In recent years, the concept of “Purchasing Now, Pay Later” has gained immense popularity among the people of our country. As they seek complete flexibility in managing their finances, two prevalent options emerge - Personal Loans and Credit Cards. Both of these financial avenues offer the convenience of delayed payments, but they come with distinct features, pros, and considerations. (Tip: Keep your credit report in the positive sphere) While both of them offer the convenience of delayed payments, understanding their ins and outs can help individuals make informed decisions that align with their financial goals. Today, in this blog, we’ll dive deep into the advantages and considerations of both options. Personal Loans These structured financial instruments that are designed to meet various individual needs are some of the most popular, especially after the COVID-19 outbreak. When it comes to “Purchasing Now, Paying Later,” these loans offer endless advantages over credit cards. Fixed and Lower Interest Rates These types of loans come with fixed and lower interest rates, offering potential borrowers stability and predictability. Unlike credit cards, which often have variable rates of interest, this helps in knowing the exact cost, ultimately enabling borrowers to plan and budget in an efficient manner. Structured Repayment Plan These loans come with a predetermined repayment schedule, allowing potential borrowers out there to plan their finances in a certain manner. Fixed monthly payments make it relatively easier for individuals to plan their overall budget. Debt Consolidation If, by any chance, a borrower has multiple high-interest debts, such as credit card balances, an apply personal loan can be used for debt consolidation. Simply by combining various outstanding balances into a single loan with a lower interest rate, individuals can simplify their finances and reduce overall interest expenses. Credit Cards: Proceed with caution! While credit cards offer immediate purchasing power and flexibility, they come with specific considerations that individuals should be mindful of when opting for the Pay Later facility. High-Interest Credit cards are well-known for their high interest rates, especially on revolving balances. If users are unable to pay off their balances in full every single month, the accumulated charges can quickly become a financial burden. Minimum Payments Trap While credit cards offer the flexibility to make a certain amount of minimum payment, this leads to a debt cycle in the long run. Individuals who only make minimum payments may find themselves trapped in a long-term repayment cycle, paying significantly more in interest over time. Impact on CIBIL Score Carrying high balances or missing card payments can definitely have adverse effects on creditworthiness. Therefore, it’s quite crucial for individuals to manage credit card usage in a responsible manner. Why Stashfin? At Stashfin, we offer an instant personal loan with just a few taps without going anywhere. If you plan to avail a loan from us, we offer such a facility that you’ll not have to pay any interest on the amount you avail (terms and conditions apply). Download our application on the Play Store/App Store or visit our website to explore. Conclusion All in all, this trend offers complete flexibility to consumers, but it’s crucial to weigh the options between personal loans and credit cards. However, if you are planning to avail, a personal loan is a much better option as it offers a structured repayment plan with a fixed rate of interest, which is quite suitable for larger purchases.
As per the Reserve Bank of India, it is mandatory that all financial institutions check the credit scores of potential individuals for every type of loan or even credit card at the time of evaluation. Although there are tons of other factors that determine eligibility, your credit score is one of the most important factors. Stashfin, one of the top personal loan applications, offers such loans with just a few taps and determines the amount of the loan based on the credit score of the borrower. However, if you find yourself in a situation where your credit score is not lucrative, there are many actionable steps you can take to enhance your CIBIL score swiftly. Today, let’s delve into effective strategies that can help you expedite this process. Understanding CIBIL score It is simply a three-digit number running from 300 to 900 and is a crucial indicator of your creditworthiness as well as financial health. This score is completely calculated on the basis of your credit history, repayment patterns, credit utilization, credit types, and inquiries made by lenders. If you have a high credit score, it clearly represents your strong creditworthiness, making you a quite attractive prospect for lenders. This is because it determines your personal loan eligibility, stashfin credit cards, etc., often influencing the rate of interest and credit limits offered to you. Therefore, regularly monitoring and maintaining a healthy credit score is very crucial for financial stability and access to favourable lending options. Credit History It includes details of your credit accounts, their financial age, and payment patterns as well. So, a longer positive credit history generally results in a higher score which ultimately helps in availing the loan easily. Repayment history and behaviour Timely payments impact your score in a positive manner. Therefore, any defaults or late payments can have the opposite effect. Credit Utilization This basically measures the ratio of your credit card balances to the credit limits. Therefore, keeping this ratio below the bar of 30% clearly demonstrates responsible credit usage. Top tips to increase Credit Score Check Credit Report In order to increase your score, the first and foremost thing you should be doing is to check your report regularly. It is a good idea because it will tell you two crucial things that are essential to your credit score. Firstly, it will show the defaults or delayed payments that have brought down your score, and secondly, it offers information supporting the reason behind the low/high credit score. Fix up your credit card balance Ideally, keeping your score above 750 is considered good but rather essential. Although it depends on organizations as well as benchmarks set by various organizations, if your credit score is low, you better rectify it. Spend as much as you can quickly repay within the billing date, as unpaid dues pull your score to the ground. Dispute Inaccuracies, if any Ensure that you dispute errors immediately after reviewing your CIBIL report or if you disagree with a particular transaction made through the vendor. Keep in mind that it’s not a good practice to apply for new credit without resolving old issues, as it will affect your score. Timely EMI payments If you are wondering how to improve your credit score immediately, you should probably make sure that you pay your EMI Calculator on time. This is considered one of the most important things, as CIBIL looks into it while gauging your credit ratings. Therefore, timely repayments of EMIs and bills can keep your creditworthiness intact. Conclusion Enhancing your CIBIL score requires a proactive approach and disciplined financial habits. Timely payments, minimizing credit utilization with time and diversifying credit types are the top vital strategies. At Stashfin, we recognize the significance of a robust credit score in securing a personal loan. Read More: Personal Loan Despite a Low Credit Score?