Many consumers are struggling with their credit now and may continue to do so in the foreseeable future. If you’re one of these, then most likely you have a poor credit score. If you have a poor credit score (below 620), it may be very difficult, if not impossible to get any type of loan (car, house, boat, etc.) let alone a personal loan.
Even if you’re able to get a loan, the interest rate may be so high, you might become in danger of defaulting and cause more problems for yourself.
You might want to consider a secured personal loan. It can help improve your credit score without having to worry about a high interest rate.
How Secured Personal Loans Work
These loans come with lower interest rates because they’re secured. Secured with what? Usually, the borrower borrows against money in a savings account or other asset which secures the loan.
In some situations, you’ll put funds (maybe $300 or $500) on the card and borrow against it. The rate is low because the lender has the money.
The idea then, is to buy something. Then pay it back in a timely manner. This pattern of financial responsibility will begin to establish your damaged credit. If you don’t repay the loan, of course, the lender will seize the asset.
Seek out a reputable lender who understands what you’re trying to do and who will work with you to help rebuild your credit. It’s a safe way to show you can handle credit and will eventually improve your credit rating.
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