How To Improve Your Credit Score With A Personal Loan

The need for a personal loan is a necessary precursor to fund major expenses that come up later in life like buying a home or opting for higher education. A credit report that is unfavourable can make acquiring credit a lot more challenging. A negative report occurs as a gradual process which is a result of a number of reasons. Regardless of the ‘why’, your credit score will remain low. On most occasions, a negative report can be a consequence of poor financial decision-making.

 

Not rectifying your credit score could have a number of damaging consequences with respect to borrowing later on in life. Not least among them is that it will make you appear risky to lenders. A favourable credit score, on the other hand, has a number of advantages aside from easier loan processing. You will be favoured among lenders with lower interest rates on personal loans to renovate your home or marriage. To help get your negative credit report rectified in the shortest time possible, we’ve devised a number of strategies for you to consider.

 

 #1 Play it Smart

You can improve your score by being financially smart. What does this mean? Simply put, repay your Credit Card bills on time, don’t miss your personal loan EMIs, never default on debts, use credit wisely. Although it may sound easier said than done, try and avoid defaulting as far as possible. Your credit score will progressively rise after consistently making repayments on time. Just try and be as consistent with repayments as feasibly possible and remember that it is a gradual process.

 

#2 Keep a Lower Credit Utilization Ratio

Another way to improve your credit score is by reducing your credit utilization ratio. Your credit utilization ratio is the amount of revolving credit you're currently using divided by the total amount of available revolving credit. For example, if you have a credit card with an outstanding debt. As soon as you reduce your outstanding balance or increase your credit limit, your credit utilization will decrease and your credit score will go up. A higher credit utilization is an indication that the borrower may be credit hungry. According to experts, it's best to keep credit utilization below 30% of the available credit limit.

 

#3 Stop Applying with Multiple Lenders

Applying for any form of credit will impact your credit score.  Taking a personal loan too will have a negative impact on your credit score; albeit temporarily. Overtime you can improve your credit score by making loan repayments in a timely manner. Remember, any defaults on your monthly instalments will have a negative impact on your credit score.  This way making or breaking credit score is entirely in the hands of the borrower.

 

#4 Faster Debt Consolidation

If you avail of a personal loan, you will receive a good amount of capital or credit. With this capital, you would be able to pay off the accumulated debt as a result of unpaid credit card bills. This thereby helps you improve your credit score quickly and easily.

 

Final Thoughts

Improving your credit score can be made simplified with the help of a personal loan. If you are looking for a personal loan to financially tide you over and to build on your existing credit score, visit Finserv MARKETS. The platform will give your access to some of the best personal loan options available in the market.