How Do Loans Affect Credit Score

To understand how do loans affect credit score, you must first know how credit score is calculated. Credit score is computed based on the credit you have borrowed so far and how you have managed it. If you have not taken a loan or used a credit card, you would probably won’t have a credit score. 

Loans can affect your credit score in both ways, positively and negatively. After having taken a loan from a bank, if you have repaid consistently without any defaults, you will have a positive credit score. When your repayment is improper, you might have a negative credit score as repayment history has a considerable weightage on the credit score.