Big-Ticket Purchases Can Help Your Credit
Making a major purchase may give your credit score a boost for two reasons:
1. When you make a major purchase, the lenders are more likely to extend credit in the form of a secured installment loan. Secured means you have pledged collateral or the item you purchased as security for the loan. If you default on the loan, the lender repossesses the security you pledged - in other words, you don’t get to keep it. Adding some secured credit to the variety of other types of credit you use, such as revolving credit, helps your credit score.
2. The payment will be the same each month. When it comes to credit scoring, this equal monthly payment is an opportunity for the people who come up with your score to learn more about your creditworthiness. Your stability and ability to make a set payment at a set time every month can be measured. This scenario is different from paying on a credit card, where you can vary your payment up or down to a minimum, depending on how your month is going financially. Adhering to a regular payment schedule also indicates that you can handle what may be a higher limit than you may have on a store, gas, or credit-card account.