Did you know that taking a personal loan can be good for your credit score? Debunking this myth and scaremongering tactic created by financial institutions will help you make better decisions for your future without worrying about the finicky details anymore. A personal loan can be a positive thing for you but like any other thing in this life, it is subject to terms and conditions. The only rule under this financial literacy hack is that the personal loan should always be paid on time. Paying just a little bit extra also helps your credit score a great deal but this is an option for those who have a little extra to spare at the end of a very long month.

Benefits

There is no doubt that there are some advantages to this bank facility. You can agree that their versatility makes it easy to sort out other avenues of your life while having the mortgage and car loans fixed on just that. Not to mention the fact that the interest rates are more favorable and competitive, with the more creditworthy consumers receiving even lower rates ranging from 5 to 6%. Nobody ever wants to admit this but the whole security thing with fixed loans is stress-inducing, but the amazing thing about personal loans is not only that they are unsecured but they don’t require you to go through hoops to prove that you have an exceptional credit history. In simple terms, you can even get one with your bad credit. Imagine having a loan that has fixed monthly payments? That’s not all, because with this one you are most likely to borrow the money that you only need, and of course, this is also dependent on your credit score. So, be careful to not ask for a loan to purchase a mansion when you cannot afford a car yet. However, the good news is that the loan approval process is quick and it can take up to anything from a couple of hours to just a few business days depends on the institution’s red tape and lending policies based on the payment terms signed for.

Some objectives before committing

Like with any other commitment, it is always a good idea to set down some objectives and to factor in positive key points prior to signing off on that agreement. Here’s a list of just a few points that can be used as motivation for that personal loan.

  • Have you been planning and putting off a well-deserved trip to Bali because you haven’t been able to cover all the expenses on your own? Well then, as the saying goes “fortune favors the brave” and right now your fortune lies in this simple and quick loan option. Go and explore those beautiful temples in Ubud.
  • With the holiday season around the corner, everything requires money. A personal loan can be a good source of that extra money needed for those unexpected expenses.
  • Unplanned emergency expenses. Funerals and medical bills are such a migraine-inducing expense. With a sufficient amount, it can be easy to manage these expenses without tapping into contingency savings
  • If you have many small debts that amount to an inconceivable sum leaving you living from hand to mouth, a personal loan can help consolidate those debts to relieve you.
  • Other expenses like weddings can also be covered by a low-interest rate loan like this one.

The takeaway

Many reasons have been written about why personal loans are bad for your credit score and stress levels. However, like everything else in life, moderation is key but in this case, timely and consistent payments are just what is needed.

 

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