Have you currently fell on hard times or slowly seeped into the situation that you are in? Don’t worry you are not alone, since the recession in 2008many Americans have found themselves in this type of situation. Some have managed to pull and scrape their way out of debt while others are still battling. Whatever the situation is, a bad credit score can greatly affect you for the rest of your life and you need to rectify the issue as quickly as possible. The real question is, how can a person borrow money or get a loan when they have a bad credit score?
Well, since the recession, banks became very weary about lending money and this led to guarantor lenders. You may or may not have heard of these lenders, but they have been popping up regularly since the recession and they are helping people from all around rebuild their credit. Below, you will learn more important information about these loans and how they can help you rebuild your credit.
Understanding How Guarantor Lenders Work
Guarantor lenders are truly unique and growing in popularity, because they offer a new form of borrowing money in conventional formats. They have really just taken a very old concept and teamed it with modern business practices. For instance, if you want to get one of these loans all you have to do is get approved by a lender and have a friend or family member vouch for you, saying that you are capable of paying the loan back in installments. It works almost the same as co-signing, and if you are unable to pay back the loan then the co-signer will be stuck with the responsibility. Guarantor lenders are the middle ground between low-rate bank loans and the high rate short-term payday loans.
How To Improve Your Credit Score
Anytime you pay off guarantor loanson time, regardless of the type you will be able to improve your credit score. Simultaneously, it is pertinent to pay off business loans as quickly as possible to avoid unnecessary debt. For instance, when you pay off a loan on time that information is then automatically reported back credit agency and factored into your credit score. So, if you have bad credit and are unable to acquire the traditional loan, you can get a friend or family member to vouch for you, so that you acquire a loan through a guarantor lender. If you do this enough times, you will have built your credit score back up.
How Your Credit Score Works
When someone talks about a credit score, they are talking about a formulated numbers that represent how well you were able to pay back past creditors. For instance, this could be anything from your ability to pay back past loans to your ability to pay of credit cards. Credit score are usually broken down into several different rating sections. A score from 0-560 is a very poor rating, whereas 961-999 is an excellent rating. A credit score is also made up of five different categories, payment history, types of credit, length of credit history, new credit, and amount of debt that you currently have.