According to a recent study from 24/7 Wall St., the personal loan industry is booming in Florida and throughout the country. In the U.S., the personal loan debt total now stands at $107 billion, and has increased by 10.8% since 2012. Personal loans were once seen as products for consumers desperate for cash. Now, however, financially stable Florida consumers with good credit scores take out personal loans frequently to cover major purchases. No longer confused with payday loans, more consumers in Florida see personal loans as good alternatives to credit cards when it comes to gaining access to extra funds.
Why Personal Loans are Sometimes Better than Credit Cards for Major Purchases in Florida
Depending on the size of the purchase – and consumer credit card limits – Florida residents may come out ahead by taking out personal loans instead of using their credit cards. First, putting very large purchases on credit cards can cause credit utilization rates to skyrocket and hurt credit scores. For example, you have a credit card with a $2,000 spending limit, and charge $1,500 in car repairs on that card. Your credit utilization then rate jumps to 75%. At this point, you likely lose credit score points because you’re using more than 30% of your available credit.
On the other hand, if a Florida consumer takes out a $2,000 personal loan to cover this expense, it likely has no negative impact on their credit score. If anything, taking out the loan may increase their credit score because it improves their credit mix. Having a good credit mix improves your credit score because lenders like to see that you can handle both credit cards (revolving credit) and installment loans.
In addition, for consumers in Florida with good credit scores, personal loans typically come with competitive interest rates. Sure, a consumer with a high credit rating can also get a credit card with an affordable interest rate. However, the average personal loan size in Florida is $21,644, and the average credit card limit is a mere $8,071. Quite simply, anyone with a good credit score who needs funding for a purchase can typically get more purchasing power with a personal loan.
Why Florida Consumers Should Exercise Caution with Personal Loans
Florida consumers in the market for personal loans should remember that these products are not all alike. Most personal loans offered by larger, mainstream lenders are tailored for consumers with credit scores above 700. They normally come with attractive terms and low interest rates. Yet, smaller, subprime lenders offer loans too. The providers call these products “personal loans” too, but they usually come with less desirable terms and higher interest rates.
Therefore, before actively seeking personal loans, Florida consumers should check their credit reports and credit scores. They should know whether or not they can qualify for personal loans that come with competitive terms and interest rates. If not, they may want to postpone their applications until they can improve their credit scores. In addition, like with any other type of credit, consumers in Florida should manage their personal loans responsibly, and make every payment on time. Otherwise, they might cripple their credit scores for years to come.
Why Florida Consumers Who Take Out Personal Loans Should Keep Careful Tabs on their Credit Reports
Taking out personal loans and managing them responsibly can help boost Florida credit scores. Yet, consumers should make sure that all of their information is reported correctly. Unfortunately, creditors and the credit bureaus often make mistakes when communicating consumer information. Then, these mistakes frequently lead to credit report errors that can damage credit scores.
Under the Fair Credit Reporting Act (FCRA), consumers may dispute credit report inaccuracies and demand their removal. However, you must first find the errors. This is why all Florida consumers should check their credit reports at least once every 12 months. Just go to www.annualcreditreport.com, and claim your free annual credit reports from the three major credit bureaus (TransUnion, Equifax, and Experian).
Then, while reviewing your credit reports, if you see that mistakes and errors have brought your credit score down, contact Credit Repair Lawyers of America in Florida. The credit pros at our firm know how to handle consumer credit issues – and the credit bureaus – and we’ll be happy to help you next. We’ll also connect you with an experienced credit attorney who will do whatever it takes to get you clean credit reports for FREE.
How to Get Free, Legal Credit Repair in Florida
Don’t let errors on your credit reports bring your credit score down. At Credit Repair Lawyers of America, we’ve been cleaning up credit reports for consumers since 2008 for free. How do we do it? All of our fees come from the defendants in cases that are settled. This is why our clients pay nothing for the work we do.
Let’s start the conversation about what we can do for your credit. Set up your free consultation today by calling Attorney Gary Nitzkin at (813) 940-7255 or sending him a message through our contact page.
For more information about Free Credit Repair, please visit https://creditrepairlawyersam.com/florida/credit-repair/.