09 MAY, 2020

If you have a little knowledge about loans, then you will also know how important the credit score rating is. A low credit score will lead to an increase in interest rates on any loan you take. This high-interest rate will increase your financial burden.

Hence, it is important that before taking a loan like a car loan or a personal loan, you check your credit score. If you have savings in the form of cash, you can easily get a secured loan against savings. If appropriately repaid, it will help you in building or improving your credit score.

Here is a list of secured loans which can be of help:

  • Savings secured loans

While many secured loans require you to put your asset as a collateral, a savings secured loan requires not your asset but your cash. As per the banks, you can get a loan amount as much as the cash savings or up to 80 to 90% of your savings.

Once the loan is approved, you will not be able to withdraw from your savings. Plus, it is essential to pay your monthly EMI installments on time. Any default with regards to EMI payments will harm your credit score rating.

Savings secured loan is preferable because of it’s easy availability, lower interest rates, and the freedom to use the loan amount for expected or unexpected purposes.

  • Loan against property

It is another type of secured loan that can help in improving your credit score. You can get a property mortgage loan by mortgaging a property that is in your name. The loan amount would usually be up to 90% of the property value.

Since loan against property is secured through the property, the interest rates will be low, and EMIs will be less due to the longer loan term. This makes it easier to repay the loan amount and helps in improving your credit score.

  • Secured credit card

If your bank does not find you worthy of a credit card, you can go for a secured credit card against your asset. But you must make sure that you do not cross your credit limit, and the payments of bills are made on time. This will help you in bettering your credit score.

The banks always keep a close watch on the overspending and credit limits of your secured credit card, so maintain a sound financial discipline.


These above tips will help you to better your credit score, which can help you in getting a car loan, home loans etc at affordable interest rates in the future.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.