Although it may seem counterintuitive to take out personal loans to rebuild credit, it can be a good move for your credit score if the money is managed well. The five main factors that make up your credit score are each weighted differently. This information will help you decide what loans you are able to afford.
Car loans
If you want to rebuild your credit score, you need to make timely payments on your car loans. You will not be able to rebuild your credit score if you pay late. There are decent car loans available for rebuilding credit. It is not easy to find a decent car loan interest rate with bad credit. However, you can find one if your credit score is good and your payment history is positive.
Lower credit scores are more likely to be charged higher interest rates. It's worth shopping around for the best deals. Alternatively, you can postpone the purchase of a car until you have rebuilt your credit score and can qualify for a better 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. Your credit score will be boosted by these loans reporting every payment to the credit agencies. Paying late can result in a serious drop in your credit score. If you cannot make your monthly payment on time, you will have to look for an alternative source credit.
Lenders will often require that you have a minimum credit score in order to approve an installment loan. The reason is that borrowers with high credit scores are more likely than others to repay their loan. Some lenders will consider your annual income when determining your interest rates.
Payday loans
Payday loans are great for short term emergencies. These loans have a high rate of interest and are due back in two weeks. These are not for the weak of heart. In fact, they can cost you more than you expected and can even hurt your credit.
A payday loan can be fast and easy to obtain, but it can be hard to repay. These loans are not recommended for those who have to make large monthly repayments. Instead, consider an installment loan which requires regular payments for a fixed period of time. These loans are for people with bad credit to make their monthly payment more affordable and predictable.
Co-signers for installment loans
If you're rebuilding your credit and need money to pay for a home or car, you can find an installment loan with co-signers. But, remember that defaulting upon an installment loan will reduce your credit score. Because lenders look at your credit history as a risk, they'll be less willing to give you the best loan terms. They may also seize your collateral.
You don't have to use a cosigner for an installment mortgage loan. There are many other options. Most people will request a friend or relative to sign on a loan. This commitment can endanger relationships and be very costly. You should explore other loan options.
Fairstone personal Loans
Fairstone can help you rebuild credit if your credit rating is poor. There are more than 240 branches in Canada and they offer both secured and unsecured personal loans. 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.
The application process is lengthy, but you can do it online or in a Fairstone branch. You can also send details and documents via email. Although the application process can be slow, it is faster than most lenders. Fairstone does not have many online reviews so it is hard to judge its customer service.