How to Stop Using Bad Forms of Credit

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Having a good credit score can be your ticket to easy street. With a high credit score, you can be more likely to get a mortgage, a good rate on a car loan, or approval for a great rewards credit card.

Your credit score tells lenders how trustworthy you are — so the higher your score, the more they’re willing to offer. The positive news is that anyone can achieve a good credit. You just have to take the right steps.

And that means avoiding bad forms of credit like payday loans and high-interest credit cards.

Forms of Credit to Avoid

If you take out a loan or carry a balance on a credit card, you’ll be expected to pay interest on that borrowed money. Some lenders have reasonable rates, but many don’t.

Many of these lenders offer credit cards and payday loans with outrageous interest rates, creating obligations that no cash-strapped borrow can meet. Here are two types of credit offerings you’ll definitely want to avoid: high-interest credit cards and payday loans.

High-Interest Credit Cards

Credit cards are great tools when used properly, but unfortunately they can foster a mindset of reckless spending. High-interest credit cards can be a real burden to unscrupulous spenders. Racking up credit card debt is too easy because you don’t see the bill until later.

If you are disciplined and able to use credit cards responsibly and pay your bill each month, go for it. You’ll boost your credit score and open yourself up to a host of benefits.

But if credit cards are too tempting, avoid them and use an Instacash advance from MoneyLion when you come up short instead. Or consider using cash primarily. Using cash to pay for something is a more psychologically painful event than swiping a credit card, so you spend less with cash than with plastic. It’s a concept called coupling.

Payday Loans

If you aren’t familiar with payday loans, it’s basically a short-term (extremely) high-interest loan that can be repaid with the borrower’s next paycheck. But lots of fees are attached and the rate is often so high (400%!) that you can’t pay it back with your next paycheck.

So what happens? Another payday loan is required and another vicious cycle begins. Payday loans should only be used as a last resort. Almost any other form of credit is a better option.

Good Forms of Credit

Use low-interest credit cards and loans with reasonable conditions like Credit Builder Loans to get quick cash and fair repayment terms. It’s the best way to boost your credit score and show lenders you’re reliable.

These two MoneyLion offerings are terrific for creating good money habits: Instacash and Credit Builder Loans.


Instacash isn’t a loan and doesn’t affect your credit, but it does simulate the experience. You can get the cash you need quickly and pay no interest on the advance. Instacash cash advances are paid back without interest, so you get all the perks of a bank loan with none of the downsides like fees and interest.

Credit Builder Loans

Credit Builder Loans are great for both people with no credit history and people want to improve their credit score. Credit Builder Loans have low APR and borrowers can take out up to $1,000. No credit check is required, but you’ll need to show some proof that you can repay the loan like using pay stubs from work or savings account statements.

By paying back this small, simple loan, you’ll show other lenders you’re responsible with credit and open the door to bigger loans like mortgages. MoneyLion users have a 70% success rate with Credit Builder Loans.

Choose Your Lenders Wisely

Credit is an inescapable aspect of life. Buying a house or car with cash usually isn’t feasible, so you’ll likely need to rely on banks and lending institutions. Good credit habits are the way to do that, but those habits take time to learn. Taking out a bunch of credit cards as soon as you graduate college isn’t an efficient way to earn a high FICO score, so be cautious when you use products like credit cards and personal loans — especially payday loans. High-interest debt builds up quickly and your credit score can sink in proportion. 

Instead, consider top-notch credit products like those from MoneyLion and start building a strong financial future.


Current Credit Builder Plus membership required for Credit Builder Plus loan eligibility; the $19.99 monthly fee will be withdrawn from your linked bank account.  All Credit Builder Plus loans are made by either exempt or state-licensed subsidiaries of MoneyLion Inc. The Credit Builder Plus loan may, at lender’s discretion, require a portion of the loan proceeds to be deposited into a reserve account managed by ML Wealth, LLC and held by Drivewealth LLC, member SIPC and FINRA. The funds in this account will be placed into a money market cash management or FDIC bank sweep vehicle, and may generate interest at prevailing market rates.  You will not be able to access the portion of your loan proceeds held in the credit reserve account until you have paid off your loan, and so long as your Credit Builder Plus membership payments are current. If you default on your loan, your credit reserve account may be liquidated by the lender to partially or fully satisfy your outstanding indebtedness. May not be available in all states.Credit Reserve Accounts Are Not FDIC Insured • No Bank Guarantee • Investments May Lose Value. For important information and disclaimers relating to the MoneyLion Credit Reserve Account, see Investment Account FAQs and FORM ADV.

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