From purchasing a vehicle to buying a home to moving into a new apartment, if you have credit woes, you will have a hard time completing these tasks. Paying your bills on time and avoiding high credit card usage can boost your credit over time. However, did you know that securing a personal loan can help you improve your score faster?
Credit Card Utilization
A personal loan can help you lower your credit card utilization rate. To keep your credit healthy, it's best to keep your credit card utilization rate below 30%. A rate at this level means that you are not using more than 30% of your available credit at a time.
The higher this percentage, the greater the impact on your credit score. A personal loan can help you pay off all your credit card debt or, at the very least, pay down the balance on the cards to a threshold that is less than this percentile.
Interest is a major problem when it comes to credit card debt. Interest doesn't just increase the amount of money you have to pay back to the credit card company, but it also increases the balance on your credit card accounts. Again, the higher the balance, the greater your credit card utilization rate.
Even if you are unable to pay off your balance entirely, if you can pay down the balance with a loan, you will reduce the amount of interest you are required to pay. Reduced interest will save you money over time and help you lower your credit card balances and improve your credit score faster.
If you have a considerable amount of credit card debt, it can sometimes be a challenge to make on-time payments for each account. One reason this process is such a challenge is that all accounts have minimum payment requirements. When you can't meet this payment, it reflects as a late payment on your credit report, which automatically drops your score.
A personal loan payment is often easier to manage as the payment is consistent, and often, the loan interest rate is considerably lower than that of a credit card account. With a personal loan, you can make your payments easier and work to eliminate a bad payment history.
A personal loan can help you boost your score and help you achieve your financial goals. Speak with a loan service professional to learn more about what options you have.Share