The good news is YES, short term loans can improve your credit rating if they’re used correctly and responsibly. Some people will tell you short term loans are dangerous to get, and to be fair, there are some dodgy companies out there that deserve this stigma. But you’ve come to Moola, we take pride in being responsible lenders in the short term loans space.
Short-term loans can be very useful. If you don’t have the greatest credit rating, when you do have bills due, or an unexpected expense comes up, not paying it isn’t going to help improve things. That's where short term loans come in handy. A small short term loan can cover you, and by paying off your financial burdens on time you get a reputation as a responsible and reliable customer and your credit rating slowly improves.
But let’s take a step back for a second. To understand how this can improve your credit rating you need to know what that is exactly. A credit rating is calculated by taking into account all the times you’ve been given credit by a bank or lending company (think hire pruchase agreements, overdrafts, peronal loans, credit cards, that sort of stuff) and whether you paid it off in time. Info about your repayment history can be kept on your credit record for up to 2 years, and any instance where a lender has tried to claim an unpaid debt can appear on there for up to 5 years, even if you ended up paying it off in full.
As short term loans usually have to be repaid within 30 days, successful repayments of this type of loan will show that you can be trusted to repay a larger, longer term loan; thus your credit rating gets a bit of a boost.
Here’s a link to some info on how you can check your credit rating:
And here’s a couple of articles you might find useful on other ways to raise your credit rating:
http://www.stuff.co.nz/business/money/5531876/How-to-raise-your-credit-rating
https://community.bnz.co.nz/t/the-low-down-how-to-improve-your-credit-score/428
So now you know a bit more about credit ratings and Moola’s short term loans why don’t you apply for one? You’ll be blown away by the ease and speed of getting a Moola fast little loan online, just use our calculator to design the loan you’re after. And if you need any more info about short terms loans or other associated topics apart from short term loans, head to our Q&A page, that’s worth reading beforehand so you know what to expect. Moola short term loans are for those temporary cash flow problems between paydays. There are no hidden costs or totally incomprehensible small print; we keep it simple to understand, simple to get, and most importantly, we like to believe we also make it easy to repay.
First of all we’ll start you off with a smaller loan anount first time round. Moving forward after that, for any loan you need we do checks to make sure you’re not taking on something unmangeable by only lending you no more than 30% of your weekly income. And as mentioned, if used correctly and responsibly short term loans can help improve your credit rating in the long run.