Does Personal Loan Affect Credit Score

Fast Personal Loans: Top 6 Benefits Of Getting Them

It must be taken into account that the credit score is one of the most important factors in financial life, so it is believed that it is not. All credit scores are registered with financial institutions and banking institutions. Even service companies associate your financial records with other financial entities.

If you usually borrowing money online, you can generate a record in your financial accounts, so it is very important to always have a positive record. All these scores are usually reported in three credit bureaus of the United States. Which is Equifax, Transunion and Experian, each of this bureau usually measures the entire accumulated score. In Singapore you may check different loan rates simply click here and weigh which is the best fit for you, both positive and negative.

The best scores must have a grade between 650 and 850 points.

The biggest help points that affects your credit

  • Financing interests: If your credit score is one of the best, it is very profitable that you can apply to low interest rates.
  • Financing amounts: If your financial balance is of a greater positive range, it is very possible that you will be able to have a loan with an amount greater than the estimate that the bank or any loan entity can offer.
  • Financing terms: People who manage to have a positive score can choose to have more time to pay off such debt, they are one of the benefits you get by having a good score on your credit record.

5 Factors That Affect Your Credit Score

  1. Your payment history: Your payment history is one of the factors that most often influences your credit score, as it usually represents 35 percent of your entire score. Payment history refers to the amount of time you spend canceling said credit or loan. If you have stopped paying bills, have suffered foreclosures, bankruptcies or something similar, this can damage your credit score for a period of time between 7 to 15 years. That is why it is very important to pay on time every month.

Tip: Pay on time whenever you can and the total amounts you owe, if you usually cancel a little more that will help reduce interest and the next month's payment may be less. It is recommended not to get your loan repaid time to call your creditor as soon as possible and request an extension of payment, since sometimes they allow special arrangements for extreme cases.

  1. Your level of indebtedness and use of credit: your level of debt is usually the second cause that most often affects everything related to your credit score, since it represents 30 percent of your credit score. Your debt level is the total sum of all unpaid amounts in your name (personal loans, mortgages, credit cards, etc.).
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Tip: To improve your debt level, try to pay off all the debts you can, as well as not borrowing more than you really need. If your debts are very high, you can also look for debt consolidation programs that help you reduce the interest you are paying, which will help reduce your debt and the time it would take to pay.

  1. The age of your credit record: The age of your credit record represents 15 percent of your credit score being the third most relevant point or factor when it comes to your credit score. Having accounts opened for a longer time is better for your registration because it shows that you have more experience with your finances and are more "predictable" than someone with a newer record and without much information, so being older is more relevant, it offers more weight credit and if your score is high this is usually much more.

Tip: Try not to close credit accounts an example are those of credit cards, you should only close your accounts if absolutely necessary.

  1. The type of accounts you have: The type of accounts you have usually affects 10 percent of your credit score. By having more accounts and of different types, it shows that you have experience managing several different types of credits at the same time. The two most common types of credit accounts are a) renewable credit accounts (such as credit cards) and b) installment loan accounts. Having or having both accounts helps improve this section of your credit score.

Tip: Since this section does not affect your credit so much, we recommend having different credit cards instead of applying for an installment loan if you do not need it. We also do not recommend taking out many accounts or credit cards, much less in a short time after opening another account, as this can negatively affect your credit score.

  1. The number and type of credit checks: This section has 10% of your credit score. Each time you apply for loans or accounts that require a "solid credit check," these reviews deduct some points, although they are not many. By making many requests and in a short time, these points add up and can have a greater impact on your credit. The review of your own credit and the request for accounts that perform "credit checks" do not affect your credit as they do not review the credit agency information directly.
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Also Read: Fast Personal Loans: Top 6 Benefits Of Getting Them

Tip: Normally, there are 2 "solid credit checks" a year, more than that and in less time, it can affect your credit. To avoid this, do not request more accounts than necessary or no more than 2 or 3 a year. You can also avoid this damage to your credit by requesting accounts that perform "credit checks" that do not damage your score.

How to Review and Fix Your Credit Score

It is highly recommended that you always be attentive to your credit score, it is a total lie to believe that being able to check your score is negative, or reduce your credit score. There are different free applications that help you check your credit score. In these applications you can observe the following actions in relation to your credit score:

  • Your Payment History: You can observe the failures in terms of the payments you owe on your accounts or if you present an error, verify it and be able to appeal to solve it and thus not damage your credit score.
  • Your Credit Use: If you have a loan, you can observe the stipulated amount of the credit granted and thus have an order of expenses and use of that loan.
  • Open Accounts in Your Name: Many people can be scammed by using their name to access certain loans, verifying what your accounts are and avoiding such incidents is very important.

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