We’ve all heard it — “Don’t take too many loans, it’ll hurt your credit score.”
But here’s the reality: having multiple loan accounts, when managed smartly, can actually strengthen your credit profile.
Why?
Because lenders love to see that you can handle different types of credit responsibly — it’s proof of financial maturity.
Let’s explore the hidden advantages of maintaining multiple, well-managed loan accounts.
1️⃣ Builds a Stronger and More Diverse Credit Mix
Your credit score isn’t just about paying EMIs on time — it’s also about how you borrow.
Credit bureaus like CIBIL, Experian, and Equifax assign higher points to borrowers who have handled both:
Secured loans (like home or car loans)
Unsecured loans (like personal loans or credit cards)
💬 Why it matters:
A diverse credit mix proves you can handle different risk types. It signals maturity and boosts your overall creditworthiness.
✅ Example:
A borrower with both a car loan and a personal loan — and timely repayments on both — may have a better credit score than someone with just one loan type.
2️⃣ Improves Your Credit History Depth
Having multiple loan accounts — especially over several years — creates a longer and more detailed credit history.
This is one of the biggest factors that build your CIBIL score.
💬 Lenders trust long-term borrowers more because they can evaluate consistent financial behavior.
✅ Tip:
Instead of closing older loans immediately after repayment, keep one long-term secured loan active to maintain a healthy credit age.
3️⃣ Increases Your Creditworthiness to Lenders
When lenders see multiple loans being managed efficiently, it signals discipline and repayment ability.
It tells them:
“This borrower can juggle multiple financial commitments responsibly.”
This can help you:
Negotiate better interest rates on future loans
Qualify for higher loan amounts
Get faster approvals for new credit products
✅ Pro Tip:
Maintaining a low debt-to-income ratio (below 40%) alongside multiple loans impresses lenders even more.
4️⃣ Gives Access to Multiple Credit Lines
Different loans serve different purposes — home, car, education, or personal.
Having multiple loan accounts means you can access funds for specific needs without straining a single credit line.
💬 It provides flexibility — you can handle emergencies or investments without maxing out one source of borrowing.
✅ Example:
You can continue your home loan EMIs while using a smaller personal loan for home improvements or medical expenses, without affecting repayment consistency.
5️⃣ Helps You Build Financial Discipline
Managing multiple EMIs forces you to plan better — budgeting, tracking due dates, and maintaining repayment buffers.
Over time, this builds strong financial habits that reflect positively in your credit profile.
💬 Bonus:
Most lenders now report payment consistency monthly — every timely EMI improves your credit reputation across all active loans.
6️⃣ Reduces Dependency on a Single Lender
Having loans with multiple banks or NBFCs spreads your credit exposure — a smart risk strategy.
✅ Benefits:
You’re not tied to one institution’s policies or rate changes.
If one lender revises terms or hikes rates, you can refinance with another more easily.
It builds stronger overall relationships across the banking ecosystem.
💡 Think of it as credit diversification — just like diversifying your investments.
7️⃣ The Key Rule: Manage, Don’t Overborrow
Multiple loans work in your favor only if you maintain discipline.
Here’s how to stay balanced:
Keep your DTI ratio under 40%.
Never miss or delay EMIs.
Track all repayment dates through apps or auto-debit.
Refrain from opening too many loans at once (too many hard enquiries can hurt your score).
✅ Golden Rule:
More loans ≠ more debt problems — if they’re purposeful, spaced out, and managed responsibly.
Final Thoughts
Having multiple loan accounts isn’t a red flag — it’s a reflection of credit maturity.
Lenders trust borrowers who can balance secured and unsecured credit while maintaining clean repayment records.
Handled strategically, multiple loans:
Strengthen your credit score
Enhance financial credibility
Unlock better lending opportunities
The secret isn’t in how many loans you have — it’s in how well you handle them.
So the next time someone says, “You have too many loans,”
you can smile and say, “Yes — and that’s why banks trust me.”
❓ Frequently Asked Questions (FAQ)
1. Does having multiple loans hurt my credit score?
Not if you pay EMIs on time. In fact, multiple well-managed loans can improve your score by showing responsible credit behavior.
2. What is the ideal number of loans to have?
There’s no fixed number. It depends on your income and repayment capacity — but keeping your total EMI under 40% of income is ideal.
3. Can I have both secured and unsecured loans together?
Yes, and it’s actually good for your credit mix. Having both types shows you can manage varied credit responsibly.
4. Will closing a loan affect my CIBIL score?
It can slightly reduce your score temporarily because your total credit length shortens — but it’s not negative if your record is clean.
5. How do multiple loans impact loan eligibility?
If your debt-to-income ratio is healthy and EMIs are on time, lenders view you positively. Too many concurrent loans, however, may trigger risk flags.
Published on : 11th November
Published by : SMITA
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