Absolutely—a personal loan can increase your credit score in India as long as you use it correctly. In fact, it is one of the best tools you can use to not only solve your urgent needs but also build or improve your credit report.
At The Lending Monk, we offer fast, easy, and inexpensive personal loans that will help you with your financial objectives, including improving your credit score.
How Much Does a Loan Affect Your Credit Score?
You may be wondering: how does a loan affect your credit score?
A personal loan can benefit your credit score in a few different ways
The truth is, a personal loan helps your credit score in multiple ways:
- Improves your payment history: EMIs paid promptly are the best possible positive signal to the credit bureaus.
- Diversifies your credit profile: loans improve your credit mix, particularly if you are using credit cards only.
- Reduces credit card debt: If you use your personal loan to pay off higher rate credit cards, you will reduce your credit utilization.
A loan that is managed properly can cause a large score increase in just a few months.
Does Getting a Loan Affect Your Credit Score?
Yes -but don’t worry – in a positive way! When you take out a loan with The Lending Monk, it might be marked with a soft or hard credit inquiry, but it could cause a minor and temporary decrease in your score. No need to fret – after your loan is funded and you make payments on time consistently, it should have a positive long-term effect.
So, if you are wondering “does borrowing money affect my credit score”, the answer is yes – but usually it helps the credit score more than it negatively impacts, if the loan and repayment process are adhered to appropriately.
Personal Loan Help Credit Score Calculator
Curious how much your score could improve? Use our free personal loan credit score calculator (coming soon on The Lending Monk) to see how your loan repayment will impact your credit profile.
This tool will help you:
- Calculate your new credit score, after you take a loan
- Plan your EMI repayment budget
- Understand the benefits of debt consolidation
Do Loans or Credit Cards Affect Credit Score More?
Here’s the truth: credit cards damage credit scores quicker due to high utilization, while personal loans are stable, structured, and credit friendly.
- Credit cards: Revolving credit. High balances = high utilization = low credit score.
- Personal loans: Installment credit. Fixed payments = steady improvement.
So, if you’re deciding between the two, and your goal is to improve your score—a personal loan is the better option.
Will Paying Off a Personal Loan Help Credit Score?
Absolutely! Paying off a personal loan is evidence that you have successfully managed debt. Whether you take a loan for medical bills, travel, education, or to consolidate debt, closing the loan with on-time payments helps build a strong financial profile.
It’s one of the most direct ways to boost your creditworthiness and become eligible for better financial opportunities.
Will Paying Off Credit Cards with a Personal Loan Help Credit Score?
This is one of the more strategic ways to utilize a personal loan If you have high credit card balances, you can:
- Take a personal loan from The Lending Monk
- Pay off your cards
- Reduce your credit utilization
- Enjoy one fixed EMI instead of multiple card bills
This leads to an improved credit score and less financial stress. Thousands of our users choose this method and see their scores improve within months.
Impact of Credit Score on Loans – Why Improve It?
Your credit score impacts your ability to get better interest rates, higher approval chances, and flexible repayment terms. A higher score means:
- Faster approvals on The Lending Monk
- Lower interest rates
- Higher loan amounts
That’s why personal loans are not just financial lifelines—they’re powerful credit-building tools when used responsibly.
Why Choose The Lending Monk?
At thelendingmonk, we go beyond lending. We want to help you improve your financial health, and, part of that includes helping you:
- Improve your credit score
- Get instant personal loans up to ₹25 Lakhs
- Enjoy flexible EMI options
- Experience fast approvals and zero hidden charges
Final Thoughts
So—does a personal loan help your credit score?
Yes, it does. Especially when you:
- Make timely repayments
- Use it to pay off high-interest credit cards
- Choose the right lending partner—like The Lending Monk
Looking to take charge of your financial future?
Apply now at thelendingmonk and let your personal loan help your credit score grow—along with your peace of mind.