The ability to get credit is an important part of life, but not everyone has the same opportunities. Some may have a limited credit history because they are young, just starting out, or fell on hard times during the Great Recession. Others may have had problems with credit in the past due to circumstances outside their control such as identity theft or a family member stealing their identity. Whatever your reason for not having great credit, if you want to buy a car or a home or get financing for any other purpose, you won’t be able to do so without decent credit. That’s why having good credit is important no matter what your financial situation is today. If you don’t have great credit, getting financing can be difficult and expensive. Fortunately, there are lenders who understand these challenges and aren’t afraid to help. Even if you don’t think you qualify for any type of loan right now, keep reading to find out about some potential options that could work for you.
Nobody really knows what the “ideal” credit score is, but most experts agree that an 800 is ideal. This is often referred to as “Excellent” credit on most credit score models. Anything below 660 is considered “bad” credit, though some lenders consider anything below 600 as “very bad” or “extreme” credit. What’s more important than your actual credit score is whether or not you have any credit at all. Having a good credit score without having any credit on your report is like having no score at all. If you are starting fresh, you may have to start by using a credit card to establish your credit and build your score. But be careful not to go overboard or you could find yourself in an endless cycle of debt.
Credit is a type of financial contract that allows you to borrow money from a lender. It’s also the way you build your credit score. Your credit score is used by lenders to decide whether to extend you credit, and at what interest rate. If you apply for a loan and have no or bad credit, you will likely be charged a high interest rate. This means that you’ll pay more for the loan over time if you are approved. Having good credit can help you get a lower interest rate on a loan and save money over time. Credit can also be important if you want to rent an apartment, sign up for a cell phone service, or even get a job. Some employers may ask to see your credit report as part of the hiring process. Having good credit can help you in all these situations.
The first step towards building your credit is to understand how credit works. Your credit is made up of several different factors. Your payment history is the most important factor when calculating your credit score. Payment history accounts for 35% of your score. The next most important factor is how much you owe compared to how much credit you have available. This is called your “debt utilization ratio” and accounts for 30% of your score. The remaining factors are 10% each and include things like credit mix, length of credit history, and new credit. Start by getting a free credit report from all three credit reporting agencies. Review the report to see what’s on it and make sure there are no errors. You can dispute any inaccurate information and ask for it to be removed from your report. When you’re ready to apply for a loan, make sure to check your credit score beforehand. You can get a free credit report once a year from each bureau.
There are many different types of loans, and each one has its own terms and conditions. Here are a few examples of loans you may be able to get with less-than-perfect credit. Auto loan. If you want to buy a car and don’t have enough cash on hand to pay for it outright, getting an auto loan is a good option. You can get a loan even if you have bad credit, but you’ll likely be charged a higher interest rate than someone with good credit. Personal loan. A personal loan lets you borrow money without having to worry about repaying it with a set due date. Personal loans come with higher interest rates than some other types of loans, but they’re often much easier to get. Student loan. If you have a student loan, you have some options for repayment beyond paying it back as quickly as possible. Some student loan lenders understand that some students may be struggling to find a job in a challenging job market. They may be more willing to work with you if you have less-than-perfect credit. Real estate loan. If you’re planning to buy a house and don’t have enough cash for a down payment, a “hard money” loan may be a good option. These loans are often easier to get if you have less-than-perfect credit.
One of the easiest ways to build or rebuild your credit is to get a credit card like Yendo. Yendo does not check your credit score during their application, so it’s perfect for those with a bad credit history. The key is to make sure you pay off your balance in full each month. Installment loan. Another option is to get a low-interest installment loan. Installment loans don’t require you to prove that you have a good payment history, but they do require you to have some sort of collateral. Examples of collateral include your car, house, or other asset. If you can get a loan using an asset as collateral, make sure to pay it off as soon as possible to avoid paying interest on it.
Credit can be a helpful financial tool, but it can also be dangerous if you don’t use it wisely. If you don’t have great credit, you may feel like you don’t have any options when it comes to getting a loan. Fortunately, there are a variety of lenders that can help you if you have bad or no credit. When you don’t have great credit, make sure to review your credit report to look for any errors. You can also work on building your credit by getting a credit card like Yendo, paying off your balance every month, and paying on time. This can help you get your credit score back to where it should be.