Credit starter loans are a great way to establish a credit history, as well as rebuild a damaged score. Being in good financial standing will provide you with the loan options you might need in the event of an auto or medical emergency. Below are some tips for success in getting approved for these types of loans, as well as how they work to build your financial future.
How Do Credit Starter Loans Work?
Unlike credit cards, which might be used for emergencies, credit starter loans offer an opportunity to establish your financial history from scratch or rebuild your score. And that’s where finance companies can help. Unlike payday lenders, finance companies make loans where with each succeeding payment your loan balance reduces (or amortizes) until your loan is paid in full. And unlike payday lenders, most finance companies report your payment history to one of the major credit bureaus. Pay your payments on time and as agreed and your credit score will reflect your good payment history.
How Co-Signers Can Help
Putting your best foot forward is good in every scenario. This is especially true when it comes to borrowing money from a lender. They want to ensure that they will get their money back, and one option to limit the lender’s risk is to have a friend or family member act as a co-signer. If the borrower defaults on the payments, the co-signer becomes responsible for making them. Having this person vouch for the borrower can boost their chances of establishing a credit starter loan. However, if you do take out a loan with a co-signer it is important to note that how you pay reflects on both your your credit score and your co-signer’s. So take care to make certain that your loan is paid on time and as agreed. Many a friendship and/or family relationship has been damaged by those who neglected their responsibility to repay their loan, forcing the co-maker to repay.
Why It’s Crucial to Pay Your Installments on Time
Before you establish a credit starter loan, it is imperative that you prioritize paying your installments on time. Since this type of financial tool acts solely as a means to establish a credit rating, it is important to make all of your payments on time and as agreed. By missing even one payment, you can adversely affect your score, as well as your ability to borrow in the future. Remember, good credit is priceless and you should borrow responsibly.
If you’re interested in obtaining a credit starter loan, the professionals at Beacon Finance would be happy to help you. Having served the La Follette, Tazewell, and Mountain City, TN, communities since 1996, these experts have the skills and experience needed to get your credit score on the right track. Give them a call today at (423) 566-6864 to schedule an appointment, and visit their website for more information on their services.