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Bad Credit Credit Cards – Bad Credit Credit Cards – Phone scams continue, Sheriff Hagaman with another warning | Fintech Zoom | Fintech Zoom

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Bad Credit Credit Cards – Bad Credit Credit Cards – Phone scams continue, Sheriff Hagaman with another warning | Fintech Zoom

Bad Credit Credit Cards – Phone scams continue, Sheriff Hagaman with another warning

Last Updated on March 20, 2021 6:22 pm

The rash of scam phone calls to area residents continues as another warning comes from law enforcement.

Sheriff Len Hagaman tells WataugaOnline.com that in this latest round of calls the caller is posing as a Fire Inspector or Fire Marshal or OSHA (Occupational Safety and Health Administration) Inspector or from the FBI.

In one instance, a victim received a call from a male claiming to be with the FBI and alleged the victim’s credit card had been used to buy drugs in south Texas and was asking for personal information. The victim did provide some information prior to hanging up.

During another one of these scam calls a local victim lost over $1400.

This is the latest round of these types of calls taking place. Below is a recap of previous warnings from Sheriff Hagaman and linked to previous articles on WataugaOnline.com

March 16 – a male calling potential victims posing as a Watauga County Sheriff’s Deputy using different names of current employees using different ranks stating that the potential victim has a warrant for their arrest.

March 6 – a local elderly couple just got scammed from a spoofed WCSO phone number – (828) 264-3761) asking for money. The couple was told that they would be arrested if the money was not sent. The couple sent $5,000 to the fake “Lieutenant.”

February 26 – Caller tells the person answering the phone that they are a grandchild or family member and that something tragic has happened. (All callers have reported that the initial caller does sound similar to their grandchildren or family member).


The Federal Trade Commission provides this guidance on how to recognize a phone scam.

How to Recognize a Phone Scam

Phone scams come in many forms, but they tend to make similar promises and threats, or ask you to pay certain ways. Here’s how to recognize a phone scam.

There is no prize

The caller might say you were “selected” for an offer or that you’ve won a lottery. But if you have to pay to get the prize, it’s not a prize.

You won’t be arrested

Scammers might pretend to be law enforcement or a federal agency. They might say you’ll be arrested, fined, or deported if you don’t pay taxes or some other debt right away. The goal is to scare you into paying. But real law enforcement and federal agencies won’t call and threaten you.

You don’t need to decide now

Most legitimate businesses will give you time to think their offer over and get written information about it before asking you to commit. Take your time. Don’t get pressured into making a decision on the spot.

There’s never a good reason to send cash or pay with a gift card

Scammers will often ask you to pay in a way that makes it hard for you to get your money back — by wiring money, putting money on a gift card, prepaid card or cash reload card, or using a money transfer app. Anyone who asks you to pay that way is a scammer.

Government agencies aren’t calling to confirm your sensitive information

It’s never a good idea to give out sensitive information like your Social Security number to someone who calls you unexpectedly, even if they say they’re with the Social Security Administration or IRS.

You shouldn’t be getting all those calls

If a company is selling something, it needs your written permission to call you with a robocall. And if you’re on the National Do Not Call Registry, you shouldn’t get live sales calls from companies you haven’t done business with before. Those calls are illegal. If someone is already breaking the law calling you, there’s a good chance it’s a scam. At the very least, it’s a company you don’t want to do business with.

Examples of Common Phone Scams

Any scam can happen over the phone. But here are some common angles phone scammers like to use:

Imposter scams

A scammer pretends to be someone you trust — a government agency like the Social Security Administration or the IRS, a family member, a love interest, or someone claiming there’s a problem with your computer. The scammer can even have a fake name or number show up on your caller ID to convince you.

Debt relief and credit repair scams

Scammers will offer to lower your credit card interest rates, fix your credit, or get your student loans forgiven if you pay their company a fee first. But you could end up losing your money and ruining your credit.

Business and investment scams

Callers might promise to help you start your own business and give you business coaching, or guarantee big profits from an investment. Don’t take their word for it. Learn about the FTC’s Business Opportunity Rule, and check out investment opportunities with your state securities regulator.

