Is your credit score getting out of control? If so, it might be time to change your money habit. After all, your credit score reflects the way you handle your debt. While you cannot change the past actions that hurt your score, there are ways you can consider today to improve it.
Taking out a personal loan is one of the ways to improve your credit score. Unlike payday or title loans, installment loans are meant to be paid off in a series of small, manageable payments over the term of the loan. Installment loans may also come with a lower interest rate than credit cards. Users can apply for installment loans online and get instant approval.
Keep reading to know how installment loans can help in improving your credit score:
Diversifying your Debt
Your credit score is made by sorting all information on your credit report into different categories. These categories that include your payment history, amounts owed, and the types of debt owed. You will be able to get a better credit rating if you have a diverse credit mix. If you are currently dealing with lots of credit card debts, you can diversify your debt by taking out an installment loan.
Improving your Payment History
Because your payment history is one of the factors that determine your overall credit score, taking out an installment loan and paying your monthly dues on time will help improve your credit score. But, this still depends on your lender reporting your payment information to the credit bureaus. Unfortunately, many payday and title lenders will not report your payment information if you have bad credit.
Saving you Money
Owing less debt is the best way to increase your credit score and you can achieve this by scoring a lower interest rate. If you pay less in interest, you will be paying less debt and be debt-free eventually.
When taking out an installment loan, make sure you get approved for one with a lower rate than your other debt such as credit card, title loans, and payday loans. Consolidating all your high-interest loans into an affordable, dependable installment loan will help you save money.
Aside from scoring a lower interest rate, you can also owe less through an installment loan by paying the debt for a shorter period. Most installment loans are designed to be paid over the a few years, where you will be paying just the minimum payments.