Will a top-up loan affect my credit score?

Availability of a top-up loan can lead to minor changes in your credit score, but it largely depends on your credit profile and repayment track record. Here's an overview:

• Credit Check: When you apply for a top-up loan, financial institutions will make a hard inquiry on your credit report to evaluate your creditworthiness. Multiple such enquiries within a short span can result in a small drop in score.
• Increased Credit Utilisation: With the additional loan, your total outstanding credit rises, leading to a higher credit utilisation ratio. A rising credit utilisation typically risks the credit score.
• Timely Repayments: As long as you repay your Equated Monthly Instalments (EMIs) on time, your score will not be impacted significantly. Even a slight delay can negatively affect your score.
• Credit Mix: Opting for a top-up of an existing loan keeps your overall credit mix stable without adding loan variety, maintaining the stability of your credit score.
• Tenure: Longer loan tenures mean you stay accountable for timely repayments for longer. This demonstrates positive credit behaviour.