By Aditya Kumar
These days, thanks to numerous information sources online and offline, people are aware about credit information firms or bureaus and how they function. A few years back, CIBIL was one of those hardcore financial jargons nobody could be bothered to decipher. Now people constantly keep track of their CIBIL report, panic at the slightest negative entry in it and try to resolve them at the earliest. More than 80 percent of personal loans that are sanctioned, are of those people who have a decent score (between 750 and 900), proving that credit approvals is directly dependent on your score.
What has gold loan got to do with CIBIL report, you wonder? Plenty. When a recent research revealed that India accounts for around 30 percent of the international demand for gold, no one was surprised. It is a reliable source of insurance and security for thousands of households that have little or no access to any kind of social security. The sheer number of gold jewelers in the country alone can testify that. Gold’s exchangeability aside from its inherent properties alone makes it an idyllic security for quick loans.
Another salient feature of a gold loan is that it is so easy to get as it is a secured loan. Even other secured loans like home loans and auto loans would take some time to process, but not gold loans. In fact, you can approach a bank, submit the gold and get the cash disbursed on the same day.
Exploring the scenarios where gold rules on CIBIL Report:
# If you own considerable gold (ornaments or coins) to pledge as security for any kind of individual loan, technical and documentation hassles will be way less compared to any other loans.
# If you take the present interest rate variations into consideration, going for a gold loan is recommended than a personal loan. It saves on expenses (for paperwork) and time. In fact the loan application is processed and approved in hours, if not minutes.
# The TransUnion Credit Information Bureau (India) Limited scores, which shows a person’s credit/repayment history, has a huge role in procuring personal loans. But guess what, jewelry loans will have a positive impact on your CIBIL report, yet another reason for the rising popularity of gold loan.
# Gold loan providers do not waste time on intense documentation. All they need is the income or address proof, sometimes both. However, a jewel loan requires no such score.
Gold loans and credit repayment history:
One easy way to create a good credit history is to opt for gold loans rather than personal or other loans. A jewel loan is a kind of secured loan. This way, it is similar to housing loan or vehicle loan in which the ornaments are pledged in return for cash. When kept in check sensibly, secured loans is seen more useful in getting a good score. Your debt settlement conduct directly goes to the credit bureaus and this is why disbursing in time is important. Gold rates change on a daily basis. And sometimes when the value is slashed drastically, it can push people who have received these loans to late payments or non-payments. This can blemish your score to a certain extent.
How are gold loans generally viewed?
Only a couple of years or so ago, getting a gold jewel loan was entered as a negative mark on your CIBIL report as it was believed that only those people who would not get finance from any other place opt for this. But this is not the case anymore. The government is also doing their best to persuade people to use their ‘idle gold’ in a lucrative way.
More on gold loan as a product and its value addition:
# Gold loans are less expensive compare to personal loans.
# It is offered at a lesser interest rate.
# Instead of keeping it idle in lockers or at home, it can be put to use.
# Sanction and disbursal of jewel loans is as prompt as it is transparent.
# The government provides subsidiary perks when you opt for a gold jewel loan.
Originally gold loans were limited to small firms like regional financiers and pawnshop owners. But now with more awareness and growing demand, many reputed players including top private lenders in the country have entered the field.
When you apply for a jewellery loan, make sure that you consider it like any other secured finance like a house loan or a land loan. Paying off EMIs in time as well as complying with other guidelines agreed upon is important for your CIBIL report as ensuring timely EMI payment and adherence to other terms and conditions are. This would over the long run help you to boost your credit score. There is reason enough to avail of the product should you require finance and the key to getting the loan application approve begins with a good credit score.
(The author is Founder & CEO, Qbera.com)