Credit scores have a major impact on every area of your life, affecting your ability to get a credit card, the interest rates you’ll pay, and even your employment opportunities. While there’s no quick way to build up your credit, paying down debts and taking out a personal loan can help restore your rating over time. Below is an explanation of credit scores and how taking out a new loan can actually give yours a boost.

Understanding Credit Scores & Personal Loans

Calculating Credit Scores

Credit reporting agencies use a variety of factors to calculate your level of financial responsibility. A history of on-time payments is one of the most crucial factors, followed by the amount of credit you already have available. Having several credit cards with balances close to their limits will drag down your score, even if you pay all of your bills on time.

Paying Down Debts

Many consumers tired of paying high interests on credit cards use personal loans to pay down their other debts. This strategy saves money in the long run. It can also immediately give your score a boost, since your available credit will increase dramatically once you’ve paid off your other debts.

Establishing a Credit History

Having little information on your report is just as concerning to some lenders as a history of late payments and defaults. Taking out a personal loan and paying it off on time will help establish a positive credit history. This will make it easier to get approved for other lending products in the future.

Whether you’re paying down debts or need cash to cover emergency car repairs, call City Finance. They offer a wide range of products and pride themselves on helping clients throughout McKinney, TX, get the funding they need as quickly and easily as possible. Visit their website to apply for a personal loan today, or call (972) 548-0092 to speak with a loan officer.