Simple Ways to Improve Your Credit Score for Installment Loans
There are several simple ways to improve your credit score for installment loans. These include paying your bills on time, reducing your total debt, and utilizing credit reporting services. Taking the time to improve your credit score for installment loans can benefit you by allowing you to get a loan easily with an online loan company. Keep reading to learn more about how you can improve your credit score for installment loans and other types of loans.
Paying Down Bills on Time
If you’re in need of an installment loan, paying it down quickly and responsibly is an excellent way to raise your credit score. However, if you have no other credit accounts, paying this loan down early can hurt your credit score. A variety of types of accounts improves your credit mix, which is more important than your FICO score.
In addition to paying down your bills on time, you should also make sure that you keep up with your payments on revolving and installment loans. This is because the positive impact of your payments will last for ten years, while late payments can pull your score down for seven years.
Your credit score for installment loans is also impacted by the amount and type of debt you have. Unsecured debt, such as credit cards, is much higher than installment loans, so it’s vital to pay down as much of your revolving debt as possible. Revolving debt, especially credit card debt, can affect your credit score more than installment loans.
Paying Off Installment Loans Early
If you are unsure of how to boost your credit score for installment loans, you may be wondering whether it is possible to pay off installment loans early. While paying off installment loans early will not significantly affect your credit score, it may reduce your overall score.
Credit utilization, which is a critical factor in determining your score, plays a larger role in determining your total credit score. While paying off installment loans early won’t necessarily hurt your score, keeping them open for the entire term can help improve your overall credit score.
Unlike credit cards and lines of credit, installment loans cannot be increased. You will need to apply for a new installment loan in order to raise the amount you owe. Make sure that your loan amount does not exceed your current income or stretch your budget. Otherwise, you might have trouble making the payments when an unexpected financial emergency arises. Thus, it is critical to pay off your installment loan early.
Rent Reporting Services
If you’re planning to apply for an installment loan in the near future, renting a home can improve your credit score. Adding recent on-time rent payments to your credit report will increase your score. While adding new accounts can negatively affect your credit score, it’s best to wait for two billing cycles before adding a new account. Rent reporting services are available at a number of online loan and mortgage websites, and most will report your past rent payments to one or more major credit bureaus.
The most popular rent reporting services are Experian Boost and eCredable Lift, which report rental payment data to all three credit bureaus. These three agencies check your credit history and score for major lenders. By using a rent reporting service, you can boost one or two credit scores and benefit from expanded credit options and savings.
1. Experian Boost
Experian Boost for installment loan purposes allows consumers without a credit card or thin credit file to add positive payment data. Unlike traditional credit reports, Boost takes into account only recent and on-time payments. It does this by scanning all of your bank and utility accounts. Positive payment data helps you improve your credit score. In addition, it may help you qualify for better loan terms and interest rates.
The Experian Boost service requires sign-up. The free credit report service only records your payment history if you have linked it to an account. You can unlink it at any time. You can also choose to have your bank account details recorded. However, if you are concerned about your privacy, you should not use this service. However, it can be a good option for those who want to build their credit score.
2. eCredable Lift
If you’re in need of an installment loan but don’t have the best credit, you may want to consider using a credit score building program such as eCredable Lift. These programs use alternate data from credit bureaus to improve your score and increase your chances of receiving financing. Several credit card companies have these programs, and can even increase your score by counting your power payments toward your Experian FICO score.
In addition to using installment loans to improve your credit score, you can also improve your credit by applying for revolving credit. You should also consider a secured credit card if you have a bad credit score. Applying for a credit card leaves a hard inquiry on your credit report. Too many inquiries can lower your score.
Lastly, keep your old accounts open. You can also use services to apply utility payments, rent, and other payments to your credit score. For example, Experian RentBureau and TransUnion’s eCredable Lift both apply your monthly utility payments to your credit score.
