Taking out personal loans for rebuilding credit is a counter-intuitive move, but it can help your credit score if you handle the money wisely. Five factors make up a credit score. Each one has a different weight. This information can be used to help you determine your financial capabilities and the best loan options for you.
Car loans
To rebuild your credit score, it is important to pay your car loan on time. Late payments will only slow down your credit repair efforts. Fortunately, it is possible to find decent car loans for rebuilding credit. Although it can be difficult to find an acceptable interest rate on a car loan for bad credit, it is possible to get one with a good credit rating and a history of making regular payments.
Applicants with lower credit scores typically pay higher interest rates. So it is worth shopping around to get the best deal. Another option is to postpone your purchase until you rebuild your credit and are eligible for a lower rate.
Installment loans
If you pay your monthly payments on time and have good financial habits, installment loans can help to improve your credit score. These loans report to the credit bureaus every time you make a payment, which helps boost your credit score. However, be aware that late payments can seriously damage your credit score. You'll need to find an alternative credit source if you aren't able to pay your monthly bills on time.
Lenders will often require that you have a minimum credit score in order to approve an installment loan. This is because those with high credit scores have a better chance of repaying the loan. However, some lenders will take your annual income into account when determining your interest rate.
Payday Loans
Payday loans are great if you need a little extra money to cover a short term crisis. These loans come with high interest rates and can require repayment in two weeks. They are also not for the faint of heart. They can end up costing you more than you anticipated and even putting you at risk of losing your credit.
Payday loans can be quick and easy to obtain but they can be costly to repay. Paying large monthly installments on payday loans is not a smart idea. Choose an installment loan with fixed monthly payments that are amortized over a set period of time. These loans can be used to lower monthly payments for those with bad credit.
Installment loans with co-signers
A co-signer installment loan is available if you are working to improve your credit score and need cash to purchase a home or a vehicle. It is important to note that defaulting on an installment loans will affect your credit score. Lenders will consider your credit history as a risk and may not offer the best loan terms. They might repossess your collateral.
Fortunately, there are many alternatives to using a co-signer for an installment loan. Most people will request a friend or relative to sign on a loan. This commitment can prove to be very expensive and can even cause irreparable harm to a couple. That's why it is a good idea to learn more about other loan options.
Fairstone personal loans
Fairstone can help you rebuild credit if your credit rating is poor. Fairstone offers personal loans in both unsecured and secure options. They have over 240 branches throughout Canada. It is easy to apply for a personal loan. You can use your credit score, financial information and other financial information in order to determine whether you are eligible.
You can apply online, at Fairstone or at any branch. Although it is time-consuming, the process can be completed quickly. You can also send your documents and information via email. While the application process is a bit lengthy, it is quicker than many other lenders. Fairstone has not posted many reviews of their personal loans online so it is difficult to evaluate the company's customer support.