Today, there are various methods of build credit history. To some extent, this is due to the spread of profitable mortgages in Woburn MA. Mortgage loans for many Americans have become almost the only way to purchase housing. Individuals use them to invest and increase their savings. Mortgages are offered by a huge number of banks, but such offers are not available for a person with a bad credit history. They are also unlikely to get a standard personal loan for recreation, medical treatment, or children‘s education. All these loans are provided on favorable terms, for fairly large amounts and relatively long terms.
All this leads to high requirements for a potential borrower, and a good credit history is one of such requirements. There are many ways to fix your credit history today. Some of them are related to the correction and legal challenge of wording and individual entries in the borrower’s credit history. Others are semi-legal in nature and, as a rule, are illegal deletions or corrections, which can negatively affect a person’s ability to get a new loan in the future. However, there is also an effective method that will require certain time and financial costs from the borrower, but it is quite legal and effective.
How to improve your credit history with loans?
The most realistic way to correct your credit history legally is to overlap negative information with positive data. This is done by getting new loans and repaying them in a timely manner. However, the situation with bank loans resembles a vicious circle: you cannot take a new loan with a bad history, and in order to correct a bad credit history, you need to take a new loan. However, there is a way out – credit builder loans from microfinance institutions. Such companies are also obliged to submit all information on loan servicing to the credit bureaus. Choose online lenders with relaxed eligibility criteria. You can also search for discounts. Pay attention to Share Builder promotions.
Thus, it turns out that credit builder loans can be taken if the borrower has debts and delays in payment.
So, the mechanism for correcting credit history with credit builder loans is as follows:
- Apply for a loan online.
- Wait for a decision;
- Get the funds deposited into your bank account within 24 hours;
- Make your payments in accordance with the loan agreement;
- After the loan is repaid, the lender sends the data to the credit bureau and your credit history improves.
The nuances of improving a credit history with online loans
However, you should keep in mind that it will take a lot of effort to fix a very bad credit history. Taking/repaying one or two small loans will not be enough. Unresolved issues will have to be closed anyway. You may need to initiate a lawsuit against the creditor or prove that the debt cannot be repaid to the credit bureau.
In addition, if you intend to correct your credit history in order to get a mortgage, then you will need to first take a large and long-term loan from the bank so that lenders can make sure that you are able to repay not only small loans but also large obligations. In such a situation, the mechanism for correcting credit history can be done in several stages:
- take and repay a small loan;
- take and repay a larger loan;
- take and repay a loan for the maximum possible amount and term;
- take and repay a small personal loan from a bank (for example, for household appliances);
- take and repay a longer-term personal loan from a bank for a period of 2-3 years.
And only after such a sequence, perhaps one of the mortgage banks will tell you yes. Of course, no one gives any guarantees. In each case, the attitude of the bank to the borrower and the factor of his/her credit history will be different. Borrowers with large official incomes and long-term work in one place can enjoy a more loyal attitude. These categories of debtors probably do not need to go through all 5 of these points mentioned above.