How to Raise Credit Score With Small Loans
Bad credit can make it difficult for you to get a home loan, vehicle loan and credit card. Yet, there are many practical ways to boost a low score.
If you want to quickly increase a low credit score, consider applying for small loans. This is one of the best ways to rebuild credit or establish a credit history.
6 Steps to Raise Credit Score With Small Loans
1. Apply for a Secured Personal Loan
If you have bad credit, getting a loan without collateral is practically impossible. Visit a local bank or credit union and inquire about a secured personal loan.
2. Be Prepared to Pay a High Finance Rate
Unfortunately, bad credit borrowers pay more for loans. Even if you have collateral, expect to pay a sub prime rate. However, once your credit improves, you can qualify for better rates on future loans.
3. Borrow a Small Amount of Money
Fight the urge to borrow a lot of money. The idea is to improve your credit, not get into debt.
4. Stay Away from Cash Advance Stores
Payday and cash advance companies offer quick and easy loans. However, these loan companies don’t report to the credit bureaus.
5. Submit the Loan Payments on Time
Using a loan to improve a low credit score is smart. To benefit, it’s important to maintain a good payment history. Make the minimum payment every month, and attempt to pay off the full balance within a few months.
6. Deposit the Loan Into a Savings Account
Rather than spend the funds on frivolous items, open a savings account and deposit the loan amount. Make monthly payments with the deposited funds.
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