Loans
There are many different types of loans
, either secured or unsecured but they are all a type of debt. A secured loan is a type of loan in which collateral is involved, and the borrower must offer personal assets (such as a car or home) if they do not repay the amount owed. Secured loans are mortgages and auto loans in most cases, because they can always take back the property if not paid. An unsecured loan is a type of loan where the person does not have to offer collateral and usually have high interest rates. An example of an unsecured loan would be a loan for credit card debt, a personal loan, or a corporate bond.
How Does A Loan Affect My Credit Score?
If paid on time loans can look great on your credit report. It shows diversity in your credit report that is needed to increast your credit score. However, if it is not paid on time it can look very bad on your credit report making a lot of consumers efforts to improve their credit score counter-productive. The initial effect may be negative when taking on a new loan but after 12 months or so of faithfully paying on time your credit score will go up.
Another important thing to consider is when looking for loans to do it in a relative short period of time. The credit score formula will recognize if you are shopping for a loan and not count many hard inquires against you. Usually all inquiries within a 30 day period will only be counted as one inquiry, however many over a few months will begin to negatively affect your credit. In addition, the size of the loan will also affect your credit. Your debt to income ratio will also impact your credit score.
If you’re interested in correcting items on your credit report, contact CreditLawGroup today at 1-800-508-0041 for more information. We provide low cost legal representationin disputing inaccuracies on your credit report as well as excellent customer service.
