What a Personal Loan Can Do to Your Credit ScoreThere are a lot of reasons to get a personal loan: getting help with bills and other expenses for the week, covering rent for the month, getting some much needed work done around the house, and much more. But if you’re hesitating and unsure about actually borrowing because of credit score, a little information can help you make the right choice. A personal loan can impact your credit score, but not necessarily in the way you think it will.
Because it Offers Help with Bills, a Personal Loan Can Protect Your Credit Score
Your credit score is something that follows you around and impacts so many financial decisions. For instance, if you want to finance a car but have a low credit score you may be denied or approved but with high interest rates. How you pay bills can impact your credit score. If you pay late, you may get reported to the credit agency, and that can lower your score.
When you need help with bills and getting them paid on time, a personal loan can help. It provides quick cash to be sure you aren’t late. This not only saves you money in late fees, but it can also protect your credit score. By not being late with payments, you don’t get a bad mark on your credit history.
A Personal Loan Can Even Boost Your Credit Score
Not only can a personal loan used the right way protect your current score, it can also improve your credit score. It’s not just mistakes you make with money that lower credit score. Good decisions you make with money can also raise your score. Using a personal loan responsibly, which means borrowing only what you can afford and repaying it on time, will ultimately boost your score.
Not using credit at all and never borrowing money can actually hurt you because there is nothing to report in your credit history. No credit history can be as difficult to deal with as poor credit. So using a personal loan in a responsible manner will help you build positive credit history and a good score that will make your financial decisions easier in the future.
When a Personal Loan Will Hurt Your Credit Score
Of course, there is another side to this story. If you don’t use a personal loan responsibly, it can hurt your credit score and lower it. As with bill payments, if you are late repaying a loan you can be reported to credit agencies and that mistake will be noted and will impact your score negatively.
The best way to avoid misusing personal loans is to be sure that you use them only when you really need the cash and help with bills and that you only borrow as much as you need and can afford. Resist the temptation to get more cash than you really need to cover expenses, as this can make it difficult to repay in full and on time. With smart choices you can benefit from the cash and the credit boost personal loans provide.
For more information about Green Leaf Loan Group, the products and services they offer, and how to apply, please visit GreenLeafLoanGroup.com