Boosting Your Score with a Credit-Builder Loan

If your credit score is low and you want to increase it as quickly as possible, you might want to consider taking out a loan. Taking out a loan and paying it off on time can really help your credit. The higher your credit rating is, the easier it will be to get loans in the future. Your new and improved credit score will open up a whole world of financial opportunities. There are some loans that are better than others for improving credit, and you will need to know what they are.

What Are Credit-Builder Loans?

Credit-builder loans are kind of like secured credit cards, but you don’t need to put down any money as a deposit. You must repay the loan in full and on time before you get access to the funds. These loans are particularly ideal for people with bad credit, as you won’t have to risk damaging your rating at all. Many people in the UK are getting these loans because of how effective they can be at raising credit scores.

Secured or Unsecured?

You can categorize most loans as either secured or unsecured. A secured loan uses collateral, such as with a car or home loan. An unsecured loan doesn’t use collateral at all. Credit-builder loans are secured with the money itself. You won’t have access to the money until you pay the loan off, so you don’t need to risk any of your property.

There is a sort of middle option that will allow you to gain access to some of the funds from the loan, while the rest is untouchable until you have paid it off in full. This is still a secured loan, as your savings account would be acting as the collateral.
Unsecured credit-builder loans do exist, though they aren’t quite as common. One of the downsides to this type of loan is that you will most likely pay a higher interest rate. The good part is that you will be able to get instant access to all of the funds in the event of an emergency.

One of the best things about credit-builder loans is that you don’t have to put down any collateral or even have a bank account when signing up for one. This means that you won’t have to worry about losing your savings if you cannot pay back the loan.

Where to Find a Credit Builder Loan

You can get a credit-builder loan from most banks and credit unions, though there are other options to choose from. A lot of people in the UK are getting these loans from online lenders for a variety of reasons.
Online lenders tend to give borrowers better interest rates, so you can boost your credit without spending a lot of extra money. It is important to keep in mind that online lenders also tend to have lower standards for applicants than banks. It is not uncommon for people who get turned down for these loans by banks to go online.

Requirements

There will be certain requirements that you will have to meet to get money now, just like any other kind. You will need to show the lender that you have a stable and consistent employment history as well as adequate income. The lender needs to know that you make enough money to pay back all of the money you borrow by the due date.

You also must be a legal citizen of the UK and over the age of 18. There are certain documents that you’ll have to turn over to the lender before you can get approved, such as a copy of your ID and proof of income. The lender will use this information to decide how much of a liability you are. Those who get these documents together ahead of time will increase their chances of getting the loan.

While your credit score obviously won’t be a factor, there could be certain things in your credit history that could prevent you from getting approved. Those who have a recent bankruptcy in their credit record might have a hard time getting a credit-builder loan.

Benefits of Getting a Credit-Builder Loan

Some of the main benefits of getting a credit-builder loan include:

• Higher score: You can seriously boost your credit score by successfully paying off one of these loans. Once you have a higher score, you will have an easier time getting other loans in the future.
• Multiple options: There are secured, unsecured and hybrid credit-builder options available. You don’t have to risk any collateral if you don’t want to.
• Easy approval: Getting approved for a credit-builder loan is fairly easy for most people, especially if you go through a private lender.

Affect on Your Credit

If you pay off your credit-builder loan in full and on time, you can increase your credit score by up to 30%. Just make sure that you aren’t late on any of your payments, because your credit could take a hit as a result. Paying your bills on time is one of the best and most effective ways to improve your credit. You will have a minimum amount that you can pay with each payment, though you can pay more. There is typically no penalty for paying off credit-builder loans early, but it won’t do anything extra to improve your credit.

Should I get a Credit-Builder Loan?

Credit-builder loans are certainly a good idea for many people, including those who have low scores. If your credit has prevented you from getting a loan from a bank in the past, you might want to try this option. Just remember that you should treat this type of loan like you would any other. It is crucial that you pay back all of the money you borrow plus interest by the agreed upon date. Take the time to find a good lender to borrow from so that you get the best possible deal on your loan.

