How Much Will A Secured Loan Improve My Credit Score? ~ The International Finance

Tuesday, 14 May 2019

How Much Will A Secured Loan Improve My Credit Score?

Much as it may appear counterproductive on the surface, strategic use of debt can actually be great for building a strong credit score. As far as the major lenders are concerned, there’s only one realistic way of gauging an individual’s financial responsibility.

That being, to see how they handle debt.

Hence, if you have no real credit history whatsoever, pretty much the only way of getting things moving in the right direction is to take on some form of sensible debt. 
The same also applies for those with flawed credit histories, which can make it uniquely difficult to qualify for loans, credit cards and other everyday financial products.

A Question of Accessibility

One of the most appealing characteristics of a secured loan is its accessibility.  Depending on the size, nature and intended purpose of the loan, it’s often possible to qualify without undergoing a credit check. Even if your credit history is anything but ideal, you’ve still every chance of qualifying.
This is precisely why secured loans can be very useful for improving a damaged or absent credit score. Just as long as you’ve sufficient collateral to cover the cost of the loan, you’re almost guaranteed to be accepted. Assuming all repayment obligations are met, this will be noted on your credit report in the form of an improvement to your score.
Of course, the extent to which a secured loan improves anyone’s credit score will be determined by a variety of factors. The current state of their credit score at the time, the size of the loan, the type of loan, its intended purpose, repayment terms and so on. Almost every secured loan can have a beneficial impact on the applicant’s credit file, but the extent of the improvement varies from one case to the next.

Building a Better Credit Score

Whether your credit score is exceptional, average or downright awful, there are steps that can be taken to improve it. Building a strong credit score takes time and effort, but the sooner you get started, the quicker you’ll get there.
The most effective options for building a better credit score being as follows:
  •   Eliminate as many unnecessary debts as possible, rather than allowing their balances to tick over on a month-by-month basis.
  • If possible, reduce the balances on your credit card so they’re nowhere near their respective limits.
  •  You could also think about completely getting rid of any credit cards you don’t need and no longer use.
  • Avoid applying for any credit facility if there’s a chance your application will be rejected, which could inflict further damage on your credit report.
  • If you’re struggling with multiple debts, speak to a broker to discuss consolidation options and prevent further damage to your credit score.
And of course, the importance of carefully considering your financial situation before applying for a secured loan cannot be overstated. By submitting sufficient collateral to cover the cost of the loan, your property is at risk of repossession if you fail to meet your repayment obligations. – UK Property Finance

About Author

Amit Singh is a founder of Theinternationalfinance.com he share his immense knowledge of Finance in this blog.

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