Qualifying for a loan is the most challenging part of the borrowing process. After that comes the second: paying your EMIs regularly. Wondering why? Well, this is where the importance of financial healthcomes into play.
How your credit history affects your financial health
With disciplined EMI payments, you can keep your repayment schedule on track and reduce your loan liability, such as unpaid interest, outstanding principal, etc. This also ensures you can pay off the debt within the predefined tenure and avoid penalties. Thus, helping you maintain a good credit history.
A spotless credit history indicates that you’ve been an ideal borrower who has never missed a scheduled EMI payment. Or, in other words, someone who knows how to manage their finances well.
This comes as a blessing in disguise when you’re in urgent need of surplus funds. You can get speedy loan approvals and affordable repayment terms with a favourable credit profile and sound financial health.
Let’s take a closer look at why timely repayments are beneficial for your financial health.
#1 To keep a healthy credit score
Your credit score, also known as the CIBIL score, is a key indicator of your financial health. So, when you apply for a loan, say a personal loan, your credit score is the first thing lenders analyse. And based on the assessment, they decide your loan repayment terms, such as tenure, interest rates, monthly instalments, etc.
So, the more regularly and consistently you pay the EMIs, the better is your CIBIL rating. This automatically boosts your financial health, giving the green signal to lenders to grant you the required funds.
Additional Read: Personal Loan Prepayment in India: Pros and Cons
#2 To enjoy quick loan approvals during emergencies
Every time you apply for a loan, lenders will evaluate if you are creditworthy or not by checking your financial health, including your current dues and credit history. With regular personal loan repayments, you can tip the scales in your favour and demonstrate a proven track record of timely EMI payments.
This will naturally help you to get faster loan approvals in the future, especially when you require immediate funds for financial emergencies.
#3 To avoid penalties
Late repayments are detrimental to your financial health in more ways than one. While your credit score starts to take a hit with continuous late payments, lenders may also charge you penalties for not paying your instalments as scheduled. This can impact your financial health negatively and also decrease your chances of quicker loan approvals. The best way to avoid such troubles is to simply pay your EMIs on time.
Additional Read: Does Prepayment of Personal Loan Affect Your Credit Score?
Over to you
As you can see, with disciplined EMI repayments, you can avoid paying hefty penalties on loan default or straining your personal finances. It’s a sure-fire way to ensure your financial health remains in good condition.
At Tata Capital, we provide personal finance at affordable rates and highly flexible repayment terms so you can repay the loan conveniently. With our easy-to-use personal loan EMI calculator, you can also check your estimated instalments before you apply.
So, why settle for less? Take an easy loan from Tata Capital and fund your personal expenses stress-free. Click here to learn more about our personal loan eligibility criteria.