A personal loan can come in handy in the case of an emergency like a medical expense or car repairs. With these types of loans, having strong credit can help you qualify for better rates and terms. But keep in mind that if you have poor or fair credit, there are still plenty of options at your disposal. Let’s dive deeper into why your credit score is important, some ways to improve your score, and some same-day personal loans for borrowers with poor credit.
Why is my credit score important?
Your credit score is what lenders look at to determine your ability to qualify for a new loan. Your credit utilization, credit mix, and history of bill payments are what build up your credit score and reflect the type of borrower you are. The better your credit score is, the more likely you will qualify for a loan, and the better loan terms will be.
How to improve your credit score
If your credit score needs a bit of work, here are a few actions you can take to improve it over time:
Review your credit report
Going over your credit report will provide you with an overview of what you need to work on. You’ll be able to see what debts need to be paid and what areas of your credit history are in good standing.
Pay your bills on time
Your payment history makes up a large part of your credit score. When you apply for a loan, you’re asking a lender to provide you with a sum of money with the intention of paying them back. Lenders want to see that you have a history of paying back loans and credit cards to give them more confidence in you as a borrower.
Use less of your credit
Your credit utilization shows how much credit you spend compared to how much you have. You want to show lenders that you manage your credit responsibly. So, it’s wise to spend around 30% or less of your credit limit to keep a low utilization rate.
Inaccuracies on your credit report can negatively affect your score. You don’t want this to hinder your ability to qualify for a loan. If you find discrepancies on your credit report like a name misspelling, wrong address, or unknown accounts, you can file a dispute with the credit bureau that created your report.
Same-day personal loans for borrowers with poor credit
If you need emergency funds now and can’t wait for your credit to improve, here are some same-day personal loan options to consider:
- Cash advance: A cash advance is a small-dollar loan that can give you quick funds to cover expenses. You can get a few hundred dollars to hold you over between pay periods and pay back the loan when you receive your next paycheck.
- Title loan: You can use your car as collateral to get a title loan if you need funds. The amount of money you receive will depend on your car’s value. If you’re unable to repay the loan, the lender has the right to repossess your vehicle, so it’s important to have a solid repayment plan.
- Installment loan: Installment loans give you a lump sum of money upfront. With these loans, you’ll make fixed monthly payments on over months and even years. Many installment loans have lower interest rates compared to other loan options.
- Line of credit: With a line of credit, you can get access to funds that you can withdraw from as needed. You can pay back what you owe all at once or over time and will only pay interest on the amount you borrow.
The bottom line
Your credit score is a powerful number and can be an important factor in the application process for a new loan. Your credit report provides a detailed reflection of the type of borrower you are to give lenders better insight into their decision-making.
To improve your credit score, you can monitor your credit report, pay your bills on time, use less of your credit limit, and dispute errors on your report. But if you have a poor credit score and need extra funds right away, you can get a same-day personal loan for poor credit like cash advances, title loans, installment loans, and lines of credit to hold you over.
Notice: Information provided in this article is for information purposes only. Consult your financial advisor about your financial circumstances.