One of the best ways to build your credit is getting an installment loan, such as a car loan. A credit score is made of a number of things, including payment history, and taking a car loan will help you build positive payment history. If you can make every payment on time and not allow any negative details to occur with your credit, you will be able to slowly watch your credit score increase over time.
How Can You Get A Loan If Your Credit Is Bad?
If you really want to build your credit history and are willing to shop around, you will be able to find a lender that will give you a car loan no matter how low your credit score is. This may result in a loan with a really high interest rate, but you should realize that this is only temporary. You do not have to keep this loan forever, but you will need to pay it on time.
There are auto dealers and lenders around that specialize in offering loans to people with bad credit. As you look for a loan like this, you should make sure you choose one that will report to the credit bureaus. Some lenders do not do this, but most do, and this is something you should ask about before accepting the loan. If the lender does not report, getting the loan will not boost your credit score at all.
Are There Benefits Of Taking A High-Interest Auto Loan?
Getting an auto loan with a high interest rate will cause your payments to be higher than you hoped for, but there are several benefits in doing this. Here are the main ones:
- High-interest loans offer a way to get a car if you really need one
- The loan will help you build your credit score
- You will have the ability to refinance at some point
One of the main benefits of doing this is for the effects it will have on your credit. Your credit will go up if you make your payments on time, and once it does you can look into auto refinancing. Once your credit score is high enough, you could apply for an auto refinance loan, and you might easily be able to get approved. If so, your interest rate would be better, and this would probably cause a decrease in your payment amount each month.
If you would like to learn more about auto loans, contact a lender in your area. Starting this soon could help you get a higher credit score faster. Click here to learn more about auto loan refinance.