Will it make my credit bad? Any good company suggestions?
2006-09-29 14:51:12 · 6 answers · asked by Sunn114 1 in Business & Finance ➔ Personal Finance
Starting off with small personal loans are a good way to build your credit up. Try credit unions. Most big banks are more stringent about lending out money for personal loans. Credit unions are more, generous.
2006-09-29 15:00:01 · answer #1 · answered by Mike R 5 · 0⤊ 0⤋
Credit score is based on, among other things, the amount of credit you're carrying. In that sense, taking a loan of any kind will reduce the amount of credit you may be eligible to receive (consider that your credit report shows you could responsibly borrow $20,000. If you take $10,000 in a personal loan, you're not going to be able to get another $20,000 for a car loan). Personal loans are generally unsecured, which means you're going to pay a much higher interest rate than on a mortgage or car loan where the loan is backed by some physical good (house or car). If you need the money, can't get it somewhere else like a home refinance, are fine with the interest rates you can get, and are prepared to pay at least according to the schedule (better if you can pay it off sooner), a personal loan is not neccessarily a bad thing.
I'd start with your bank or credit union. Many institutions will provide a somehwat lower interest rate if you pay by automatic withdrawal from a savings or checking account (because it minimizes the risk of you defaulting by forgetting to pay).
2006-09-29 15:03:58 · answer #2 · answered by toddos1 3 · 0⤊ 0⤋
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2016-09-28 11:11:27 · answer #3 · answered by ? 3 · 0⤊ 0⤋
Keep in mind that a personal loan is unsecured debt (like a credit card) meaning you are not putting anything up as collateral. Therefore it may be harder to be approved for this and you may be charged an outrageous interest rate depending on your current credit. I agree that credit unions are good, they look at your "complete financial picture" and if they deny you it is usually because the loan is not in your best interest. If you are looking for a way to establish or repair your credit, look into a share secured loan or a certificate secured loan. With these loans you use existing monies as collateral. It works like this: you deposit money into a account which you EARN dividends on, you apply for a loan agreeing to leave that deposit in the account for the entire term of the loan. Because you agree to that you can get a low interest rate (sometimes as low as 2%). If you fault on the loan the financial institution simply takes what you owe from the monies deposited. If you don't have money for the deposit you could see if a family member would be willing to make that deposit. As long as you make your payments they will get their money back and then some.
Also, you should make your payments on time every month, don't pay the loan off early or make double payments. The whole point is to establish credit HISTORY.
2006-09-29 15:59:20 · answer #4 · answered by Anonymous · 0⤊ 0⤋
I took out a $500 personal loan from my credit union to help establish my credit. It was the best thing that I could do for myself. the payments were managable. Prior to that loan I applied for credit cards at Target, Hudson, and I forgot where else. I was always denied. In my opinion a personal loan is beneficial if paid on time but, not paid off too soon, because they like to collect interest off of you.
p.s. Also, you do not want to have to much unused credit.
Hope this helps
2006-09-29 15:04:16 · answer #5 · answered by i hate stuff, stuff really sucks 2 · 0⤊ 0⤋
Try the links in http://www.thequickinfo.com/loans/
2006-10-01 06:21:10 · answer #6 · answered by Anonymous · 0⤊ 0⤋