Are installment loans a valid way to improve your credit score.

credit-scoreIf you are a finance nerd like me, you most likely wake up and take a look at the financial section of your local newspaper. On top of that you also check some other large news publications like Forbes and New York Times. There are also a few others I read. I was reading around on Huffington Post and I found a article that was directed at college students. What really got me was when they mentioned that online installment loans is a great way to improve your credit score. Ill cover this in a bit. Before, let me get to some real good advice.

Credit cards are probably the #1 way to improving your fico score. There are many different factors that they look at in order to calculate your score. But by far the most important is making all of your payments on time. If you were to do this for 5 years and 1 card and nothing else you would have a great credit score.

A car loan is also another very commonly used form of loan that can do wonders for your credit. Just like with credit cards there are many dealers out there that will approve you as long as you don’t have any delinquencies. Just make sure that the lending company is not one of those obscure hard money lenders. Those will charge very high interest rates that will build up over time.

If you are looking for a way to use installment loans to improve your credit, here it is. Take out and loan then don’t do anything with the money and simple pay it back. This will show that you made your payments and it will also show some utilization on your credit report. So while the contributor in HP did mention installment loans, he should have also mentioned how exactly to do this. Nothing says you have to use the money in any particular way or even use it at all. Ill let you think about that. If you want to know more, leave a comment below or simply contact us. We have many more tips that we can share with you. Keep checking back for the rest of the posts in this series.