Skip to main content

How a Personal Loan Could Increase Your Credit Score

A personal loan could help you pay your bills on time.
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

Popular posts from this blog

I need a loan - Get an Instant Loan Here!

LOOKING FOR WHERE TO GET A LOAN? APPLY WITH US NOW!!! Do you need a quick loan? Apply for a loan online with us. Instant Loan, is an Internet-based direct-to-consumer lender. We specialize in providing loans for customers with less-than-perfect credit. We can help you with a genuine loan. Our loan services include... 1. PERSONAL LOANS 2. BUSINESS LOANS 3. MORTGAGE / HOME LOANS Amount ranges from $3000 to $20 million. Repayment period is between 6 months to 25 years. We offer secured and Unsecured loans. Even without a collateral, we can still provide you a good loan. We give loans worldwide - to any country. Talk to us now! To apply for a loan contact our e-mail:  instantloans.plc@gmail.com
184 comments
Read more

Looking for a Small Business Loan?

Over the past 5 years there has been a huge increase in the options available to small business owners looking for financing. It’s a lot easier these days to get financing that it was 10 years ago. However, with so many choices, it’s a lot more difficult to figure out which  option is best for your small business. Rosalyn James, the CEO of Instant Loan provided some comments and advice on business financing to writer Henry Kivitt at Small Business Central. Apply for a business loan with Instant Loan below. Do you need a business loan? Apply for a business loan online with us. We can help you with a genuine loan to start a business or even to expand your existing business. We also lend personal loans, auto loans, truck loan, equipment loans, debt consolidation loans, home loans, mortgage loans, agricultural loans, small business loan and commercial business loans. Amount ranges from $3000 to $20 million. Repayment period is between 6 months to 25 years. We offer secured and Unsec...
3 comments
Read more

STAYING ON TOP OF YOUR PAYMENTS - TIPS FROM THE PROS

We all have our own monthly obligations and expenses we must consider each month. Many of our expenses are mandatory while others are by choice. We need to pay our mortgage each month. The electricity bill. Mobile phone. Insurance. Car payment. These are just a few of the monthly bills we have to pay but when we add in additional discretionary spending, especially just after the holidays when we might have spent more than we had planned, making monthly payment on time can be a bit confusing even overbearing at times. At other times of the year, expenses are more easily handled and bills paid on time when discretionary spending is lower. Yet keeping track of all these bills and making sure there are no payments made after the due dates can be a challenge sometimes. Here are a few tips to keep you on track. Set Up Auto-Pay This is the most convenient way to make sure your payments are made on the due dates. Remember, even though credit reports only show late payments when they’re ...
1 comment
Read more