Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk
At first glance, it’s difficult to understand how a £100 loan can affect your credit score. If you have a poor credit score, don’t write off instalment loans just yet. A credit score is a summary of the information found in your credit report. Your credit report is a history of all lines of credit in your name, payments or non-payments, judgments, liens and other filings against you. Your credit report reflects how well you manage your debt. Since you cannot change what has already happened, you can make meaningful changes by managing your current lines of credit with care and attention.
That’s where a £100 loan comes into the picture. These short-term loans are useful in many ways. For starters, they provide instant access to cash when you need it most. Plus, there is the added benefit of improving your credit score when you make good on these types of loans. Your credit profile is made up of different lines of credit. These include car loans, student loans, mortgage loans, credit card loans, personal loans, business loans, and even payday loans. While some people think taking out loans will help their credit score, the truth is the best way to improve your credit score if you are taking on a loan is to be on time with all your repayments on any credit-related expenses you may have.
Let’s backtrack a few steps. Once you’ve decided to apply for a loan, you need to be sure that you can afford the monthly payment, because short-term loans and payday loans are typically not low APR loans. That’s where a loan calculator comes into the picture. These calculators allow you to enter the loan amount, the loan term, and the interest rate to determine what your repayments will be every month, or payment period.
A loan calculator is a failsafe way to instantly calculate the monthly payment, the total of all payments that you will be making, and the total interest that you will be paying on the principal sum. It’s important to shop around for the best loans on the market and look for loans with the lowest APR possible– don’t simply select one because the website looks good, or the customer service agents are trying hard to get you to sign up.
Once you have thoroughly compared different loan providers, you will have a much better understanding of the market. Various tools and resources are available to help you pick the most cost-effective instalment loans for your needs. Always read the fine print in the text at the bottom of the loan offer, ask customer support to explain all aspects of the loan and the repayment, and always verify what you’re being told with a loan calculator.
All loans, even the low APR ones, should comply with FCA regulations to ensure that you are not being swindled by short-term lenders. Personal loans should be affordable and accessible to anyone who meets the qualifying criteria. Leading online loans providers can approve these loans within 15 minutes. The long-term benefits of paying off an instalment loan are evident in the money savings you will enjoy in the future. Once you fulfil the loan requirements, and your credit score improves, you will be eligible for better interest rates on future loans.
Some people use personal loans for debt consolidation on their credit cards – another money-saving option. As always, these loans will impact your credit score depending on how well you manage them. Since your payment history comprises approximately 35% of your credit score, you can boost that component by making good on your monthly repayments. If you have a poor payment history, you can change that by picking an affordable £100 loan and repaying it on time. These are some of the many ways that you can benefit from loans – besides for cash in hand, which is always good to have!
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