Can Bad Credit Loans Improve Your Credit Score?
If you have a low credit rating and need a loan then taking one out with a specialist Bad Credit Loans company is the best way forward.
Not only are you more likely to be approved than if you went to one of the mainstream lenders, they have a more sympathetic approach to lending to people with bad credit.
There are some point to be aware of, if you have bad credit and apply to a main stream lender you will undoubtedly be refused. This refusal will be added to your credit history and will have an adverse affect on your credit rating. Also when you take out a bad credit loan the interest rate will be much higher than you are used to.
Now to answer the question posed in the title, yes bad credit loans can improve your credit score. But there are some things to consider first, as already stated the interest rates will be much higher, so borrow the absolute minimum amount and not what ever the loan company will offer you. Secondly what ever else you do make sure you make the monthly repayments on time each and every month.
As you start to repay the loan and the credit bureaus see the repayments been made on time each month your credit rating will slowly improve this normally kicks in about halfway through the term of the loan.
The following steps will help to improve your credit rating
1. Stop trying to borrow from the mainstream lenders.
2. Find a company that does bad credit loans
3. borrow as small an amount as you can for as short a term as possible.
4. REPAY ON TIME EACH AND EVERY MONTH.
5. If necessary repeat steps 2 to 4.
An example would purchasing a car with a bad credit loan:
Many people would go the most expensive car that they could afford and take the loan out for a 5 or 6 year term. Whereas the best way as per the above steps would be to purchase a less expensive car for a term of 3 years and then after 18 months or so provided that you have made all the repayments on time you could trade up to a better car with a new loan at a lower interest rate.
That is how bad credit loans can improve your credit score.