A bad credit installment loan has a couple of advantages over the typical high interest payday loan and/or cash advance. The most important thing is that you can develop and reestablish your credit rating by paying a term based loan over months and perhaps years.When you pay installments every month or every two weeks (biweekly) then you are establishing a pattern of making payments on time and in full. As long as you are not delinquent in your payments and you pay the full amount each time the credit reporting agencies pickup on your good-faith and report your good borrowing behavior.
It is a well-known fact that you must start rebuilding your credit rating brick by brick, stone by stone, and payment by payment – month by month. There is only one way you can slowly begin to get your credit rating cleaned up over time and that is to become a borrower again and show that you have cleaned up your act – I will explain how to do this now.
If you have recently declared bankruptcy or you have a miserably bad credit rating (like in the 460 FICO score area) then you must consider a way to recoup your reputation with the lending institutions across the country and frankly across the world. You have to borrow money or get some credit somehow no matter what it takes and that means getting a cosigner if you must.
The key thing here is getting a cosigner and a job so you can make the payments on your credit line, overdrafts, or credit cards because you will not be able to get any kind of credit if you have been bankrupt. With a cosigner on your loan agreement with the bank or credit card company you can get approved for a very small amount of money, usually $400-$600.
I know this from experience because I have declared personal bankruptcy (Chapter seven) and I had to have my spouse signed for me as a cosigner on a small $600 limit credit card. This was very important because I made all of my payments on time and in full. The catch with this kind of credit card well you are in bankruptcy is that you have to pay them the money upfront (in my case $500-$600) and then I was basically paying back myself when I made a payment on the new credit card. You see – once you screw up enough you have zero credit and you have to have your own money as your so-called credit limit.
So if you have a terrible credit rating stay clear of the payday loan and cash advance companies. If you can somehow get a cosigner for an installment loan you are much further ahead and all your way to repairing your credit rating. If you are bankrupt currently and perhaps discharged already it is just a waiting game and you will have to have a cosigner for any kind of credit you have for the next seven years. I know that waiting for that seven years to be finished is a real pain in the back side because it is are hard to live off of the credit.
For example, when you travel you really do need a credit card in this is about the only time I suggest using a credit card frequently. If you have air miles and are making points on your credit card through a small-business or something like it then sure; fill your boots – but make sure you bank will your payments on time whatever you do.
Even if you are currently in bankruptcy and you have managed to get a cosigner for a long term or short term installment loan the credit reporting agencies like Experian, Trans Union, Equifax, Fair Isaac, and Teletrack will see your new history of on-time payments and full payments. Please steer clear of making only partial payments even if your credit card or line of credit institution tells you that you only have to make a small payment – make the full payment and show that you mean business.
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