Personal Loans for Rebuilding Credit

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Best Personal Loans Options for Rebuilding Credit

If your credit score is less than perfect, you should rebuild it. You should especially work on rebuilding credit after a large drop in your credit score or after you have defaulted on loans or payments. Even if you have a good credit score, you can’t just ignore it. Credit should be used and monitored to maintain a good credit score.

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How To Apply For Personal Loans for Rebuilding Credit

1 Pre-qualify

Fill out easy online form to check for pre-qualified offers with no impact to your credit score

2 Select offer

Compare terms and payment options to select offer that’s best for you

3 Finish application

Complete application process on your selected lender’s website*

4 Receive funding

After loan approval, your funds should arrive within 1-2 business days*

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“It was important to me that I could review my offers without any impact to my credit score, before deciding on the best loan option.”

 

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FREQUENTLY ASKED QUESTIONS

Learn More About Personal Loans for Rebuilding Credit

Using personal loans for rebuilding credit offers some great advantages that can make receiving better funding in the future much more plausible. Some of the advantages include:

Read more - FAQ

Can I get a personal loan for rebuilding credit?

You can get a personal loan for rebuilding credit or for building credit for the first time. Getting a loan with no credit can be hard because lenders aren’t sure if you are a risky borrower or not. They might be hesitant to give you the funding you need because they aren’t sure if they can trust you with loans or not.

Some lenders will be willing to work with your situation though because they realize everyone has to start building credit for the first time at some point. When you receive your first loan for rebuilding or building credit though, you probably won’t be given the best terms.

For borrowers who need to rebuild their credit, they are usually only offered loans with high interest and other unfavorable terms. Make sure you shop around for loans and lenders and make sure you are getting the best deals possible. You may need to use a secured loan.

When should I rebuild my credit?

If your credit score is less than perfect, you should rebuild it. You should especially work on rebuilding credit after a large drop in your credit score or after you have defaulted on loans or payments. Even if you have a good credit score, you can’t just ignore it. Credit should be used and monitored to maintain a good credit score.

What are the advantages of personal loans for rebuilding credit?

Using personal loans for rebuilding credit offers some great advantages that can make receiving better funding in the future much more plausible. Some of the advantages include:

Lower your credit usage. If your debt-to-income ratio is high or your credit card usage is more than 30%, your credit score might be pretty low. It might also mean you have a very high debt-to-income ratio. Getting a personal loan can help you pay off the credit cards and bring down your total usage.
Raise your payment history. If you have a bad history of making payments on time, you can get a personal loan and then make all the payments before they are due. This will show that you are capable of making payments on time.
Shows you have recent credit. Having recent credit is ideal because it shows lenders that you can pay back the current debt you have. Applying for personal loans might lower your credit score a few points because it does a hard inquiry of your report. This might also show on your recent credit report.
Length of credit history. If you need to start rebuilding new credit or building credit for the first time, a personal loan can increase your credit history making you a less risky borrower.

What are the disadvantages of personal loans for rebuilding credit?

With taking out a personal loan, there are also a few disadvantages that should be noted. Some of the main ones are:

Short-term loans have drawbacks. Certain short-term loans may have high monthly payments. If you end up not being able to make the payment, your credit score will drop even lower.
It can be expensive. Bad credit loans can come with very high APRs and even higher interest rates. So, over the course of your payback time, you will be paying a large number of fees and interest. This could cost you much more money than you originally anticipated spending.
Late payments will make your credit worse. If you take out a personal loan and then can’t make the payments, you will end up with an even lower credit score than before. Make sure you have the income and financial means to make payments on a new loan before choosing to take one.
Not all personal lenders will report to the credit bureau. Not all personal loan lenders will report to the major credit bureaus. If you are using the personal loan as a way to rebuild credit, you need to make sure you are choosing a lender that will report it to the bureau.

Is it better to rebuild credit with a personal loan or credit card?

This depends on your personal situation. Some people find credit cards are easier to use and easier to get. If you had trouble with overspending in the past though, getting a credit card probably isn’t the best idea. You might be tempted to start spending out of your means again.

If you are a student, you might find it easy to get a student credit card to start building credit. Other options include getting an unsecured credit card or a secured credit card. Secure credit cards will need a deposit to use as collateral. In some cases, you can get the deposit back and move to an unsecured credit card after a few months of making on-time payments on the secured card. You may see your score increase more steadily with a credit card as opposed to a personal loan. However, both can help improve your credit score if managed responsibly.

How much can I improve my credit score with a personal loan?

This depends on the personal loan and how you use it. Using it to consolidate debt is a great option because it will lower your credit card usage which can significantly raise your credit score. You can also improve your credit mix since credit models give you points for revolving debt.

It also helps you to build a credit history which can add a few points to your credit score. Raising your credit score will make borrowing much easier in the future, especially when you need a large loan such as a mortgage.

How much should I borrow with a personal loan to rebuild credit?

This depends on how much you can afford, how much you are offered, and how much debt you currently have. If you are using a personal loan for debt consolidation, you can try to get a personal loan to pay off and consolidate your current debt.

Depending on your credit score, you might only be offered a small loan amount. Regardless of what you are offered though, don’t take out more than you can handle. Make sure you can handle the monthly payment and have some money on reserve to help you make the payments.

How do I get a personal loan for rebuilding credit?

If you have little to no credit, you should start by finding lenders that offer secured personal loans or credit rebuilder loans. You may want to start by contacting your local bank or credit union. Some online lenders may offer options too but you may feel you need the support of a face-to-face interaction. If you have bad credit and are looking to rebuild credit with a personal loan, an online lender may be the best option. Banks may have more strict requirements than online lenders.

Where can I get a personal loan for rebuilding credit?

There are many online lenders you can check with you before you fill out an official application. Obtaining a loan from these lenders will depend on your credit score. You can check with the following lenders who are known to offer personal loans to people for rebuilding credit:

Avant
First Tech Federal Credit Union
Navy Federal Credit Union
LendingPoint
OneMain Financial
PenFed Credit Union
Rocket Loans
LendingCLub
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Why choose Acorn Finance for personal loans?

Acorn Finance can make checking personal loan offers safe and easy. Within 60 seconds or less you can receive multiple offers from top national lenders with no impact on your credit score. Save yourself the time, hassle, and risk of hopelessly searching the internet for the best personal loan offer. Taking advantage of the Acorn Finance platform can help you shop and compare offers efficiently. You can be sure you are working with a trustworthy lender if you use an Acorn Finance lending partner.

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