4 Choices to Consider When Your Credit Score Needs Improving
Wednesday, December 20, 2017, 6:00 AM | Leave Comment
Tough times happen to almost everyone at one point in their lives. If you’re experiencing financial difficulties or have in the past, you may have a difficult time getting financing when you need it because of a low credit score.
You do still have options to improve your credit score even if you have a lot of debt.
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You Can Get a Secured Credit Card
If your goal is to rebuild your credit, one option is to get a secured credit card. This type of credit card works just like any other, but you must pay a deposit first. Your deposit will usually equal your credit limit. For instance, you can pay a $300 deposit, and you’ll receive a credit card with a $300 limit.
This option is ideal for anyone who wants to improve a low credit score and can’t qualify for a traditional credit card. They can use the card for purchases and rebuild credit as long as they make the payments on time.
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You Can Apply for a Secured Loan
Another option is to apply for a secured loan. More lenders will consider people with lower credit scores for a secured loan than a non-secured loan because they have collateral in case the person fails to make the payments. Collateral is anything of value you provide to the bank in case you don’t pay back the loan.
The lender may give you funds up to the value of the collateral. In some cases, the collateral is the item you’re purchasing, such as with a car loan. The value of the car should be equal to or greater than the amount of the loan.
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You Can Apply for an Installment Loan
An installment loan is an unsecured loan that you pay back over time. It’s a personal loan, which doesn’t include any collateral. The lender will look at your credit history and your income to determine how much you qualify for and the terms of the loan.
Most installment loans in Utah or wherever you may live must be paid back within a few years. They may range from less than one year up to five years or sometimes even longer. They are a good option for someone who needs financing and can’t qualify for a traditional loan from a bank. Just make sure you know the interest rate and the minimum required payment for your loan.
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You Can Use a Payday Loan
If you have no other option and your credit is poor, you can apply for a payday loan. This is only a short-term answer to your financial problem because you will most likely have to pay it back on your next pay period. It is best used in situations where you must pay for something now, and you know you’ll have the money in your next paycheck.
Payday loans carry higher interest because the creditors have more risk. They are not meant to be a long-term solution, but are intended to help you out in an emergency. You should always read the fine print and know that you can meet the obligations before you accept any type of loan.
If you have bad credit or even fair credit, you may not qualify for the best loans and credit cards. Depending on your goal, you can find options to help you improve your finances and your credit.
Just make sure you understand each financial product and the obligations so you don’t end up with even worse credit or another negative account on your credit history.
Consider all of these options if you need financing or if you’re trying to improve your credit for the future.
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Hannah / Freelance Writer
Email: hannahwhittenly@gmail.com
