New Loan: Credit Score May Dip, But Smart Repayment Boosts It

• A new loan can temporarily lower your credit score due to hard inquiries and increased debt, especially with multiple applications in a short time.
• Timely repayment of a new loan can strengthen your credit score by building positive payment history.
• New loans can help establish credit for those with limited history or improve credit mix, demonstrating ability to manage different credit types.
• Consistent, on-time EMI payments are crucial; missing even one payment can significantly damage your score for years.
• Responsible borrowing and managing EMIs within your budget (e.g., under 30-40% of income) are key to improving creditworthiness.

Why It Matters: It clarifies how new loans can ultimately strengthen your credit score.