It’s hard to believe that having no credit is as bad as having very bad credit when it comes to getting a loan because neither show a history of paying on time.
Neither shows potential lenders a history of paying on time, which is the determining factor in getting you approved to borrow money. In fact, the monthly income is almost irrelevant if a person does not have a proven history of repaying their past debts.
This can be very frustrating for someone just starting their first job. People in this position often wonder how they can increase their credit rating if they can’t get any credit. The quickest and most deliberate way to build up new credit is to take advantage of a payday cash loan.
To qualify for a cash advance loan, a person must be a US citizen, have a checking account, and earn a certain amount of regular income. Applications can be made in person, over the phone, online, or even by fax, which also makes them very convenient.
The reason payday cash loans are great for helping build new credit is because the loan term is typically no more than two weeks. Due to the short term of the loan, a person may have many opportunities to borrow money using this type of credit. If the borrower pays off each loan on time, this could be a great way to build their credit report and begin to show that they are financially reliable.
Payday cash advance loans can also be used as one of the steps to restore bad credit. If a person has had difficulty making payments on time or at all in the past, some payday loans that are paid on time can immediately improve their credit rating. After all, these loans will be the most up-to-date transactions shown on your credit report. Establishing any type of new credit and being reliable with it is a great way to show lenders that a borrower may be worth a second chance.
Other steps to take to increase a negative credit score may include closing credit cards that are not being used. If someone has numerous credit card accounts, even if some of the balances are zero, this can have a detrimental effect on their credit score. Payday loan lenders must use any credit available to potential borrowers when calculating the debt-to-income ratio. If these ratios are outside of the lender’s guidelines, new credit cannot be granted.
Also avoid paying any bills late and especially not making any payments. If someone hasn’t made timely payments in the past, it’s unlikely they will in the future, at least that’s the opinion of most lenders. Now is the time to ensure that all payments are up to date.
Applying for a large amount of new credit is also a bad idea when trying to restore old credit. Every time a lender checks a person’s credit, it negatively affects their credit rating. Also, the last thing someone who already has credit problems needs is more credit.
Having a good credit rating is very powerful. Even the best planners cannot avoid the unforeseen circumstances that affect people every day. For example, if a person’s car breaks down, you can fix it or buy a different one. If that person has bad credit, or no credit at all, he may not be able to do either. Lenders most likely won’t approve a new car loan, and most mechanics don’t have payment plans. No car means they may not be able to work and this is not good by any means.
Having bad credit or no credit at all can prevent a person from buying a home or even turning on the utilities. Unexpected problems can become intractable without the added protection that good credit provides. Therefore, whether a person is just starting out or has failed along the way, it is imperative to continue on the path to good credit. Personal loans could be one of the necessary steps along the way. This quick and cheap loan could easily help propel a person towards a credit-prosperous future.
