Personal Loan or Home Loan – Which One Builds Your CIBIL Score Faster?

Credit Score
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I took a personal loan a while back, and my CIBIL score dipped slightly. But I’ve heard home loans actually help build credit in the long run. Is that true? How do these loans affect scores differently? Have you noticed a big change in your score after taking a personal or home loan?

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I obtained a personal loan during an emergency situation because I believed it would not significantly impact my CIBIL score. My score experienced a significant decrease within one month after taking the loan. Lenders consider personal loans unsecured which makes them perceive these loans as high-risk. The initial score reduction proved frustrating despite my timely payments. My CIBIL score began to improve after I maintained regular payments for several months. Personal loan borrowers should expect their credit score to experience a temporary dip right after you take a personal loan!

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A few months back, I took a personal loan and was also using my credit card a lot. My CIBIL score dropped more than expected! Turns out, having both high loan EMI and credit utilization makes lenders think you’re relying too much on credit. I started paying off my personal loan faster and kept my credit card usage low, and my score slowly improved. If you have both, try to keep your card usage under 30% to avoid a bigger score drop!

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I’ve taken both a home loan and a personal loan, and the impact on my CIBIL score was completely different. The personal loan caused an immediate dip, but the home loan helped build my score steadily over time. The key difference? Home loans are long-term and secured, so lenders view them as responsible borrowing, while personal loans are seen as short-term debt. If you’re looking to build your score, a home loan (with regular payments) is most likely the best bet!

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I was worried about my credit score when I got my home loan yet it showed unexpected growth over time. Regular payments on secured long-term home loans demonstrate your ability to manage large credit responsibly which leads to an improved credit score.