4 Reasons to Use Private Mortgage to Boost Your Credit Score

• October 19, 2016

When you are in need of a loan but you don’t want to damage your credit score, private mortgages can be a very viable solution, especially if you don’t have the credentials to apply for a loan in normal institutions. Provided you are a responsible borrower, a private mortgage can actually increase your credit score in the long run. Here are 4 reasons why you should use private mortgages to boost your credit score:

1) Private Mortgages can be advantageous

Private mortgages are loans effectuated by an individual investor instead of a bank.
They are easier to qualify for, which is a great option for individuals who don’t qualify for traditional mortgage plans. Their processing is also faster and is a lot more flexible than traditional mortgages. This is because you don’t have to go through the administrative rules and procedures of a financial institution.

2) It builds your Payment History

Payment history is the number one factor in determining your credit score. Creditors need to have information about the way you handle your debts in order to know whether you are trustworthy or not. A private mortgage is an easy access opportunity to build that credential in the eyes of future creditors, provided you can pay the mortgage in a timely fashion.

3) It’s not considered a “Bad” Debt

In the point of view of a lender, mortgages are a responsible borrower’s debt. This is because mortgages are backed by a physical asset (your home) rather than a “digital” asset (e.g. a credit card). Lenders know that more is at stake for you and that only a responsible borrower could undertake such a debt.

4) It Diversifies your Credit

One of 5 factors that affect your credit score is the type of credit you take. The more you diversify the type of credit you undertake the better as it shows lenders that you are capable of balancing multiple accounts.