Charity scams

Scammers like to pose as charities. Scams requesting donations for disaster relief efforts are especially common on the phone. Always check out a charity before you give, and don’t feel pressured to give immediately over the phone before you do.

Extended car warranties

Scammers find out what kind of car you drive and when you bought it so they can urge you to buy overpriced — or worthless — service contracts.

“Free” trials

A caller might promise a free trial but then sign you up for products — sometimes lots of products — that you’re billed for every month until you cancel.

loan scams

loan scams include advance fee loan scams, where scammers target people with a poor credit history and guarantee loans or credit cards for an up-front fee. Legitimate lenders don’t make guarantees like that, especially if you have bad credit, no credit, or a bankruptcy.

Prize and lottery scams

In a typical prize scam, the caller will say you’ve won a prize, but then say you need to pay a registration or shipping fee to get it. But after you pay, you find out there is no prize.

Travel scams and timeshare scams

Scammers promise free or low cost vacations that can end up costing you a lot in hidden costs. And sometimes, after you pay, you find out there is no vacation. In timeshare resale scams, scammers lie and tell you they’ll sell your timeshare — and may even have a buyer lined up — if you pay them first.

How to Stop Calls from Scammers

Hang up

Even if it’s not a scammer calling, if a company is calling you illegally, it’s not a company you want to do business with. When you get a robocall, don’t press any numbers. Instead of letting you speak to a live operator or remove you from their call list, it might lead to more robocalls.

Consider call blocking or call labeling

Scammers can use the internet to make calls from all over the world. They don’t care if you’re on the National Do Not Call Registry. That’s why your best defense against unwanted calls is call blocking. Which type of call-blocking (or call-labeling) technology you use will depend on the phone — whether it’s a mobile phone, a traditional landline, or a home phone that makes calls over the internet (VoIP). See what services your phone carrier offers, and look online for expert reviews. For mobile phones, you also can check out the reviews for different call-blocking apps in your online app store.

Don’t trust your caller ID

Scammers can make any name or number show up on your caller ID. That’s called spoofing. So even if it looks like it’s a government agency like the Social Security Administration calling, or like the call is from a local number, it could be a scammer calling from anywhere in the world.

Learn more about unwanted calls and what to do about them at ftc.gov/calls.

What to Do If You Already Paid a Scammer

Scammers often ask you to pay in ways that make it tough to get your money back. If you’ve paid a scammer, the sooner you act, the better.

If you paid a scammer with a credit or debit card,you may be able to stop the transaction. Contact your credit card company or bank right away. Tell them what happened, and ask for a “chargeback” to reverse the charges.

If you paid a scammer with a gift card, prepaid card, or cash reload card, contact the company that issued the card right away. Tell them you paid a scammer with the card, and ask if they can refund your money. The sooner you contact them, the better the chance they’ll be able to get your money back.

If you paid a scammer with a wire transfer, call the money transfer company immediately to report the fraud and file a complaint. Call the complaint department:

  • MoneyGram at 1-800-MONEYGRAM (1-800-666-3947) or
  • Western Union at 1-800-325-6000.

Ask for the money transfer to be reversed. It’s unlikely to happen, but it’s important to ask.

If you paid a scammer using a money transfer app, contact the company behind the app. If the app is linked to a credit card or debit card, contact your credit card company or bank first.

If you gave a scammer remote access to your computer, update your computer’s security software. Then run a scan and delete anything it identifies as a problem.

If you gave your username and password to a scammer, change your password right away. If you use the same password for other accounts or sites, change it there, too. Create a new password that is strong.

If you gave a scammer your Social Security number (SSN), visit identitytheft.gov to learn how to monitor your credit report to see if your SSN is being misused.

If someone calls and offers to “help” you recover money you have already lost, don’t give them money or personal information. You’re probably dealing with a fake refund scam.

Report Phone Scams

If you’ve lost money to a phone scam or have information about the company or scammer who called you, report it at ftc.gov/complaint.

