Installment Loans can Help Save Credit Scores
Where credit has taken consumers
Installment loans can help save credit scores. In the market today, there are many changes in the world of credit. It used to be that credit cards were reliable options when consumers were faced with emergencies. Many people had that one credit card they kept in the kitchen drawer. It wasn’t for daily use, or even monthly use. Rather, it was solely for emergency occasions when cash was needed but not on hand.
The recession changed the way consumers can use their credit cards. Cards that formerly sat dormant for months, sometimes years, for emergencies were canceled. Not due to any mistakes on the part of the owners, but rather because credit companies did research and noted stagnant cards as “risky.” Credit lenders theorized that if their emergency funds were needed, then the consumer may not be able to pay back the debt. It is akin to that age-old adage, “You can get all the credit you want, when you don’t need it.”
What to remember when dealing with credit cards
There are some things to be aware of in the credit card world. First of all, remember that working on your credit, when you are still unable to pay your current bills, is pointless. The last thing you want to do is put time and money into paying back debt, only to have new debt bring your score even lower. You can’t work on your past credit history until any financial crisis you were in is over and you have some extra money to start paying down debts.
Secondly, remember that you don’t necessarily have to pay credit card interest to improve your score. In fact, holding a balance on your cards can be a detriment to a good credit score. The best way to manage a credit card is to pay off your debt. Remember that holding a balance is expensive, bad for your finances and usually not necessary. Make sure you pay off the full balance, even if you have to use savings or installment loans.
Thirdly, it’s important to note that credit repair is a long-term activity. Nothing will change overnight regarding your credit. Look at it this way: It took you years to get bad credit, and it will take you years to fix it. Studies have showed that it takes three times longer to fix credit than to ruin it. For larger items like foreclosures or bankruptcies, you may need to just wait for them to drop off your credit report before you can bring your score up significantly.
Speak to a professional today and take proactive steps to repair your credit. For a FREE credit consultation, call 1-877-563-2076.
How to act wisely in the future with credit
Once you know how to deal with your credit cards, you need to know what to look out for when watching your credit score. Your credit score is based solely on the information Equifax, TransUnion and Experian collects regarding your payment activity on your credit cards. It benefits you to request your credit report once a year via AnnualCreditReport.com. You should file a dispute if you see any of the following:
- Late payments that are inaccurate
- Accounts that don’t belong to you
- Negative information that is more than seven years old
- Bankruptcies older than 10 years
- Incorrect information regarding where you have lived
These are all important to dispute, and the process isn’t difficult. Just write to each credit reporting agency, tell them the problem and request that they remove the misinformation. Always keep a copy of whatever you send to them and don’t send more than you need to. If they need specific information, they will request it.
The benefit of credit cards
Overall, the benefit of credit is great. It allows you to purchase things that you normally wouldn’t be able to afford. But it takes some time and effort to monitor your credit habits to assure that they are benefiting you. Always be aware of how much you owe and pay it down. Even if you have to use savings, installment loans or family borrowing, be sure that you have as low a balance as possible. It will only bring your credit score higher and allow you the freedom of more credit in the future.