Indeed, credit can be positive for your overall credit score. A credit score, or credit rating, is a numerical measure that demonstrates your financial literacy and dependency by calculating how likely you are to pay bills on time using evidence from your previous financial transactions. Although many people assume that they’ll have a good credit rating because they don’t have any credit facilities, this often isn’t true because they have never proven their reliability with paying bills. Taking out a loan or other credit facility and making repayments in full and on time is one way to increase your credit score by demonstrating your dependability to credit providers.
A decent credit score is needed for a whole host of financial commitments, including credit cards, loans, overdrafts, mortgages, and even mobile phone contracts. Whilst The Money Shop would never advise you to take out a loan purely to pay it back for the credit rating, it is worth knowing that it may not have the negative impact you’d expect on your long-term reputation.
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