If you didn’t lose money and just want to report a call, you can use our streamlined reporting form at donotcall.gov.

Report the number that appears on your caller ID — even if you think it might be fake — and any number you’re told to call back. The FTC analyzes complaint data and trends to identify illegal callers based on calling patterns. We also use additional information you report, like any names or numbers you’re told to call back, to track down scammers.

We take the phone numbers you report and release them to the public each business day. This helps phone carriers and other partners that are working on call-blocking and call-labeling solutions. Your reports also help law enforcement identify the people behind illegal calls.

Bad Credit Credit Cards – Phone scams continue, Sheriff Hagaman with another warning

Bad Credit Credit Cards – Bad Credit Credit Cards – Phone scams continue, Sheriff Hagaman with another warning | Fintech Zoom

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Taking A Joint Home Loan Can Benefit You. Here’s Why – Forbes Advisor INDIA

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In India, buying a home is mostly the single largest investment made by an individual during their lifetime. As our families expand, we plan for the future and plan to invest in bigger homes that can comfortably accommodate and protect a growing family. However, such dream houses come at a significant cost, warrant access to huge funds, and hence, require key financial planning.

In most cases, individuals need to opt for home loans to fulfil the cost obligation associated with buying a house. Considering the amount and type of loan taken, there are certain eligibility criteria that one needs to be aware of before initiating applications. 

At the time of taking a home loan, your lender or you may wish to add another applicant, also called co-applicant, to your home loans for various reasons and the structure of having a co-applicant is referred to as a joint home loan. 

Let’s understand when and why should you take a joint home loan. 

Role of a Co-applicant in a Joint Home Loan

A lender while considering applications simply wants to check if the borrower can repay the home loan along with their household expenses and existing loans. Therefore, while calculating your eligibility they generally keep aside a certain fixed portion of your income that covers your existing expenses. An individual’s eligibility is decided on the basis of the discretionary amount left post calculating their interest repayments and monthly instalments. 

In a joint home loan, you can add another co-applicant or applicants who becomes liable to pay the home loan along with the primary applicant. Liability of the loan is a collective responsibility on both or all the co-applicants as well. Generally, immediate family members, including father, mother, spouse, children, and brother, are most eligible to become co-applicants in joint home loans. 

With such arrangements the question that mostly arises is whether the co-applicant is also the co-owner of the home being considered. Co-applicant or co-applicants may or may not be the co-owner of the property, however they have a liability to pay back the loan. The co-owner of the property is a joint owner along with other owners. 

As a safeguard and prudent underwriting practice, lenders ask all co-owners to also become co-applicants in home loans, however, the reverse need not be true. This is a decision the pros and cons of which should be carefully considered by the primary applicant while choosing joint home loans.

Why Choose a Joint Home Loan Over Any Other Loan 

There are a number of additional advantages in considering taking a joint home loan as compared to an individual home loan. These include higher loan amount eligibility, lower interest rates and other income tax benefits. 

Higher Loan Amount Eligibility: When you add an income-earning co-applicant to a loan, the lender considers the income level of all the applicants and calculates an eligibility amount higher than that of only one individual applying for a home loan. This allows applicants or families to take a larger home loan amount or purchase a more aspirational home since the room for increasing an applicant budget is possible. 

Lower Interest Rates: In order to avail lower interest rates individuals can add their spouses or mother as co-applicants for a joint home loan and as a joint property owner. This is useful as most lenders in India offer a lower rate of interest to women borrowers. It is up to 10 to 25 basis points lower than the interest rate for male borrowers. 

Tax Benefits: Tax benefits can be enjoyed by all the co-applicants separately. For this to happen, co-applicants should be property owners as well and should contribute to the payment of monthly instalments towards the repayment of the home loan. 

Income Tax benefits that are available to the all co-applicants include: 

  • Benefit under Section 80 C of the Income-Tax Act for the loan’s principal payment up to a maximum limit of INR 1.50 lakh per year. 
  • Benefits under Section 24 of the Income-Tax Act for interest paid on a home loan up to INR 2 lakh per year. 
  • In a joint home loan, both the applicants can claim the above amounts individually and use this as an effective tax planning tool

Co-applicants and first-time loan applicants can utilise the joint home loan as a great tool to improve their credit score, thereby easing the process for future loan applications as and when required for various other purposes. 

