Strategies for Using Personal Loans to Boost Your Credit Score

credit score conceptYour credit score is a reflection of the financial decisions you have made through the years. Unfortunately, you might have made some poor choices at some point, and they might go on to affect your credit score for years on end. While there have been many books and articles on how you can improve your credit score, some of these strategies take a long time and are primarily non-feasible. One of the best options for boosting your credit score is by taking a personal loan.

There are many personal loans you can get from a moneylender based in Singapore. However, when choosing a moneylender, you must ensure that they will offer you a loan that boosts your credit rating. Shop around for one who advances the best terms for your loan to guarantee that the loan will not further sink your rating. The following are the techniques you can apply for the loan to boost your credit score.

Borrow Only What You Need

It is tempting to borrow the highest loan limit a moneylender will allow with your credit score. If however, you are using a loan to boost your credit rating, it is prudent to borrow a low amount. This way, you will benefit from establishing an optimal payment history by making huge repayments within a short period. Going for a maximum loan, on the other hand, might leave you with insurmountable debt, which will only make your situation worse.

Make Prompt Payments

Your payment history is the primary element that determines your credit rating. Even one delayed payment will significantly hurt your efforts of boosting your credit score. When taking your loan, get a detailed payment schedule from your lender. You can negotiate favourable terms on this schedule with your lender to ensure it meets your circumstances. If you will be late in repayment for an unavoidable reason, contact your lender early enough to minimize the impact of the late payment on your score.

Avoid Additional Loans

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When used right, a personal loan will boost your credit score within a short period. In these times, it is tempting to get other loans. You might assume that this move will further boost your score. It is, however, advisable to steer clear of other loans when using a personal loan to boost your credit rating. Multiple lines of credit will only increase your credit utilisation ratio and knock off the points from your score.

Apply for Loans from One Lender at a Time

People assume they will boost their odds of getting a loan approved if they spread their applications. As such, they will apply for loans from multiple lenders over the same time frame. Each loan application, however, reflects as a hard inquiry on your credit report and might cause a dip in your score even if you do not get approved. Stick to a lender with optimal terms and one who has a high possibility of approving your application.

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