While higher credit scores represent good credit decisions and responsible borrowing, bad credit works the other way around. For some borrowers, short term loans no credit check is a key ingredient for improving their credit rating, as it helps them pay off their debts on time—while they wait for their finances to get better. But, is it? Find out how short term loans can boost your credit score or knock off a few points out of it in the discussion below.
First, Let’s Find Out How Credit Agencies Compute Your Credit Score:
Your creditworthiness is measured by the following factors:
- Payment history: 35% of your credit score relies on your repayment history. Do you make payments on time or not? If you miss payments often, you have loan defaults and you recently failed to pay on time – your score will go down. But, if you have a high proportion of on-time payments, you can expect a higher score.
- Total debts: How much do you owe on your credit accounts? Do you have outstanding loans? The credit reporting agency will consider how many credit accounts you have, their types and the total amount you owe when computing your total debts which roughly account for 30% of your credit score.
- Length of credit history: If you have been making timely payments for a long time-you can expect a higher score. While it is not advisable to carry huge debts for a long time, keeping your oldest credit card can actually improve your credit score because rating agencies usually get 10% of your score from this factor.
- Credit mix or types of accounts: Don’t just stick to credit cards. Having a balanced mix of various accounts such as short term loans no credit check, home loans, retail cards, mortgage and other installment loans can add a few points to your score. If you get it right, you may just push your scores up, because credit mix makes up around 10% of your credit rating.
- New accounts, hard inquiries and recent credit activity make up 10% of your score. Frequent hard inquires made within a certain period and opening up various credit accounts can seriously hurt your score.
Short Term Loans No Credit Check Loans Can Boost Your Score in the Following Ways:
It Improves Your Payment History
If you want to take care of the most important factor in your credit score which is your history of payments, you can use your short term loans to pay them off. While a single late payment can lower your credit especially if it is a large loan, paying it off will give it a boost. It may not show up immediately on your report but the potential lenders will realise that you eventually took care of it.
It’s true that you’ll be increasing your debt load, but paying off a large loan and eventually repaying the short term loan on time could indicate that you are serious about repaying your financial obligations.
Quickly Lowers Down Your Overall Debt Load.
If you have a massive loan from various lenders that alone can harm your credit. Not to mention the huge dent it would cause on your finances. To see an improvement on your score, you can take out another short term loan with no credit check to pay more than the monthly payments. This strategy would help you get rid of significant credit card debts and other high interest loans faster.
The Downside of Short Term Loans No Credit Check
Getting rid of a single credit item in exchange for a short term loan with low interest is a good thing. But, if you cannot make timely payments – your score would plummet once again. There is no substitute to responsible borrowing and proper money management. If you want to have a good credit standing, learning how to balance your resources and your credit is the key to leveraging debts to advance your interests.
Credit Repair is better than Getting another Debt to pay off Loans
If the only reason why you’re planning to obtain short term loans is to improve your credit score, why don’t you consider credit repair instead?
Get a grip of your credit life by taking charge of your own credit repair process without waiting in line till your short term loans no credit check is approved. Get started today by contacting Clean Credit!