Necessary Documents Needed for a Joint Home Loan

Documentation is the most cumbersome and tiring part of taking any loan. However, it is a critical part of any lender’s operations as they would want to make sure that their borrower meets income eligibility and supporting documents are provided. 

There are a number of regulatory guidelines for the know your customer (KYC) and property-related documents, where it is imperative that all accurate documentation is shared to avoid unnecessary rejections and thereby delaying the availability of funds. 

For any home loan, typically an applicant needs to provide the following: –

  • KYC documents which include:
    • Identity Proof
    • Address Proof 
  • Income proof documents including but not limited to:
    • Salary slips, Form 16 issued by your employer or
    • Income tax returns (especially for self-employed) of the last three years
  • Property related documents such as: 
    • Agreement to sell, a sale deed or a registry 
    • Previous sale deed for the property (typically all transactions done on that property in the last 13 years) 
    • Few property or location-specific documents like a no-objection certificate (NOC) from relevant authorities or from your bank if the project is funded by any financer in case you are buying new property from a builder.

All applicants need to provide their KYC documents regardless of whether they earn an income or not or whether they even co-own the property. 

If you are applying for a joint home loan mainly for higher eligibility wherein the income of other applicants also needs to be considered, then income documents of all the applicants will be required to be shared with the lender in addition to KYC documents.  

If your purpose is to save on stamp duty charges by adding a female member of the house as a co-owner of the property, then you must make sure that the draft agreements and final sale deed or the registry documents have relevant members stated clearly as co-owners. 

If you are a nonresident Indian (NRI), you can issue a registered power of attorney (POA) in favour of a trusted family member for them to execute the necessary documentation on your behalf. However, you must ensure that the exact purpose of the required transactions are mentioned in the POA, thereby easing the process for compliance and reducing chances of rejection.

Factors to Consider Before Applying for a Loan

Before even applying for a joint loan, it is important to fully understand the lenders’ conditions, which differ depending on the provider you’re considering to approach. 

Lending Conditions

  • If the property has co-owners, in such a case, the lender, in all likelihood, insists all co-owners to become co-applicants as well. 
  • The lender may also insist any or one of your family members become co-applicants in the case of an NRI loan. 
  • If you have given the power of attorney to any of your family members, the lender is likely to insist one of the family members is available in the country as co-applicant for follow-ups and communication purposes to minimize repayment risks.

Credit Score Reports

It is always better to check your and the other co-applicant’s credit score and bureau report prior to applying. This will help to ensure that you are aware of all your past and current loans along with their performance over time. 

In some cases, if it is observed that you may have an old credit card with some minor payment overdue or incorrect reporting by any financial institution, it may lead to the possibility of hampering your overall credit score, reducing the chances of approval.

In India, there are primarily four credit bureaus via which you can check your credit report. Any bureau after paying relevant fees, which is about INR 500, will process your credit report. These credit bureaus include CIBIL, Equifax, CRIF Highmark and Experian.  

When to Avoid Taking a Joint Home Loan?

When a co-applicant already has significant loan obligations and is not left with sufficient income to be eligible for a higher home loan amount, it is generally advisable to reconsider taking a joint home loan and instead consider an individual home loan.

Healthy credit history is very important for lenders while considering applications and a co-applicant who has a bad credit history or poor track of repaying past loans is a major factor while assessing the eligibility of a new loan. 

If your income is sufficient to cover costs with no additional benefits available in terms of tax write-offs, it is suitable for you to avoid a joint home loan and keep the responsibility of your liability limited.

Joint home loans are also best avoided if there is a plan for taking on a larger liability or loan in the near future as the joint loan may impact the eligibility criteria of future loans due to existing liabilities.

Bottom Line

A joint home loan is a beneficial financial tool with the potential of helping the borrower secure higher loan amounts. 

