Thursday, December 25, 2014

How To Use Personal Loans For Bad Credit To Increase Your Credit Score


Changes in financial circumstances can occur without warning; you can quickly use up your savings to meet daily living costs. Then you find you are left with little option but to fall behind with payments on loans and mortgages. Once the borrowers rating drops, it can be difficult, but not impossible to build it back up. You need to do that as quickly as you can and many people seek out personal loans for bad credit.

Your options may be limited by the scoring process. You will definitely have to look outside the financial institutions such as banks and building societies. There are reputable lenders who will work with you to help improve the score by providing debt counseling and advice on money management. It may just take some time and effort on your part to find the right one for you.

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In all cases when applying for a personal loan you have to be 18 years of age or older. You need to be a US resident with a permanent address. You will have to be able to prove you have a steady and reliable source of income, preferably from employment. A current bank account that can accept money transfers and direct debits is usually a standard requirement.

A search on the internet for personal loans for poor loan repayment history will bring up a list of lenders and a list of comparison websites. Comparison websites ask for personal details and the loan requirements before searching numerous lenders to provide you with quotes that meet the borrowers requirements.

You need to be sure to check the repayment terms and the interest rates which can vary significantly from one lender to another. Do not over commit yourself of the payment terms, if you fall behind on payments, the score may fall even further, and you will be hit with penalty payments.

The other option is to join a credit union that operates a credit builder program. They open a savings account in your name and deposit a set amount of money. You cannot touch that money, but it sits and earns interest for a minimum of six months upwards. During that period, you repay the money plus a small amount for interest each week or month until the loan is repaid. You can then withdraw the amount deposited plus an interest accrued to use as you like.

In the meantime, you have shown you can make regular payments over a period of time, and that you can save. Both these factors will help to improve the individuals credit rating. The best advice is not to over-commit when applying for personal loans for bad credit and make sure you can meet the repayments on time.

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