The initial application of most loans can cause a few points of your credit score to fall temporarily due to a hard credit check. To counter this, many bad credit installment loans will be willing to work with no credit check, or at least avoid a hard credit check so you won’t experience the small hit to your credit for applying.
Building your credit through a loan is possible when your lender is willing to report your timely or early payments on your loan to the credit bureaus. To help you understand and make the most of your credit through the loan process, we’ve compiled a few tips to help get you started.
The Wily World of Credit
Your credit score is so powerful because it’s the number that determines how trustworthy you are as a borrower. Credit scores can range anywhere from 300 to 850, so the closer you are to 850, the more likely you are to be approved for loans, low interest rates and new lines of credit.
Credit gets mixed up into loans because your score is what lenders use to determine how likely you are to pay off a debt. Lower scores mean higher risk, so in order to compensate, lenders will offer bad credit installment loans at higher rates than they would good credit loans.
This only becomes more important when you’re working with short-term installment loans, whose interest rates are very high to compensate for the shorter term. Bad credit payday loans can hit APRs in the thousands, so just a little bit of improvement toward your credit score can make a world of difference when you need money fast.
The more you work on your credit, the more other financial areas of your life will improve. Applying for credit cards with benefits, getting approved for car and home loans and paying less interest on the personal or installment loans you need are all possible when you build your credit.
How to Build Your Credit
Improving your credit starts with understanding what affects it the most. Your credit score can be broken down into five basic areas: payment history, the amount of credit currently owed, the length of your credit history, how many types of credit you have and any new credit you’ve accrued.
Because payment history has such a strong and active role in defining your credit, it’s often the easiest place to start. Making timely payments on your credit card, for instance, not only demonstrates that you are a reliable customer, but it’ll also save you any late fees and higher interest rates that come from missing payments.
Normally, making timely payments on a loan should help build your credit. The only trouble is, many personal and payday lenders won’t report your trustworthy behavior to the credit bureaus. If you start missing payments or have to default, that’s when lenders will report the results and your credit score will take a hit.
At Wise Loan, we do things a little differently. We’re faithful in reporting your timely payments to help you build credit and provide cash incentives to help you reach your financial goals. Building credit by being a great customer is a natural benefit we believe all clients are entitled to.
How Our Online Installment Loans Help
When you need money fast, you should be able to work with a lender you can trust. We treat our customers right by offering quick approval with no hidden fees. You’ll be able to get cash when you need it and enjoy prompt customer service trained to help you pay back loans and build up your credit.
If you’re curious about how you can get both the money you need and the better credit you want to help you with future loans, feel free to learn more about us here.
The recommendations contained in this article are designed for informational purposes only. Essential Lending DBA Wise Loan does not guarantee the accuracy of the information provided in this article; is not responsible for any errors, omissions, or misrepresentations; and is not responsible for the consequences of any decisions or actions taken as a result of the information provided above.