It can aid individuals significantly improve their spending power and investing threshold while buying a larger and more comfortable home and at the same time keeping the primary applicant’s liabilities manageable by sharing the repayment burden with other co-applicants. 

If utilized correctly, it can help you enjoy higher tax benefits, while simultaneously reducing overall tax outgo on a yearly-basis. 

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Fixed-rate student loan refinancing rates inch up, but still hover near record low

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Our goal here at Credible Operations, Inc., NMLS Number 1681276, referred to as “Credible” below, is to give you the tools and confidence you need to improve your finances. Although we do promote products from our partner lenders who compensate us for our services, all opinions are our own.

The latest trends in interest rates for student loan refinancing from the Credible marketplace, updated weekly.  (iStock)

Rates for well-qualified borrowers using the Credible marketplace to refinance student loans into 10-year fixed-rate loans hit another low during the week of April 12, 2021.

For borrowers with credit scores of 720 or higher who used the Credible marketplace to select a lender, during the week of April 12:

  • Rates on 10-year fixed-rate loans averaged 3.78%, up from 3.73% the week before and down from 4.81% a year ago. The record low for 10-year fixed rate loans was 3.71%, during the week of Feb. 15, 2021.
  • Rates on 5-year variable-rate loans averaged 3.26%, up slightly from 3.13% the week before and down from 3.28% a year ago. Variable-rate loans recorded a record low of 2.63% during the week of June 29, 2020.

Student loan refinancing weekly rate trends

If you’re curious about what kind of student loan refinance rates you may qualify for, you can use an online tool like Credible to compare options from different private lenders. Checking your rates won’t affect your credit score.

Current student loan refinancing rates by FICO score

To provide relief from the economic impacts of the COVID-19 pandemic, interest and payments on federal student loans have been suspended through at least Sept. 30, 2021. As long as that relief is in place, there’s little incentive to refinance federal student loans. But many borrowers with private student loans are taking advantage of the low interest rate environment to refinance their education debt at lower rates.

If you qualify to refinance your student loans, the interest rate you may be offered can depend on factors like your FICO score, the type of loan you’re seeking (fixed or variable rate), and the loan repayment term. 

The chart above shows that good credit can help you get a lower rate, and that rates tend to be higher on loans with fixed interest rates and longer repayment terms. Because each lender has its own method of evaluating borrowers, it’s a good idea to request rates from multiple lenders so you can compare your options. A student loan refinancing calculator can help you estimate how much you might save. 

If you want to refinance with bad credit, you may need to apply with a cosigner. Or, you can work on improving your credit before applying. Many lenders will allow children to refinance parent PLUS loans in their own name after graduation.

You can use Credible to compare rates from multiple private lenders at once without affecting your credit score.

How rates for student loan refinancing are determined

The rates private lenders charge to refinance student loans depend in part on the economy and interest rate environment, but also the loan term, the type of loan (fixed- or variable-rate), the borrower’s credit worthiness, and the lender’s operating costs and profit margin. 

About Credible

Credible is a multi-lender marketplace that empowers consumers to discover financial products that are the best fit for their unique circumstances. Credible’s integrations with leading lenders and credit bureaus allow consumers to quickly compare accurate, personalized loan options ― without putting their personal information at risk or affecting their credit score. The Credible marketplace provides an unrivaled customer experience, as reflected by over 4,300 positive Trustpilot reviews and a TrustScore of 4.7/5.

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What is a Credit Builder Loan and Where Do I Get One?

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Your credit score plays an important role in your financial life. If you have good credit you can qualify for loans and borrow money at lower interest rates. If you don’t have a credit score or have poor credit, it can be hard to get loans and you’ll be forced to pay higher rates when you do qualify.

Building credit can be like a chicken and egg problem. If you have no credit or bad credit, you’ll have trouble getting a loan. At the same time, you need to get a loan so you have an opportunity to build credit.

 

What Is a Credit Builder Loan?

A credit builder loan is a special type of loan designed to help people who have poor or no credit improve their credit score.

