When it comes to credit, if you don’t use it you won’t have a good score. Those who have had bad credit in the past may be hesitant to use it all because of this, but the way that our economy works you need a high credit score to get anywhere. Whether you have no credit history or at all or want to increase a low score, taking advantage of loans is a good way to boost your credit score.
Essentially there are two different types of loans. Secured loans are when the borrower uses collateral to apply for funds. Unsecured loans are when this is unnecessary, but they usually require a good credit score. Whether you are able to access an unsecured loan or not, loans can be used to your advantage. Here are some secured and unsecured loans that you can use to boost your credit score.
Personal Loans
A personal loan can be both unsecured and secured. It is a great way to increase your credit score. When you apply for a personal loan, you will have access to a certain amount that you will be asked to pay back. Whatever the amount, you should pay back the money as soon as possible. Don’t wait until it becomes a problem. When you give the money back immediately, the amount won’t matter. Your balance should reach zero, which will then increase your credit score. If you need money and don’t have a good credit score, a secured personal loan can put money in your pocket while helping you increase your score.
Auto Loans
Auto loans are a form of unsecured loans that typically use the vehicle as collateral. This means that you can obtain money to buy a car without having a high credit score. However, if you fail to make the payments, the lender may repossess the car. On the other hand, if you keep up on payments and give the money back as soon as possible you will be able to increase your credit standing while buying a car that you need.
Mortgage Loans
Mortgage loans are typically secured, but they can also be unsecured as well. When you are going to buy a house, a mortgage loan provides the money you need to make payments. The property might be the collateral needed for the secured loan, so if you fail to make payments they might repossess the house like a car. Another option is to use the equity of your home as leverage. If you don’t currently use the property as collateral, you can refinance using the equity you have. It will then become a secured loan with your house as collateral, but this can provide financial advantage you need to move forward.
Starter Loans
If you have no credit at all and need to build a score, a starter loan may be just what you need. Lenders offer starter loans to help those build credit and get their hands on a little extra cash flow. However, you shouldn’t use a starter loan for the money. Instead, it’s better to pay off what you owe immediately and open up the door to new credit options. Starter loans are designed to help the client build their credit. If you use it wisely, you will be able to increase your overall credit standing.
Installment Loans
Installment loans can provide cash for a variety of things in installments. These loans are great to build credit because you are provided money in bursts, making it easier to pay back soon. If you keep up by paying off the loan every time you receive money, you will have a great way to build credit and increase your score. Like any of the rest of these loans, you have to pay back the money as soon as possible to see any benefits.
Loans can be complicated, but once you understand them you will be able to use lending to your advantage. You should always pay back the money as soon as you can. If you do this diligently, you will be able to boost your credit score and find yourself able to take advantage of other financial benefits. Don’t wait, make those payments!
