How to Use Loans to Bring Up Your Credit Score
You may have heard that to bring up your credit score that a quick cash loans can help. This is true, although not all loans are created equal. For instance, taking a cash advance loan or payday loan may have no effect at all because the lender does not even check your credit, nor do they report your payments. They will, however, enter a default if you get too behind. That being said which loan is your best option to bring up your credit score? Let's find out.
Borrow Against Your Own CD or 401k
Did you know you can take a loan out against your Certificate of Deposit (CD) or employer-sponsored 401k account? Your interest rate is low, and payments are affordable. This is a loan you are taking against yourself, not with a creditor. You may be wondering how this helps your credit score. Well, in many instances, once you take a loan against your CD, the bank still wants to verify you have no prior loan payment issues. Once they approve your request, this will show as an open loan and your on-time payments will be reported. It is a different situation with your 401k, as generally this is not reported. You can use this 401k loan in your favor to bring up your credit score by paying down or eliminating other debts you may have. This decreases your credit utilization, which needs to be kept low.
Take Out a Credit Builder Loan
Credit unions allow you to have a more personal relationship with a lending institution of its type. If you are a member of a credit union, inquire about a credit builder quick loan. These are small loans, but more attainable than going to your traditional bank. These loans are a great way to rebuild your credit rather than focus on paying debts. Credit unions are not-for-profit, so your chances of having a low-interest rate is also greater than using a bank.
A Peer to Peer Lending Group by quick loans lenders.
Another way to boost your credit score is checking out a peer to peer lending group such as Prosper or The Lending Club. These are online organizations that make it a bit easier for those with less-than-perfect credit to be approved for loans. Members pitch in dollars to help fund you the loan money you need. You still must qualify; the rates may be higher than a credit union, but their lending rules are a bit more lenient.