How Loans Can Help You Build Credit
If you have bad credit, you may wonder if there is anything that you can do besides wait for negative items to fall off your credit report. In fact, there a several strategies that you can take to improve your credit. Removing inaccurate and outdated items and cleaning up derogatory items that are accurate are just two ways that you can proactively work to improve your credit report and boost your credit score.
Credit building loans can also help improve your credit profile, if they are handled responsibly. Borrowing from the right type of lenders is also essential. It can be difficult to qualify for approval from a bank or credit union. But resorting to payday loans can defeat the purpose of borrowing to improve your credit. By contrast, LoanNow can play a positive role in helping you to develop positive financial practices that can ultimately translate into improved credit.
How Credit Building Loans Work:
Your repayment history counts for about 35 percent of your credit score, according to MyFico. So the benefit to your credit score from credit building loans is drawn less from the money itself but rather by how you repay the loan. By maintaining regular on-time installment payments, you can establish a favorable payment history that in turn boosts your credit report and your FICO score. If you invest the money from your loan in a guaranteed certificate of deposit, you could make enough money to counterbalance the interest you pay for the loan.
The Payday Loan Trap:
The irony of applying for loans is that you may not qualify for approval from a bank or credit union. As a result, you may seek alternate loan sources. But taking a payday loan can defeat the purpose of credit building loans. First, payday loans usually don’t report to the three major credit reporting bureaus: TransUnion, Equifax and Experian. Second, with their sky-high interest rates and unrealistically short repayment periods, payday loans earn their designation as predatory forms of credit. In fact, if you get caught in the cycle of payday rollovers, you could ultimately ruin your credit by diverting large portion of your income to repaying the loan rather than maintaining current status on your other bills.
How LoanNow Can Help:
Unlike payday loans, LoanNow provides the opportunity to build credit. We offer incentives for customers to establish consistent on-time payments. Responsible borrowers can qualify for lower interest rates on future loans. We hope these incentives will also carry over to how they handle other financial obligations.
We are also an approved data furnisher which means LoanNow is able to report payment history back to the major credit bureaus. If you get a loan with LoanNow, your positive repayment history will be reported to major credit bureaus, and this could ultimately help you improve your overall credit profile. Let LoanNow help you rebuild your credit today!