To improve the credit score and correct it, a person can apply for a payday loan. Using the services of a microfinance institution, you will be able to get a small amount online and also restore your financial reputation. It will take only a few months to build the credit.
What is credit history?
Credit history is information about how an individual fulfills his or her obligations on loans and borrowings. Credit history is collected from various sources: banks, credit institutions, government agencies. Based on credit history, scoring systems determine the credit rating of borrowers and decide whether to give a new loan.
Why did my credit score go down?
The payer forgot to make a payment, underestimated the importance of timely payment, or overestimated his/her capabilities… The result is the same – the credit score went down.
There can be several reasons why your credit score drops:
- you had a delay in payment and did not request for a loan extension;
- you took several payday loans and could not repay them on time;
- you repaid all loans but made payments late;
- you refused to repay the loan at all;
- you took many small loans and filed for bankruptcy.
The last two categories of consumers will be blacklisted. The path to re-lending for such citizens will be closed, and their payment score will go down to the red zone. Clients who forget about payment or delayed payments due to financial difficulties can easily take out a loan to improve credit score online.
If your payment is late for several days but your lender extended your loan, the credit score will remain the same. The fact is that online lenders are loyal to consumers who have temporary difficulties and give them a second chance to pay the debt. However, you will not get a third chance if you deceived the lender. In this case, you will have to pay penalties.
Can you improve your credit score with loans?
To correct your credit score online, you must adhere to the following rules:
- take loans from companies that transfer information to major credit bureaus;
- pay loans back on time, avoid early repayment;
- do not take several loans at once, pay them one after another.
Before starting the procedure, it is recommended to contact the credit bureau and request a credit score report. It is recommended to repeat the same procedure six months later in order to track changes.
Why choose a microfinance company?
If you have a bad credit score, there is no point in contacting a bank – large financial institutions have lots of customers, therefore, if your credit score falls, you get a denial immediately. Microfinance companies treat payers differently:
- a loan can be paid back at any time, as soon as you get money;
- if you have difficulty repaying a loan, the repayment terms can be extended;
- almost all companies allow online applications; the approval is made automatically.
All records on the timely debt repayment are transferred into the credit bureau database, which increases the borrower’s score. The score will improve in 6-12 months.
How to apply for a credit-builder loan?
After choosing an organization to apply for a credit-builder loan, you need to proceed to the application process. If you have a damaged credit score, we recommend that you start with the minimum amounts.
The procedure for getting small loans to improve credit score can be divided into several cycles:
- choosing a microfinance organization;
- filling out the application;
- obtaining approval for a loan;
- repaying a loan.
Next, you need to use the services of a lender 3-4 more times. The second application will be approved much faster since all user data will already be saved in the system.
For all borrowers, a credit score is a clear indicator of financial discipline level. The higher the rating, the more trust the lender has, which increases the chances of getting a large loan amount. However, even if you have made delays, do not be upset. Microfinance institutions will provide several loans to improve your financial reputation.