A short-term personal loan can be a practical tool for improving your CIBIL score, especially if you have a limited or poor credit history. By taking out such a loan and making timely repayments, you demonstrate responsible credit behavior, which adds positively to your payment history—a key factor in your credit score. Successfully managing a short-term loan also diversifies your credit mix, showing lenders that you can handle different types of credit, which further boosts your creditworthiness.

While applying for a new loan may cause a minor, temporary dip in your score due to a hard inquiry, the long-term benefits of consistent, on-time EMI payments outweigh this initial impact. It’s important to choose a loan amount and tenure that you can comfortably manage, as missing even a single payment can harm your score. Many lenders offer specialized credit-building loans, even for those with lower scores, often at higher interest rates. Responsible use of a short-term personal loan can provide quick financial relief and, over a few months of disciplined repayment, help you qualify for better loan terms in the future. Myths that any loan will automatically boost your score are dispelled—only careful borrowing and timely repayments lead to improvement.