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 credit score is calculated using five factors with each having a different weight. This information will help you decide what loans you are able to afford.
Car loans
You must make timely payments on your auto loans if you want to improve your credit score. Paying late will only make your credit worse. It is possible to get decent car loans to rebuild your credit. A car loan with bad credit can be hard to get a decent interest-rate. But, it's possible if you have good credit and a track record of paying your bills.
Low credit score applicants are likely to pay higher interest rates. Therefore, it is important to shop around for the best deal. Alternativly, you could postpone purchasing a vehicle until you improve your credit score so that you 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. The credit bureaus report every payment you make to these loans, which can help boost your credit score. Late payments can cause serious credit scores to be lowered. If you can't make your monthly payments on time, you'll have to seek out an alternative source of credit.
Lenders will often require that you have a minimum credit score in order to approve an installment loan. High credit scores will have a greater chance of repaying the loan. Some lenders will also consider your annual income in determining your interest-rate.
Payday loans
Payday loans work well if you are in a pinch and need money quickly. These loans have a high rate of interest and are due back in two weeks. They are also not for the faint of heart. In fact, they can cause more damage than you might expect to your credit score and could even cost you more.
A payday loan can be fast and easy to obtain, but it can be hard 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 are designed to help people with bad credit make their monthly payments more affordable and predictable.
Co-signers for installment loans
You can get an installment loan with cosigners if you are rebuilding your credit or need money to buy a house or a car. An installment loan with co-signers can 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 might repossess your collateral.
You don't have to use a cosigner for an installment mortgage loan. There are many other options. A majority of those who need a loan will ask close friends or family to sign. This commitment can endanger relationships and be very costly. It's therefore a good idea learn about other loan options.
Fairstone personal loans
Fairstone Personal Loans are a great option for people with poor credit. Fairstone offers personal loans in both unsecured and secure options. They have over 240 branches throughout Canada. To determine if your loan eligibility, you can apply for a personal mortgage.
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 takes a while, it is significantly faster than that of other lenders. Fairstone does not have many online reviews so it is hard to judge its customer service.