Taking out a loan can help you build your credit. But remember, to get that benefit, loans must be paid back in full and on time, and according to the terms of the loan agreement. When these terms are not met, the lender can take steps to repossess collateral and collect any money that is owed. As a result, the defaulted loan can be listed negatively on credit reports and lower your credit scores.
Let’s take a closer look at how this all works.
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