6 Ways to Get the Home of Your Dreams Faster

Anyone who has ever bought a house before knows what a long and gruelling experience it can be. If you want to buy a new house for the first time, there are certain ways to speed up the financing process. Those with bad credit will especially want to get this information because of how beneficial it can be. Property values are still climbing, so you will want to get a good deal on a nice house while you still can.

Before You Get Started

There are some things that you should keep in mind before trying to get financing for a new home. The very first thing you should do is to figure out if you can really afford to buy a house in the first place. Too many people rush into buying a home, only to discover that they cannot afford it. The more time you spend looking at your finances, the better off you will be in the long term.

You should also decide how much you are going to put down on the house. A deposit of 25% is pretty standard, and it’s a good way to minimize your interest rate. Anyone who is interested in buying a house should stay away from the zero percent down loans that only exist to scam first time buyers. If you don’t have enough money to put down a decent deposit, you should take some time to save up before moving forward.

1. Explore the Help to Buy Scheme

The “Help to Buy” scheme was started back in 2013, and it is essentially a home equity loan option. This can be an excellent solution for first time buyers as well as those who want to move from one house to another. Those who take advantage of this scheme only need to put down 5% of the house’s total value. This is a particularly good option for those who don’t have a ton of money saved up but feel like it’s the right time to buy a house regardless.

This scheme applies only to houses with a value of under £600,000, and it is available until 2020. You won’t have to pay any interest for the first five years, which is a huge plus. After the initial five year period, you will pay an interest rate of just 1.75%. The rates you get with loans through this scheme are significantly lower than most others.

2. Help to Buy ISAs

A Help to Buy ISA is another option for first time homebuyers, and it offers many benefits. If you are saving up for a deposit on a home, this scheme can help you out a lot. All you need is £1,000 to begin, and put just £200 each month into it every month. Eventually you will receive a 25% bonus from the government. There is a maximum of £3,000, but it can be incredibly helpful nonetheless.

3. Right to Buy

If you live in the UK and rent a home from your local council, you could be able to buy the home at a very reasonable overall amount. In order to qualify for this steep discount, you will need to have rented the property for a minimum of three years. A lot of people are taking advantage of this scheme because of how much money it can help homebuyers save. This scheme covers housing association tenants who live in England as well.

4. Private Lenders

You might associate buying a home with going down to a bank or credit union, but they certainly aren’t your only options. When you need the money for a new house, private lenders have much to offer. These lenders are largely based online, and many of them are highly reputable. There are a lot of reasons to consider going through a private lender, such as lack of credit checks.

Many private lenders do not run credit checks on those who apply for loans with them. This means that if your credit score is low, you won’t necessarily have to be worried about being turned down. You can apply for loans through private lenders online, which is very convenient. The whole process of getting a home loan from these lenders is very simple and easy.

5. Shared Ownership

This option involves buying only part of a house from a housing association or local council, and renting the rest. You will be required to obtain a mortgage for ¾ of the home’s overall value. After you get the mortgage, you will pay rent on the rest of the share but with the option to buy a larger share in the future.

6. Starter Homes Scheme

The Starter Homes Initiative was initiated back in 2015, and it has helped many people to get affordable homes. These homes are available at a 20% discount for first time buyers that fall between the ages of 23 and 40. If you are having trouble finding affordable housing that fits within your budget, there is a good chance that this option can help tremendously.

There is a maximum home value of £250,000 for homes with this scheme, but it is going to go up to £450,000 for those who plan on buying in London. While this scheme might not be for everyone, it is certainly worth exploring before making a decision.

Don’t Rush into a Decision

The worst possible thing that any first time homebuyer can do is to rush into a final decision. Buying a house is a big deal for most people, so it’s not something to take lightly. The more you explore these options, the easier it will be to get an affordable home fast. The fact is that this process doesn’t have to take forever. Even those who don’t have much money in their savings accounts can still find a way to buy a home in the near future. This information will help you get your dream home sooner than you ever thought possible.