Having bad credit can sometimes feel like being followed around by a black cloud, or like having a contagious disease that means no one wants to come near you. Bad credit is simply a mark on your record that indicates you have struggled to pay off loans in the past, or that you have missed other arranged payments. In turn, this suggests that you are someone who might not be able to pay off future loans and that makes you less desirable for lenders to offer money to.
But the unfortunate irony is that the very people who have bad credit are also very likely to be the ones who need the occasional loan.
So what can you do?
Installment Loans Online for Poor Credit
Some types of loan are easier to get than others if you have poor credit. If you have a bad credit record and you approach your bank to ask for a personal loan of $1,000,000 to buy a yacht, you will likely be turned down.
A payday loan on the other hand is more likely to be accepted because in this case the money you’re asking for is only short-term (often just a couple of weeks) and much smaller. The APR is so high on these loans (in the hundreds) that the risk is very small for the lender.
Unfortunately though, payday loans won’t help you to rebuild your credit score. The reason for this is that payday loans are paid off all in one lump. This means that there’s no history of repayments to help you restore your good name.
Conversely though, if you can find installment loans online, these have the potential to help you rebuild your score. Installment loans are like payday loans with the difference being that you are paying them off in multiple installments rather than one go. This then means you can build up that history of repayments which will amend your credit score.
What to Expect
Like payday loans, installment loans online will usually accept a wider range of people due to higher APRs (around 50%) and shorter repayment terms. But because you pay in numerous installments, they are still useful for repairing a bad credit rating.
The problem though is that the APR on your loan might be slightly increased to reflect the greater risk that you represent.
The simple solution to this problem though, is to shop around and look for the best rates. While you might represent a little risk, the thing to remember is that these companies want your business and thus you can still represent an opportunity.
How to Increase Your Credit Score
There are other things you can do to increase your credit score in the meantime too.
These include, for example, taking out credit card loans and then being sure to make your repayments in a timely manner. Try to pay off any debts that you can afford to pay off and then make sure to keep your main bank accounts in credit.
You can use various free tools online to check whether these changes are having a positive impact on your credit score and what has been most effective. Another tip is to try and make sure that your credit score is not linked with anyone else’s that may be bringing yours down.
But failing all this, find installment loans direct lenders and make sure to repay your installments on time – you should find this is enough to gradually restore your credit history and get you out of a bind in the short term.