In many ways, credit builder loans are less like loans and more like forced savings plans. When you get a credit builder loan, the lender places the money in a bank account that you can’t access. You then start receiving a monthly bill for the loan. As you make those payments, the lender reports that information to the credit bureaus, helping you build up a payment history. This improves your credit score.

Once you finish the payment plan, the lender will release the bank account to you and stop sending bills.

In the end, you’ll wind up with slightly less money than you paid overall, due to fees and interest charges. For example, let’s say you get a credit builder loan for $1,000, the lender may make you make a monthly payment of $90 each month for a year. After the year ends, you’ll get the $1,000 from the lender, but may pay $1,080 overall.

Why Get a Credit Builder Loan?

The main reason to get a credit builder loan is right in the name: They help you build your credit. If you don’t have any credit history or if you’ve damaged your credit by missing payments, it’s much easier to qualify for a credit builder loan than a traditional loan from a lender.

The companies offering credit builder loans take on almost no risk because they don’t give you the money until you’ve finished paying the loan, so they’re willing to approve people who have severely damaged credit.

Credit builder loans will help you build your credit history if you make your monthly payments, but you do have to pay fees and interest to do so. There are other ways to build credit that don’t require paying any money. For example, if you get a fee-free credit card and pay your balance in full each month, you’ll build credit without paying any interest or fees.

This makes credit builder loans best for people who have tried and failed to qualify for other loans and credit cards.

There is also some value in the forced savings provided by credit builder loans, but the interest and fees eat away at that savings. If saving is your goal, it’s best to use a different strategy to help you save, but if you want to save and build credit at the same time, a credit builder loan might be worth using.

Where to Find Credit Builder Loans?

There are many companies that offer credit builder loans. Each lender offers different loan terms, fees, and interest rates.

One of the top credit builder loan providers is Self. The company offers credit builder loans with payment plans as low as $25 per month, making it easy for almost anyone to afford a credit builder loan.

With Self, you can also qualify for a Visa credit card after you’ve made at least 3 payments on your credit builder loan and made $100 of progress toward paying off the loan. You can set your own credit limit, up toward the total amount of progress you’ve made on the loan.

The card doesn’t have any additional upfront costs and can help you gain experience with using a credit card. It can also help you build your credit by giving you another account to make payments on, providing you with more opportunities to build a good payment history.

Visit Self or read the full Self Review

What to Look for?

When you’re looking for credit builder loans, there are a few factors to consider.

The first thing to think about is the monthly payment. The point of a credit builder loan is to show the credit bureaus that you can make regular payments on your debts, which will help build your credit score. If a lender’s minimum payment is more than you can afford each month, you won’t be able to build your credit with that lender’s credit builder loan.

It’s also important to think about the cost of the loan. Credit builder loans often come with stiff fees and you also have to pay interest on the money you’ve borrowed, even if you don’t get access to it until you pay the loan off.

The fewer fees and the less interest you have to pay, the better. You should look very carefully at each lender’s fee structure to choose the best deal.

Finally, take some time to see how easy it is to qualify. While credit builder loans are targeted at people with bad credit, some lenders will still check your credit history and might deny your application.

If you have very bad credit, you might want to look for a lender that advertises credit builder loans with no credit check.

Alternatives to a Credit Builder Loan

Credit builder loans can be a good way to build credit for some people, but they come with interest charges and fees. There are other ways you can build credit worth considering. Some of them won’t cost any money, which may make them a better choice than a credit builder loan.

Secured Credit Cards

A secured credit card is a special type of credit card that is much easier to qualify for than a typical card.

With a secured card, you have to provide a security deposit when you open the account. The credit limit of your card will usually be equal to the deposit you provide. For example, if you want a $200 credit limit, you’ll have to give the card issuer $200 as collateral.

Because you give the lender cash to secure the card, it’s much easier to qualify for a secured credit card. The lender assumes almost no risk. Once you get the card, it works like any other credit card. You can use it to spend up to your credit limit and you’ll get a bill each month. If you pay the bill on time, you can build credit.

