05 Dec Pay Your Loan Off Faster to Improve Your Credit Rating
Pay Your Loan Off Faster to Improve Your Credit Rating
Settling your loans early would not just get you off the hook earlier, but would also benefit you in a lot of other ways⎯specifically with your credit rating. If you need to boost your credit rating, surely it won’t happen overnight but paying of a loan faster can definitely help.
There are a lot of bits of advice available on websites on how to pay off your loan faster, manage debts more efficiently, and improve your credit score. The concern about this is the actual number of ways on how to do it. So here are some simplified ways to pay off your loan faster and improve your credit rating.
Pay your loan early and put in a little extra
Paying your loan on time should be an utmost priority, reducing the chance of having a late fee. Making sure that the loan is always updated would keep you on the right track.
Paying a fixed amount rounded up from your actual monthly payment would save you time in the long run and keeps you from forgetting a random number combination.
Rounding up your payments is the easiest way to pay extra without actually missing any funds. You may even go a little further and increase your payments by $20, $50 or $100 per month. In a time that would add a significant amount, which will save you money from interest and shorten the length of your loan. Doing so will also impact your credit score on a positive note.
Making an extra payment
Making a sizable extra payment within the year of your loan will give you an edge by finishing the repayment of the loan earlier.
Paying with a bonus from work or a tax refund will save you money concerning interest and will result in a faster payoff. Allowing you to avoid the urge to follow the compulsive buyer in you, prioritizing the critical matters like this will result in your dream credit rating.
Avoid missing a payment
Some unavoidable circumstances are sure to happen wherein we may tend to forget or unwillingly miss a payment. However, these things are what we should always try to resolve and avoid occurring within our loan existence
Some companies would let clients skip a payment several times within the duration of the loan, but do not be tempted as it would prolong the length and may cause you to incur late charges on your next statement.
Go paperless, save our planet!
The digital age has come, we should use technology as the tool it was created for. We should take advantage of it in our favor.
Companies are giving out discounts to customers who opt into their paperless and auto payment schemes. It creates a seamless paying method, prevents no late fees, and can be done without having to follow up regarding lost or undelivered paper statements.
Create a budget and minimize expenses
Making a list of all expenses would give you an advantage by letting you recognize any unnecessary expenses that you can eliminate and use for a better purpose.
Consider it as a map that would lead you to a great treasure⎯which is paying your debts faster and creating a better credit rating.
This is one of the most straightforward options where you can negotiate terms regarding a lower monthly payment and a more convenient pay-off date.
Keep in mind that refinancing should only be done if it would help you financially; otherwise, it would make little sense. Having a lower monthly payment but extending the length of your loan is something that you don’t want to end up with.
Paying off loans and other debts earlier would result in saving you money, decreasing the overall length of your loan and increasing your credit rating. This habit would help ensure a brighter future, may it be for personal gain, home improvement, other debts, for your business or an early retirement. There are a lot of benefits from paying your loans earlier, not just in improving your credit rating but also in giving you a stress-free and better focus on more important matters such as your well-being and family.
Sarah Porter is a money-savvy writer and mum of two based in Manchester, UK. She is the Brand and Marketing Manager at the UK loan website Oink Money (oinkmoney.com), as well as the founder of a well-known money-saving website. Sarah is originally from Edinburgh where she studied Business and later worked in finance for a FTSE 100 company. She left her career in finance to pursue her passion for writing, a move which allowed her to travel the world with her laptop while running her blog.
Sarah has been writing about money, debt and marketing for the last 6 years and has contributed to a number of prominent finance and marketing blogs with many of her market-leading money saving tips. When she’s not working, she enjoys skiing, travelling and days out with the kids.