We received this blog below from The Phoenix Group, https://thephenixgroup.com/. Thought it would be good to share for those interested in improving their credit score.
Many Americans who have bad credit still need to get a loan. Having a FICO score of 620 or lower is considered in the bad credit territory. A score this low prohibits one from getting a loan under reasonable terms, but that doesn’t mean it’s impossible.
It’s vital to know your score before you apply for a loan, and if it’s not where it needs to be, consider working to raise your credit score before you apply.
What Does Bad Credit Mean?
Our consumer culture encourages people to buy now and pay later, and many people are happy to do just that. And, unfortunately, many people aren’t adequately educated on responsible financial practices and end up ruining their credit rating, which makes it tough when applying for a car or home loan. Being smart with credit, and knowing how to fix bad credit, are essential for your financial well-being. As stated, bad credit is a FICO score of less than 620. A score of 630 or higher is considered fair, and 720 and up is deemed to be good to excellent.
What is a Bad Credit Loan?
A bad credit loan is a loan given to those people who have lower than average credit scores. These loans are typically high interest and come with many fees, but if you need a loan and have bad credit, you’ll have to take what you can get. The key to a bad credit loan is to repay it quickly and never miss a payment; doing these two things significantly improve your credit score.
What’s the Difference Between Secured and Unsecured Loans?
There are two main types of loans for which one can apply: Secured and unsecured loans. The secured loan requires the borrower to put up some collateral such as a home or vehicle to guarantee payment. Lenders typically give unsecured loans to people who have proven themselves trustworthy with credit, and who have good to excellent credit. Both of these loans can be helpful to build up your credit, but the key is to be vigilant about making payments and to pay them off quickly.
Types of Secured Loans
A payday loan gives a person fast cash. The borrower writes a check that they give to the lender who cashes it on the borrower’s payday. Another type of secured loan is a Title Loan. This loan uses your property as collateral to guarantee repayment. Property can be real estate or a vehicle. If you default on the loan, the lender gets the title to your property. Both of these loans are helpful for building credit but beware of the high interest and fees that come with them.
Types of Unsecured Loans
If you have bad credit, you may still qualify for an unsecured loan, but be prepared for interest rates from 100 to 300%. Most of these loans require a credit score in the mid to upper 600s.
Two important keys to rebuilding your credit are to be on time with your payments and to carry a low credit to debt ratio.
If looking for other tips to repair your credit, you may try this link with Top 20 Credit Repair Blogs, https://blog.feedspot.com/credit_repair_blogs/