Does taking a loan affect your credit score?

Yes, taking a loan affects your credit score both positively and negatively. When you apply, a hard inquiry by the lender may cause a small, temporary dip in your score. However, once the loan is active:

• Timely repayments help build a strong credit history and boost your score.
• Consistent EMIs demonstrate financial discipline to credit bureaus like CIBIL.
• A healthy mix of credit types can improve your overall credit profile.
• Conversely, missing or delaying payments will significantly damage your score and future borrowing capacity.