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How To Build Up The Perfect Credit History With Personal LoanBy Expert Author: Neha Sharma
A personal loan is a kind of unsecured loan that is used by a consumer for a financial purpose that does not include commercial or business reasons. The loan approval is determined as per consumer’s credit history or the borrower’sability to pay back. In this article, we inform you how a personal loan helps you build your credit history.
When you are granted a personal loan by a bank or a financial institute, you are given a fixed tenure as return on payment which can last from 12 to 60 months. This tenure is fixed before the loan is approved on the understanding and acceptance by both parties. Therefore if you have decided on a tenure that is comfortable and acceptable by you, you can easily repay the personal loan easily, without any problems. Ensure that there is sufficient buffer time for your monthly EMIs.
Monthly fixed payments
Personal loan includes monthly fixed payments either by post dated cheques or through ECS. When you apply for personal loan, the bank or financial institute will provide you with easy repayment options. You can availany one of them for the repayments. In these plans, the amount of monthly payment isfixed and you can adjust it in such a way that suits your financial needs. Thus you will know how much you need to set aside per month for the repayment of the personal loan where you will be thoroughly prepared for it. This prepares you to pay your dues for all future requirements with equal ease.
With a personal loan, there are several possibilities to use it. Be it financing a wedding, taking a trip abroad, or even to fulfill the overwhelming monthly bills, a personal loan can be used for these reasons sufficiently and easily. Also, the repayment options for a personal loan are normally easily carried out, with low interest rates and a short tenure. Thus comparatively, a personal loan has low risks compared to credit card debt and therefore will not harm your credit history in the long run.
Alternate to credit cards
Although a credit card is very convenient and beneficial as a mode of payment, it also carries a lot of risks. While the credit card can be used as an instant mode of financing, the repayment of credit cards is a tricky part. While there is no fixed repayment tenure for credit cards, the financial institute or bank can easily demand the repayment at any moment, in a single amount. Also, the interest rates are extremely high, and with a short tenure for repayment, it is can seem strenuous. A personal loan on the other hand has a fixed tenure for repayment, fixed interest rate and also a systematic monthly EMI repayment system which can easily be repaid, fixing your credit history score.
Author Bio :- Neha Sharma is a finance student who loves to write about personal loans. She is delighted to offer information that will be helpful about personal loans, interest rates and repayment options to the public
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