If you’re into taking loans and things related to that you probably know about what is credit score. For those who don’t know I will describe it briefly in the article.
In this Article we will talk about whats credit score and how it helps you to get loans easily. Plus I will tell you why paying loan Installments on time is so important and how it affects your credit score.
But first before going deep into the topic I’ll first let you know what’s Loan Installments and credit score briefly.
What is Loan Installment?
Loan installment means returning the loan that you borrow from a loan lender or a bank time by time. Means you can return your loan monthly within the given time period of some months or maybe some years.
This is a brief summary of description of Installment loans. Now as you know the simple meaning of installment loans I will tell you a brief description of credit score.
What is Credit Score?
A credit score is basically a score set to determine your previous financial status. It has the history of all the mortgages and loans you’ve taken and the score states that how good you’ve been in returning loans and borrowed money.
This was the brief description of credit score but you might be thinking that how can a credit score benefit you or how it can be a trouble for you.
How Your Credit Score Works?
A good credit score can be really helpful. You have a financial trust of a bank or people. It’s easy for you to borrow loans and you get to pay a less percent of interest.
This is how a credit score benefits you in the Loan field. Well, it really can be a headache if you have a bad credit score. It’s the complete opposite of having a good credit score. You don’t get Loans easily, lenders don’t trust you and you have to pay a large amount of interest compared to the interest rate for a good credit score.
How Loan Installments Affect Your Credit score?
Now we all know that when we take a loan we have a specified time of returning it. But if we fail to return it on time one of the many problems is that there will be a great decrease in our credit score. And if we pay all our loans on time we may get an increase in our credit scores. Most of times, it gets hard to pay installment on time. Lots of calculation, interest, timely payment, and lender rules makes it harder. Availing Simple installment option is the best choice to secure your credit ratings.
A bad credit score means a lot because the next time it would be quite difficult in getting a loan or to mortgage a property. This will also decrease our financial trust and the worst is that we will have to pay a large amount of interest rate the next time we take a loan.
On the other hand if you have been returning all your loans on the given time period and have a good credit score. You’ll get many benefits like low interest rate, easy loans and etc.
This is the reason you should always pay your loan I on time and always keep a good credit score.