If your credit score has decreased and is affecting your ability to borrow money when you need it, a bad credit loan may help you rebuild your credit. Of course you don’t want to borrow money just to increase your credit score, but if you have a legitimate reason for borrowing money, you can certainly use the availability of those bad credit loan proceeds to increase your credit score.
Evaluate the reasons for your low credit score
Many factors go into making up your credit score, so there is not one single item that affects your score. There are some factors that have more of an impact than others, and if you can evaluate the reasons, you will be in a better position to know that you need to do in order to increase your credit score.
For most people the largest scoring factor is how they pay their obligations. If you do not make your payments on time this will affect your ability to borrow money by traditional means thus making a bad credit loan the only way you will be approved. The amount of debt you carry can also affect your credit score, but if you pay your bills on time this will have less of a damaging affect than you would experience from paying your bills late or not at all.
Factors having an affect on your credit score
Many people think as long as they pay their bills before their account goes into collections, they will maintain a high enough credit score to prevent the need for a bad credit loan. Unfortunately this is a misconception as your ability to pay your obligations on time is one of the major scoring factors on your credit history. [Read more…]