EMI, Loan Tenure & Credit Score: A Complete Guide for Hassle-Free Loan Approval (MyLoanWala)
Loan Tenure (Repayment Duration EMI, Loan Tenure & Credit Score: A CompletGuidefor Hassle-Free Loan Approval (MyLoanWala)
When applying for any type of loan—whether it’s a personal loan, home loan, business loan, or used car loan—three things play the most important role in determining your loan approval and theinterestratyou ge
1. EMI (Equated Monthly)
2. Credit Score (CIBIL Score)
Many borrowers know these terms but don’t understand how they are connected. A wrong selection of loan tenure, poor credit score, or high EMI burden can lead to loan rejection or higher interest rates. As a trusted loan consultant in Delhi
, MyLoanWala, based in Uttam Nagar (Dwarka Mor), helps borrowers compare loan offers from multiple banks and NBFCs. We simplify the loan process with faster approvals, minimal documentation, and doorstep assistance.
What is EMI (Equated Monthly Installment)?
EMI is a fixed monthly payment that the borrower pays to the lender until the loan is completely repaid.
EMI includes:
Component Meaning Principal Amount The amount you borrowed Interest Amount The bank’s fee on the principal amount 
EMI remains fixed every month (unless you opt for a floating interest rate).
How is EMI calculated? Banks use the formula:
EMI = [P × R × (1+R)ᴺ] / [(1+R)ᴺ − 1]
(P = Principal Amount, R = Rate of Interest per month, N = Loan Tenure in months)
However, instead of calculating manually, you can also use online EMI calculators or get assistance from MyLoanWala to estimate your monthly payments
What is EMI?
EMI (Equated Monthly Instalment) is the fixed amount you pay every month to the bank or NBFC for your loan.
EMI includes: Principal Amount Interest Amount 
Mathematically: EMI = Principal + Interest (calculated monthly)
Example:
If you take a personal loan of ₹5,00,000 at 12% interest for 5 years, the EMI will be around ₹11,122/month.
What is Loan Tenure?
Loan Tenure is the period during which you agree to repay the loan.
It can range from: Loan Type
Typical Tenure Range Personal Loan 1 to 5 years Car Loan 3 to 7 years Home Loan 10 to 30 years Business Loan 1 to 5 years
Longer tenure = lower EMI Shorter tenure = higher EMI but you save more on interest
What is a Credit Score?
A Credit Score is a 3-digit score between 300 to 900, issued by credit bureaus such as CIBIL, Experian, Equifax, and CRIF Highmark.
Credit Score Range Rating Chances of Loan Approval 750 – 900 Excellent Very High 700 – 749 Good High 650 – 699 Average Possible but Higher Rate Below 650 Poor Difficult / Rejection
How EMI, Loan Tenure & Credit Score are connected?
These three are deeply connected: FACTOR IMPACT ON CREDIT SCORE Paying EMI on time Increases credit score Missing/delaying EMI Decreases credit score Opting longer tenure Helps manage EMI easily Opting shorter tenure Saves interest but EMI becomes heavy
Relationship 1: EMI & Credit Score Your EMI payments directly impact your credit score.
If you pay EMI on time → Score increases
If you miss EMI → Score decreases Example: Situation Impact
You pay EMI every month Score improves within 3–6 months
You miss EMI repeatedly Score drops by 50–150 points
Relationship 2: Loan Tenure & EMI
The longer the tenure, the lower your EMI becomes.
Example:
Loan Amount: ₹5 lakh
Interest: 12%
Tenure EMI
3 years ₹16,607
5 years ₹11,122
Conclusion:
1. Longer tenure = Lower EMI but more interest paid
2 . Shorter tenure = Higher EMI but less interest paid
3. Relationship 3: Loan Tenure & Credit Score
Longer loan tenure gives you smaller EMIs, making it easier to pay on time → improves credit score.
But shorter tenure increases EMI burden → missing payment becomes likely → score may drop.
How Your Credit Score Affects Your EMI & Loan Tenure?
Credit Score Loan Approval Interest Rate EMI Amount
750+ Very Easy Low Low EMI
700–749 Good Standard Moderate
<650 Difficult Very High High EMI
How to Choose the Right EMI & Loan Tenure?
Best strategy:
Choose tenure based on your monthly income
Ensure EMI ≤ 40% of your monthly income
Example:
Income = ₹50,000
Maximum Safe EMI = ₹20,000
10 Smart Tips to Improve Credit Score Quickly
Tip Result
Pay EMI before the due date Score improves fast
Keep credit utilization below 30% Prevent score drop
Avoid multiple loan applications Reduces hard inquiries
Check CIBIL report regularly Correct errors
Maintain old credit cards Longer history = higher score
Pay credit card bills in full Avoid interest
Avoid settlement of loans Bad mark stays for 7 years
Take mixed credit (secured + unsecured) Boosts score
Avoid frequent personal loans Indicates instability
Use auto-debit to avoid missed payments Ensures regular payment
EMI, Loan Tenure, Credit Score
Q1. What is the minimum credit score for a personal loan?
Generally, 750+ is required, but some NBFCs give loans even at 600.
Q2. Does longer tenure reduce EMI?
Yes, longer tenure means lower EMI.
Q3. Does missing an EMI affect CIBIL score?
Yes, even one missed EMI can reduce your score by 50–90 points.
Q4. How to check credit score for free?
Credit score can be checked online from CIBIL, Experian, Equifa