A credit score is very important to process loan applications. Although there are options to get loans with a bad credit score, still having good credit is great to have. You miss out on so many attractive offers when you have a bad credit score or no credit history. So, exploring means of building your credit score is important, and what better than taking out a loan to build it? Yes, a loan can help you build a credit score. Let’s see how:
How does a loan help build your credit score?
Let’s first learn what a credit score is and the factors that influence it.
Credit score, in simple terms, is your creditworthiness. It is a numerical representation of your worthiness to obtain credit or a loan. Various factors influence your credit score which consists of your payment history on previous credits, previous credit utilization ratio, your credit or loan history, new credit inquiries, etc. Here’s how a loan helps you build your credit score:
Repayment history: When you take out a loan, you have the opportunity to repay it responsibly and on time. This repayment history is stored and reported to credit bureaus, which reflect it in your credit score. A timely payment will increase your credit score whereas untimely or missed payments will decline your credit score.
Credit Utilization Ration: Credit bureaus keep a watch on how you utilize the requested credit in the form of a loan or credit card. Try to utilize 30% of the total amount that you have got or better just keep it below 10% to increase your credit score.
Credit diversification: Maintaining different lines of credit like a personal loan, credit card, etc shows lenders that you are able to manage different credits. This increases your credit score.By taking a loan you can diversify your credit and hence increase your credit score.
This is how you build your credit score. However, these things come into the picture after taking out a loan.
But, who provides loans for bad credit or no credit? How do you exactly get a loan if you do not have a credit score or have bad credit? Well, we have a solution for that as well, so read on.
How to get a Bad Credit or No Credit Check Loan?
Many lenders are providing bad credit or no credit check loans. There are direct as well as third-party lenders providing these loans. However, you should always go with direct lenders for hassle-free loans. Now, how do you get these loans?
Lenders providing no credit checks and bad credit loans judge your profile based on your capability of repaying the loan instead of checking your credit score. They analyze your monthly income through bank statements. Here are all the eligibility criteria:
- You should be 18 years or older
- You must have a Social Security Number
- You must have a checking bank account
- Should have a regular income
Get a Loan From CashAmericaToday to Build your Credit
CashAmericaToday is a trusted direct lender and can process your loan within 24 hours. We also do not ask for your credit score or papers to prove your employment. By taking out a loan from CashAmericaToday, you can build your credit score.