Many secured cards charge high interest rates and have hefty fees, but there are some fee-free options available. One great secured card is the Discover it Secured Credit Card, which has no annual fee and offers cash back rewards.

Become an Authorized User

Most credit card issuers let cardholders add other people as authorized users on their accounts. Authorized users get their own cards and can use them to spend money just like the main cardholder.

Some issuers will report account information to the credit reports of both the main cardholder and any authorized users. If you know someone that is willing to make you an authorized user on their credit card account, this may help you build your credit so you can qualify for a card of your own.

Not every issuer will report information to authorized users’ credit reports. It’s also worth keeping in mind that if you become an authorized user on a card and the cardholder stops making payments or racks up a huge balance, that will show up on your report as well, damaging your credit further. That can make this strategy risky.

Personal Loans with a Cosigner

Personal loans are highly flexible loans that you can use for almost any reason. If you need to borrow money, you can try to find someone who is willing to cosign on the loan. Having a cosigner can make it easier to qualify, even if you have poor credit, giving you a chance to build your credit score.

When someone cosigns on a loan, they’re promising to take responsibility for your debt if you stop making payments. Lenders will look at both your credit and your cosigner’s credit when you apply, so having a cosigner with strong credit can help you get the loan or reduce the interest rate of the loan.

Keep in mind that your cosigner is putting themselves at risk by cosigning on a loan. It’s even more important that you make your payments every month. If you don’t, your cosigner will have to pick up the slack.

Personal Loans without a Cosigner

Even if you have poor credit, you may be able to qualify for a personal loan designed for people that don’t have strong credit. Just keep in mind that you’ll have to pay higher fees and interest rates to compensate for your poor credit score.

If you’re looking for a personal loan and have poor credit, shopping around for the best deal becomes even more important. You can use a loan comparison site, like Fiona, to get quotes from multiple lenders so you can find the cheapest loan.

Related: Best Emergency Loans for Bad Credit

What Is the Difference Between a Credit-Builder Loan and a Personal Loan?

A personal loan is a type of loan that you can get for almost any reason, such as consolidating debts, starting a home improvement project, paying an unexpected bill, or even going on vacation. They’re offered by many lenders and banks.

A credit builder loan is less a loan and more a forced saving plan. When you get a credit builder loan, the lender doesn’t actually give you any money. Instead, it places the amount you’re borrowing in an account you can’t access. Once you finish paying the loan, the lender releases the money in that account to you.

Credit builder loans tend to be much easier to qualify for than personal loans because the lender doesn’t have to take on much risk. They’re mostly used by people who want to build or rebuild their credit score.

On the other hand, personal loans are less popular for building credit and more useful for providing funding when borrowers need cash to cover an expense.

Related: Best Prepaid Credit Cards That Build Credit

Pros and Cons of a Credit Builder Loan

Before applying for a credit builder loan, consider these pros and cons.

Pros

  • Easy to qualify for
  • Helps you build savings
  • Payments are usually small
  • Helps you build payment history

Cons

  • Not really a loan
  • Fees and interest rates can be high
  • There are cheaper alternatives to build credit

FAQs

These are some of the most frequently asked questions about credit builder loans.

Like most loans, it is possible to repay a credit builder loan ahead of schedule, but there are a few downsides to consider. One is that many lenders add an early repayment fee to their loans, so you’ll have to pay that fee if you want to get out of the credit builder loan. The other is that repaying the loan early somewhat defeats the purpose. Each monthly payment you make toward the loan helps you build your credit. If you pay the loan off early, you’ll make fewer monthly payments, which means less improvement in your credit.

Missing a payment on a credit builder loan is like missing a payment on any loan. You’ll likely owe a late fee and it will damage your credit. This is one of the reasons it’s important to make sure you can afford the monthly payment before signing up for a credit builder loan. If you can’t make your payments, the loan will wind up damaging your credit instead of helping it.

Final Thoughts

Credit builder loans can be a good way to build or rebuild your credit, but they’re not your only option. They often involve paying fees and interest, so you should search around for the best deal or look for cheaper (or free) alternatives, such as secured credit cards.



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