{"id":43567,"date":"2024-01-05T09:00:06","date_gmt":"2024-01-05T14:00:06","guid":{"rendered":"https:\/\/www.newswire.com\/news\/oportun-how-personal-loans-can-affect-financial-health-22212026"},"modified":"2024-01-05T09:00:06","modified_gmt":"2024-01-05T14:00:06","slug":"oportun-how-personal-loans-can-affect-financial-health","status":"publish","type":"post","link":"https:\/\/d56fg8tfg.fitnews.club\/lifestyle\/oportun-how-personal-loans-can-affect-financial-health\/","title":{"rendered":"Oportun: How Personal Loans Can Affect Financial Health"},"content":{"rendered":"\n\n \n \n

\n SAN CARLOS, Calif., January 5, 2024 (Newswire.com)\n -\n <\/strong>Personal loans are versatile financial products that borrowers can use to make purchases, pay bills, consolidate debt, resolve financial emergencies, and much more. But what many people may not realize is that they can also have a positive impact on the borrower\u2019s financial health. Personal loans<\/a> can help borrowers build their credit scores, manage their debt, and cover financial needs when used responsibly. <\/p>\n

Building Credit Scores<\/strong><\/p>\n

Payment history is a key factor in one\u2019s credit score, since scoring models deem it an important element of creditworthiness. If the lender reports to the credit bureaus, making timely payments in full on a personal loan can boost a borrower\u2019s credit score. It\u2019s essential to avoid missed or late payments, as this can have a negative impact. Consistently making personal loan payments in full and on time demonstrates responsible borrowing habits and reliability to lenders and other institutions so that the borrower can qualify for better loans and financial products in the future. <\/p>\n

Credit mix also contributes to a borrower\u2019s credit score, though it has less of an impact than payment history. Various types of credit exist, for example, personal loans are installment loans while credit cards are revolving credit accounts. A mix of multiple types of credit can positively affect a credit score. Lenders like to see that borrowers can handle different types of credit responsibly, so adding a personal loan to one\u2019s credit mix may be beneficial in some cases.<\/p>\n

Debt Consolidation<\/strong><\/p>\n

Individuals struggling to manage multiple debts can use a personal loan to consolidate their debt. Debt consolidation<\/a> is obtaining a new loan to repay existing debts. When a borrower consolidates their debt, they replace multiple loan payments with one monthly or bi-weekly payment that\u2019s easier to keep track of. <\/p>\n

Using a personal loan to consolidate and pay off high-interest debt could lower an individual\u2019s credit utilization ratio and improve their credit score. Additionally, consolidating debt with a loan that has a lower interest rate than the existing debt may help borrowers save money on interest in the long term, depending on the length of the repayment period. Further, simplifying debt repayments may make it easier to avoid late fees, which could also reduce the overall cost of debt. <\/p>\n

Covering a financial need <\/strong><\/p>\n

Personal loans can be used for a variety of personal purposes like getting through an emergency, managing income volatility, or making a large purchase accessible. All of these situations can relieve financial stress in the moment. Borrowers should fully understand the loan commitment prior to taking out a loan to be better able to manage the loan payments over the course of the term. <\/p>\n

How to Use a Personal Loan Responsibly<\/strong><\/p>\n

Personal loans offer several benefits for borrowers. However, it\u2019s important to use them wisely. Make the best of a personal loan with the following tips:<\/p>\n