Did you know that taking out a personal loan can actually improve your credit score?
While there are many components which go into the secret sauce of credit and credit worthiness, your credit mixture can have an effect on overall credit health. An installment loan could be a great addition to your revolving lines of credit. In addition, making timely payments on a personal loan will help to increase your score.
Interested in other ways to improve your score and future rates?
Just like building a healthy body, relationship, or career, improving credit happens over time with a cumulation of good habits and decisions. Here are some of our tried and true credit builders:
1.) Pay your bills on time, every time!
First and foremost, credit is built by paying off loans and damaged by missing payments. Set your accounts to autopay, or set regular reminders to pay off your loans to avoid not only dings to your credit, but accruing additional interest or fees.
2.) Spend within your means
Thomas Jefferson once said “Never spend your money before you have it”. While we can’t all live like 18th century statesmen, his advice can find some purchase today. Make sure your monthly payments can fit comfortably into your budget before taking on an additional line of credit.
3.) Don’t over apply for credit
While taking out an additional line of credit can ultimately build credit when done in moderation, every application puts a small, temporary dent in your score. This is called a hard credit check, or pull. In addition, if you are overextended in your lines of credit, it may be more difficult to find additional loans or offers.
4.) Use different types and sources of credit
Create a diverse credit background by working with different lenders and taking on different types of loans (e.g. mortgage loan, car loan, credit card, personal loan, etc). Variety is key!
5.) Maintain a long established history
Rome wasn’t built in a day, and neither is credit. When opening a new line of credit, treat it like a relationship and foster it over time with regular payments.
You can learn more about personal loans or even apply directly for an installment loan at www.sweetwaytopay.com/access-direct.