What Are Installment Loans?
Installment loans are some of the better personal loan alternatives compared to the very short termed payday advances. Direct lenders like CashAmericaToday offer repayment term up to 3 months when you borrow an installment loan which can give you cash up to $1,000. The other benefits of installment loans include lower interest rates, lower income level to qualify, and even bad or no credit histories to be acceptable for funding.
Since the payday loans give a very short repayment period, most borrowers find it very difficult to pay back on due. Which primarily results in a penalty fee. And in extreme cases, if the lender reports the late repayment to the rating agencies, debtor’s credit score becomes bad. Since installment loans give a better solution to this -apart from the cash shortage issue, people are going for them to help their credit scores.
Does Paying Off Installment Loans Help Credit Score?
So, apparently, now you know that just by borrowing a loan with a longer term can save your credit from getting “bad”. But how about when you make the scheduled payments? Does paying off installment loans help credit score too? It does! If your lender reports your timely repayments to the credit bureaus, then your credit score can improve really fast. If the lender does not report, it still does not have any negative impact on your credit rating.
Apart from the rating improvement of credit status, installment loans also give you a chance to save a little money. First of all, you will be paying less interest, and that means some saving. Secondly, since the single payments are going to be small, you also get to save more from your income. On the long run, if you have some savings, you don’t have to go for a payday advance in an emergency. So installment loans help your credit in more than one ways!