In a seemingly endless universe of financial decisions and choices, your credit score is your North Star. It’s your compass, guiding you on the road to smart money management. But what happens if your credit score is less than stellar? Is there much you can do to resolve the situation? The answer is yes: a short-term loan.
This guide will explain how to boost your credit score using a short-term loan. We’ll also provide some valuable strategies to help you maximize the impact of a loan on your credit score.
Your Credit Score: the Basics
A credit score is akin to a report card. At the heart, it is a number that represents how well you have managed your finances. The score takes a few factors into account, including:
- Your payment history
- The debt you owe
- Your credit history length
- New credit applications
- Type of credit you use
A credit score is helpful to anyone who needs information about how financially reliable you are. That includes banks, mortgage companies, phone companies, and landlords.
A high score indicates you have an excellent credit background. You pay your bills on time and don’t get into too much debt. A low score suggests the opposite. And it means you’ll find it harder to apply for new credit.
Knowing your credit score is a helpful way to keep your financial situation in check. And it’s crucial to take a responsible approach to any debt you owe.
What Are Short-Term Loans?
Short-term loans provide a valuable alternative to long-term, traditional personal loans.
First, lenders designed these short-term loans for borrowers with immediate but temporary needs. It means you aren’t stuck paying off a loan over several years if you only need finance temporarily.
Short-term loans offer a payment period of weeks or months. The longest short-term loan is usually 12 months. You’ll also see short-term style loans in other financial products. That includes payday loans, emergency loans, and cash advance loans.
One of the benefits of a short-term loan is that it offers speed. It’s also convenient. Imagine, for example, that your car breaks down and you can’t afford the repairs.
A short-term loan will give you that cash and the loan will be in your bank account fast. So you can get your car fixed without it disrupting your daily life.
The other benefit of short-term loans like Eastern Loans is that we don’t run a credit check. Our application process is straightforward. And since we operate 24/7, you won’t experience delays getting the money you need.
We also offer 3, 6, or 12 installments, offering you the flexibility to repay at a rate that suits your finances.
Short-Term Loan Eligibility
Before proceeding with a short-term loan application, check that you are eligible. While these online loans don’t run a credit check, you must meet other criteria.
That includes having evidence of an income – many won’t accept self-employment for proof of income. You must be 18 or older and have a Canadian bank account.
How Short-Term Loans Can Help Your Credit Score
Short-term loans can help your credit score in various ways.
One factor that influences your score is your payment history. It has a significant impact on the score calculation. So you can use a short-term loan to boost this part of your credit rating, providing you repay the loan on time.
When setting up a short-term loan, set up the payments. Always choose an achievable repayment schedule. You’ll show credit report agencies that you can manage your debts responsibly. That will help to improve your score gradually.
A short-term loan also adds to your credit mix, which means the different types of credit you have. The average person will have a range of credit, such as car loans, credit cards, and mortgages.
And credit mix is something else agencies consider when they oversee your credit score. They see a diverse credit mix in a positive light, as it shows you can manage different types of debt.
So if you don’t have an existing loan, a short-term one could be an ideal choice. It could help increase your score and make future credit applications easier.
Remember, monitoring your finances and paying bills on time is the best way to influence your credit score.
Short-Term Loans: Strategies to Help Boost Your Score
If short-term loans sound like a good option, your next step is to get organized. There are several strategies you can use that will help you maximize the impact on your credit score.
Mark Your Calendar
The most crucial step to helping your credit score is to pay on time. Mark your calendar for when payments are due. Use notifications to remind you several days before the due date. If you seem short on funds, you can take action before the payment is scheduled to ensure you don’t miss it.
Try a Side Hustle
Making extra cash on the side can help cover your loan payments. Here are some simple ideas.
First, try a yard sale. Most of us have unused items in our homes. Sell them locally or via an eBay auction.
Alternatively, see whether you can use your spare time to earn extra money. You could become a pet sitter, delivery driver, or Uber driver.
Set a Budget
Finally, set a monthly budget. Review your outgoings and look at ways to make minor cuts to your spending.
You could also shop for better deals like phone contracts and food shopping. Excellent budget management will help ensure you can repay your loan on time and help boost your credit score.
Creating a Sound Credit Improvement Plan
If you have worries about your credit score, it’s time to take a proactive approach. A short-term loan can have plenty of benefits. And it offers the perfect opportunity for you to prove your creditworthiness.
If you’re ready for that next step, apply now at Eastern Loans. Our simple and quick 5-minute application process will give you an answer and instant cash to help you begin your credit-building journey.