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  • Dec 26, 2013
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Raise Credit Without Accumulating Debt

People often think of credit and debt as a package deal, but this is not always the case. For instance, credit card charges paid within their 30-day cycle do not incur interest fees; you merely repay each purchase with funds available elsewhere. Larger loans, however, help finance items outside of your immediate budget, meaning how you handle such loans will determine your level of debt. In most circumstances, taking initiative and practicing good judgment will minimize a loan’s financial burden, regardless of its size.

Since credit scores weigh many different factors — frequency of use, total balance, payment history, etc. — you can elevate your score by paying monthly expenses like rent and utilities on-time. Without spending more money than you have, you consistently improve your credit year after year. But when it comes to larger loans, you receive lower interest rates with a better score, so just paying your bills may not be enough. Credit reports do not look at a person’s net worth, rather how that person makes payments, so try to pay above the minimum to reduce interest fees month-to-month on newer loans.

Unfortunately, loans only serve to raise credit so long as the debt remains active. Although a paid debt still benefits your history statement, the regular payments cease to continue. Besides the many credit advantages, obtaining a secured loan for big purchases can also add security and flexibility, as several low payments may be less drastic than one huge lump sum. In this sense, the effects of debt do not impede day-to-day life. To avoid creating unnecessary debt, however, it’s important to look around for the best rates and plans and to recognize the restraints of your salary.

Since debt and credit often fall side-by-side, Trillium Auto Group guarantees applicant approval for auto loans. Loan holders appreciate the available financing plans as they work to rebuild credit while also providing a means of transportation. Through these programs, you will establish/repair your credit score without falling deeper into debt. Once paid off, you will be well on your way to finding the right balance between credit and debt, having the necessary history to find better loans.

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