Our credit card score affects our life in more ways than we can expect. Although in most of the scenarios our credit card is scrutinized to find out whether you can clear off your dues on time. However, the use of credit card score has evolved over the years. Did you know that when you apply for new insurance, checkout apartments or even apply for a job, your credit score is evaluated? Hence, don’t you think that it is important to scrutinize how your credit affects your life? To know more find out how installment loans can change the way you live.
What are Installment Loans?
Personal loans, student loans – all fall in the installment loans category. In other words, where you get the entire amount at the beginning of the loan tenure is referred to as installment loans. You need to pay back the amount in equal amounts at fixed intervals with fixed or varying interest rates.
Unlike credit cards you cannot just pay off the balance so as to use additional funds. Once, you have received the amount, you will not get any further amount throughout the tenure of the loan!
When you are first establishing yourself with a credit score, it is just but natural that you would like different lines of credit. Instead of opting for two different credit cards, it is better to opt for a credit card and other one as an installment loan. Unlike a credit card, the loan will not have an adverse impact on your credit card score. As such you are able to avoid large scale fluctuations in your score report.
And the best part is there are many loan companies and financial institutions that are more than willing to give you the loan.
What are the Other Factors Controlling Your Credit Score?
A major factor that affects your credit score is the duration for which you have had borrowed credit. When you opt for an installment loan in your credit portfolio, the credit users see a decrease in your credit score as this means that you are in a better position to pay back. So, when you eventually pay back the loan borrowed, you give a better credit score report as we have already mentioned. In fact even after the re-payment of the loan, the account still persists which in turn help to increase the overall age of your account! In other words, it acts like comprehensive insurance coverage.
If required, you can check out the different financial institutes and loan companies to find out what is the prevailing rate of interest charged and the tenure for which you can borrow the loan.
The Bottom Line:
Installment loans are a great addition to your credit portfolio. Whether you are opting for an education loan, house loan, auto loan or you want a loan for a personal reason; you can improve your credit history, and create a better borrower image. Take the help of loan companies to make the most of these loans.