Personal loans are a risky move to help rebuild your credit. But it can make a difference in your credit score, if you manage the money well. A credit score is calculated based on five factors, each carrying a different weight. This information will allow you to decide how much you can afford and which types of loans are best for you.
Car loans
It is essential that you pay on time your car loan payments if your goal is to rebuild credit. A late payment will only set back your credit rebuilding efforts. There are still decent car loans available to help rebuild credit. Although it can be difficult for people with poor credit to find car loans at a reasonable interest rate, it is possible if they have good credit scores and a history in paying their bills.
Lower credit scores are more likely to be charged higher interest rates. It's worth shopping around for the best deals. Another option is to postpone your purchase until you rebuild your credit and are eligible for a lower rate.
Installment Loans
If you are punctual with your payments and follow good financial habits, then installment loans could be a great option to repair your credit. This loan reports to the credit bureaus each time you make a payment. This helps improve your credit score. Be aware that late payments may cause credit score to drop. You will need to find another source of credit if you are unable to make your monthly payments.
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 can be a great option if you have a short-term emergency and need extra cash. These loans have a high rate of interest and are due back 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.
Although payday loans are fast and easy, they can be expensive to repay. Paying large monthly installments on payday loans is not a smart idea. Instead, consider an installment loan which requires regular payments for a fixed period of time. These loans are intended to make monthly payments easier and more predictable for people with poor credit.
Co-signers on installment loans
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. You should remember that defaulting to an installment loan can lower your credit score. Lenders view your credit history negatively and will not give you the best terms. They might repossess your collateral.
Fortunately, there are many alternatives to using a co-signer for an installment loan. A majority of people who require a loan will ask their family members or friends to sign it. This commitment can lead to long-term problems and could even endanger a relationship. You should explore other loan options.
Fairstone personal Loans
If you have bad credit and need to rebuild your credit score, you may want to consider applying for a personal loan from Fairstone. They offer personal loans that are unsecured or secured. There are over 240 branches all across 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 email documents and other details. Although the application process can be slow, it is faster than most lenders. There are not many Fairstone personal loan reviews online, so it's hard to judge the company's customer service.