How to Improve Your Credit Score with a Secured Loan?

Overview:

The after-effects of a poor credit score stretch far beyond not just qualifying for a loan. It hinders your insurance, employment, rental agreement, etc. Even if your credit score is good, but you still wish to make it better then secured loan is one option that can help you do so.

Since secured loans are collateral, lenders do not hesitate to approve the same and applicants get an easy approval.

Instructions: 

  • Check your credit score before applying for a loan. This will help you evaluate where you stand. At times it may so happen, that your score is fair enough and you will not even have to opt for a secured loan.
  • Get in touch with all the banks and lenders in your area. Check for the regulations that they follow when it comes to secured loans. Compare the same with your income and credit history. This will give you a list of lenders who might offer you a loan.
  • After your list is ready, make applications to all those banks you feel will offer you a loan. Compare the quotations given by each in terms of interest rate, a tenure of repayment, etc.
  • If you have pending credit card payment, then clear a part of it with the loan amount because a part of your score also depends on the balances you carry on your credit cards.
  • Clear all your collections accounts with the remaining balance. Though collection accounts payment neither has a positive or negative impact on your credit score, but it is always better to clear your dues.
  • After clearing the above, repay your secured loan gradually. This will give an impact that you were managing all your debts gracefully. Apart from this, each time a loan is cleared your lender will update the same on your report and your score will improve. Keep this in mind that recent accounts have more weight on your credit score. Hence, ensure you make payments on time and maintain a healthy score.

The above-mentioned points will help you rebuild your credit score and with a little smartness, you can get back to a decent score.

Updated: December 1, 2016 — 10:55 am

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