How Does A Gold Loan Affect Your CIBIL Score?

How does a gold loan influences your credit score? Read to get answers to all your queries about impact of gold loan on your cibil score.

27 Sep,2022 10:11 IST 9 views
How Does A Gold Loan Affect Your CIBIL Score?

Lenders such as Banks and NBFCs often face the problem of default, where the borrower fails to pay the outstanding loan amount, forcing lenders to incur losses equaling the defaulted amount. However, to mitigate such losses without collateral, lenders ask for a CIBIL score to ensure that the borrower is financially capable of repaying the loan and will not likely default on the repayment.

What Is A CIBIL Score?

A CIBIL score is a three-digit score out of 900 that reflects the creditworthiness of a person to the lender. An individual with a score closer to 900 is deemed more capable of repaying a loan than those with a lower credit score in India. TransUnion CIBIL Limited generates the CIBIL score. It manages the credit files of over 600 million individuals and 32 million businesses, assesses your credit history, and provides a score out of 900.

How Does A Gold Loan Affect Your CIBIL Score?

Every financial transaction directly affects the CIBIL score, as they add to an individual’s financial history. If an individual makes a timely repayment without any default, it increases the CIBIL score. However, with every delayed repayment over the set date, the CIBIL score decreases.

When borrowers take a gold loan, they are legally liable to repay the principal amount with interest to the lender within the loan tenure. Since the gold loan is also a financial liability for the borrower, it highly affects the CIBIL score. After taking a gold loan, the borrowers have to repay the loan amount through flexible monthly EMIs. These EMIs are predetermined to ensure that the borrowers know their financial liability beforehand.

However, if you have taken a gold loan, you must repay all the monthly EMIs on or before the due date of payment. If you make timely EMI repayments, the gold loan will affect your CIBIL score positively. Furthermore, you should ensure that you do not delay or default on the EMI payments, as it will lower your CIBIL score, which may reduce your chances of getting a loan in the future.


CIBIL score is one of the most important factors affecting an individual's eligibility to take a business loan. Except for a gold loan, almost all other loan products rely on having a CIBIL score higher than 750 for approval. Hence, it is necessary to make timely repayments even when you have taken a gold loan to maintain a good credit score.


Q.1: Is a credit score needed to take a gold loan?
Ans: Although a credit score is not needed to take a gold loan, it affects the CIBIL score and your chances of getting a different type of loan in the future.

Q.2: What is the minimum CIBIL score needed to take a loan?
Ans: A CIBIL score above 750 out of 900 is perfect for getting a loan from a reputed lender.

Q.3: How can I increase my CIBIL score?
Ans: You can increase your CIBIL score by making timely repayments and not defaulting on your financial liabilities.

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