Installment Accounts
An installment account is an account that you pay a pre-set monthly payment and pay off the balance over time. These are for accounts such as auto loans, mortgages, student loans or personal loans. They have fixed terms where you make regular payments on the balance.
What are the benefits of installment accounts?
The benefit of having an installment account over arevolving account is that it makes it much easier for the consumer to work out a monthly budget. When they have a set monthly payment that they know is going to be the same every single month, they can work other monthly expenses around that number. Installment accounts are almost always better than revolving accounts when purchasing big ticket items because they offer competitive interest rates. Installment loans are also great for building a credit history. A mortgage or auto loan looks great on your credit report when paid on time. If you are looking for less of a commitment for building your credit history, student or personal loans will also look favorably upon you when you faithfully make the monthly payments on time every month.
How does an installment account affect my credit score?
Making your payments on time for installment accounts looks good on your credit report because it shows lenders that you are responsible. Unlike revolving accounts, there is a definitive end in sight where you will no longer owe money. Installment accounts can be secured (there is collateral for the loan) or unsecured (not requiring any of your personal property for collateral). However, if you do not make payments on an installment account then they can affect your credit score negatively. It could be difficult to receive a loan in the future because you have either showed in the past that you do not make payments on time or repay the loan at all. In all situations, lenders will review your credit history to decide whether or not they will give you a loan and base your interest rate on the way you repaid in the past.
Is there a solution if I had trouble repaying my loans in the past?
If you were late making payments on an installment account such as a student loan or any other type of loan, then you can still resolve the situation. Maybe your credit report says that your installment account was sent into collections as unpaid. Now here’s another situation: you were not late making payments, but your credit report says that you were. The only way to solve these problems is by disputing the information on your credit report. You can do this by contacting the credit reporting bureaus and letting them know that they are reporting the information as inaccurate.
If you are serious about disputing inaccurate, unverifiable, or misleading information on your credit report, contact CreditLawGroup today at 1-800-508-0041. We provide low cost legal representation in disputing inaccuracies on your credit report as well as excellent customer service.
