Plan on getting a loan in the future? You should be smart and always calculated when it comes to your money or installment loans. Do you have someone in mind who you can borrow from? In the first place, you need to know what is the perfect credit score for you to indulge in this process. You need a credit score of at least 580 to qualify for a decent installment loan from a major lender.
An installment loan is a common type of loan that’s used to buy real estate, property, or a car. It is nothing small or simple, leaving you with options that are reasonable for your future purchases and money investments.
How does an installment loan work?
An installment loan is a lump sum of money that you borrow and repay in payments also known as installments in the long-run period that was set up and agreed upon from the get-go. You can secure your loan through your car (for instance), which is also known as collateral. Usually, repaying this will take a couple of years for most individuals.
Example of installment loans for you to consider
1. Personal loan
A personal loan is an installment loan that can range from $1,000 to $100,000. You can repay it in a 2-7 year period. If you qualify for it or not comes down to your lender and their set of requirements. Although most people do, you have to be aware of your credit score. Borrowers with poor credit profiles can opt for a bad credit loan when the need arises.
If you go for a mortgage you agree to borrow the value of the house and agree to repay it with interest in monthly increments. This process will take you 15-30 years to repay, which is the longest type of loan that one can go for. You can secure it with the home you get and if you miss a payment you are risking losing it, so being punctual is more than important in this case.
3. Auto loan & student loan
If you have a vehicle that you’re interested in this type of loan is important for you. You will borrow the money that values the cost of the vehicle and make monthly payments along with interest.
Student loans are also smaller loans where you pay them back in regular payments over time. These also often have simpler requirements than other types of loans.
How can an installment loan affect your credit?
You will have to go through a credit check by your bank and the lender. When you make your application you will go through a detailed and hard in-depth check, which will result in you losing points due to heavy investigation. However, as you make regular payments and deposits you will get better scores.
PS: Be aware of the penalties for missing the payday. A payment that’s 30 days or more later can knock up to 100 points off your credit score, which is quite a lot to have risk.
How can you get an installment loan?
Before you commit to a specific set-up and give it a go with your preferred deal you should consider your options and compare prices with other dealers and banks. Once you know your options, make sure that you:
- Boost your application
- Apply with the right bank
If you have a bad score you can find your options elsewhere. For instance, credit unions and online lenders may work with bad credit borrowers.
When working with high-cost unsecured installment loans you will be given an annual percentage rate (interest rate plus all other fees). Go for something that is within your budget and personal preference, yet that is reasonable for you to pay back.
So, can an installment loan help with your credit score?
Some people believe that it’s possible to improve your FICO score as you take out an installment loan. The truth is that your credit score can be diverse due to any previous purchases that you have made, or due to poor decisions that have led you to borrow money in the first place. What are the pros and perks of trying this process out? The following three reasons:
1. You can diversify your debt
The process begins with the classification that is done by FICO. Everything begins with 3 different categories, such as:
- Your payment history
- Amount owed
- Credit mix
The more diverse your credit mix is, the better your credit rating will be. Consult with your bank or your provider to see what is best for you and your specific case. You will be given several options that are within your budget.
2. Save money
The best way to get the best possible credit score is by owing as little money as possible. Also, the less you’re paying in interest, the less you’ll pay overall in the long run. Interest rates will play a huge role in this case, despite your borrowed sum. The shorter the loan, the less it costs. So, you can save money to make a big deposit which will leave you with a better score. Give it time and wire it to make a difference.
3. Improve your payment history
Your payment history determines 35% of your score overall. As previously said, you should make regular payments. If you have a bad history with your previous bank or with your previous lender you can ask from another bank and another source. In the end, it all comes down to being responsible.
Where can you borrow cash and learn more about the process?
In recent times, installment loans have experienced an increase in demand and have gained more popularity. This happened because most millennials were trying to avoid any type of traditional debt. Let’s not forget that current times and recession have had their impact on most of our wallets.
Installment loans involve predictable payments unlike a lot of other forms of credit. Anyone interested in giving them a go should check out heartpaydays.com. With them, you can borrow anywhere from $100-$5,00 over 3-24 months. They are guaranteed, safe, and instant, perfect for anyone who needs cash quickly.