How to Build Credit While Paying off Your Personal Loan!

Personal loans are the saviour for many when it comes to bridging the gap between money and during financial needs emergency. Especially when you show responsible financial behaviour, you can rework your credit score while paying off your personal loan.

Here are some smart tips you need to know that can help you increase your credit score and pay your loan altogether.

1. Build a Good Payment History

   Your on-time payments contribute 35% of your total credit score. Even if you miss single payment, it can have a huge impact on your credit score.
   

   1. You can set automatic payments and never miss a payment update.

   2. Consider paying at least a minimum amount every month.

   3. Save money and try to pay a little more.

      
      

2. Keep Low Credit Utilization

   The Credit Utilization ratio is a percentage of the total credit you are currently using from your total available credit. Your credit utilization ratio contributes 30% to your overall credit score. You can request to increase your credit limit to lower your utilization ratio.

   
   

3. Add to Credit-Mix

   Credit mix is the variety of credits you have in your profile such as loans, credit cards and mortgages. If you only have a personal loan or mortgage loan in your credit history, you can get a secured credit card and use it wisely to strengthen your profile.

   
   

4. Keep your Oldest Credit Account Open

   The length of your credit history adds a 15% contribution to your credit score. Closing your oldest account shortens the length of your credit history.

   
   

5. Avoid too many Inquiries

   Frequently, applying for a new credit card brings your credit score down. Just because a new credit card gives you certain benefits, getting too many cards would deteriorate your credit instead of boosting it.

   
   

6. Get a Credit Building Loan

   Financial institutions offer a credit building loan curated especially for borrowers who want to boost their credit.

Conclusion

Always remember it’s your financial behaviour that shapes your credit score. Responsible behaviour can take your score to greater heights. When bad financial habits are incorporated into your financial behaviour, it will harm your credit score. Simultaneously, a bad score affects your future chances of borrowing eligibility.

Lenditt is one of the finest lending apps in Ontario Canada, and it gives you financial support in various financial emergencies. Whether it is for medical expenses, home renovation, purchasing a vehicle or just any personal purpose, our instant personal loans are designed in such a way that people from diverse backgrounds can afford it effectively.