Whilst higher credit scores represent good credit decisions and responsible borrowing, bad credit works the other way around. For some borrowers, short term no credit check loans are a key ingredient for improving your credit rating. Short term no credit check loans may help you pay your debts off in time, whilst waiting for your finance to heal
Find out how a short term no credit check loan can boost your credit score or knock off a few points of it
How Do Credit agencies measure your credit score?
Payment history
Did you know that 35% of your credit score relies upon your payment history? Are you making repayments on time? If you miss payments often, you will more than likely have a loan default on your credit report. This will decrease your credit score. If however, you are constantly paying on time, 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. This usually accounts for roughly 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. Rating agencies usually factor in 15% of your credit score from the length of your credit history.
Credit mix or types of accounts
Don’t just stick to credit cards. Having a balanced mix of various accounts such as short term, no credit check loans, 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
These make up 10% of your score. Frequent hard inquiries made within a certain period and opening up various credit accounts can seriously hurt your score.
How Do Credit agencies measure your credit score?
Short term no credit check loans can boost your credit score in the following ways
Improve 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, no credit check loans to pay them off. While a single late payment can lower your credit especially if it is a large loan, paying it off may improve your credit score. Any potential improvements may not appear immediately, but the lender will notice the repayment history whilst assessing your credit file.
It is true that you will be increasing your debt load. Paying off a large loan and eventually paying the short term no credit check loan, may however indicate that you are serious about repaying your financial obligations.
Lenders have a clearer indication of your financial position
With the introduction of the positive reporting in March of 2014, lenders have a greater amount of access to information on your credit file. Whilst this can be negative, it can also be positive as lenders can access more information such as the type of credit on file, dates of opening and closing along with payment history.
Making positive repayments on your short term no credit check loan can help build a stronger case for lenders who now have greater access to your credit file. Short term no credit check loans are typically smaller in nature. If you are positively making these repayments, a lender can clearly see this.
Short term no credit check loans, quickly lower your overall debt load
Do you have a massive loan from various lenders? Is it harming your credit? A large loan from various lenders can alone, harm your credit and place a massive dent on your finances. To see an improvement on your credit score, you can take out a short term, no credit check loan 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, no credit check loans
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 will plummet once again. There is no substitute for responsible borrowing and proper money management. If you want to have a good credit score, learning how to balance your resources and your credit is the key to leveraging debts to advance your interests. Budgeting also plays a critical role in taking control of your finances and better managing your financial state.
Credit repair is better than getting another debt to pay off loans
If the only reason you are looking to obtain a short term, no credit check loan is to improve your credit score, there are better alternatives. Credit repair agencies such as Clean Credit could remove any defaults, listing or blackmark from your credit file. This may potentially improve your credit score and help you get back on track.