A personal loan could help you pay your bills on time.
Whether you already have great credit or have the funds to pay off all your bills on time, your score might not be as high as it could be without one key element: installment loans. While you may not have considered using installment loans as a way to build your credit history, these loans could be very effective in optimizing your credit score.*
Here is how a personal loan could improve your credit:
1. Increase credit mix
While you could have good credit by having several credit cards, just having one kind of credit - revolving credit in this case - is not enough. According to credit provider FICO, the types of credit used affects 10 percent of your FICO score. To help boost your score, add installment loans to the credit mix. By having both revolving credit and installment loans on your credit history, it shows potential lenders that you can handle both types responsibility no matter which kind of credit you are applying for.
2. Improve on-time payment history
In addition to being a crucial addition to your credit mix, installment loans can pave the way to a solid on-time payment history. Compared to using revolving credit like credit cards, installment loans, such as personal loans, are easier to repay. Before signing a contract with a personal loan provider, make sure to closely read the repayment terms. Personal loans often have repayment terms which allow them to pay off their amount owed in fixed monthly payments. The advantage is knowing exactly what the payment will be month to month, as opposed to having the balances change every statement period for credit cards.
The result is you can continue to add onto your positive payment history, which represents 35 percent of a FICO credit score. While many personal loan lenders do report relevant information to credit reporting bureaus, others do not. This too is something you should verify beforehand.
3. Prevent late payments that could damage credit
Avoid late payments by planning ahead when making payments because you know the exact amount owed each month. When you are unable to meet the due date for credit obligations, late payments and delinquencies could bring down your score. However, applying for a personal loan could help you have the cash to pay your bills on time. In addition, how you use your personal loan could also help your score. If you use a personal loan to pay a credit card bill, you could reduce credit card debt. This in turn lowers your credit utilization rate, which is the amount owed on your credit cards divided by the total credit limits.
Personal loan advantages over other loans/financing products
Applying for just any new line of credit might not bring up your score. A personal loan is not the same thing as a regular payday loan, which may not improve your credit. Similarly, applying for a new credit card will also not help your credit because you still need to diversify your credit types, which can be done with installment loans.
To apply for a personal loan to add to your on-time payment history and enhance your credit mix, contact Zion Finance - Lend Up.
WE CAN HELP YOU WITH A QUICK LOAN! WITHIN 48HRS
Do you need a quick loan today? Zion Finance - Lend Up can help you with the loan you need, we offer personal loans and loans for business development. To apply e-mail: zionloanfirm.ltd@aol.com
Comments
Post a Comment