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This week, we’re looking at how you can rebuild credit with a guarantor loan designed to help people in your situation get back on their feet.
Borrowing money to repair your credit score sounds like a strange solution, doesn’t it?
Most advice about repairing your credit score talks about getting on the electoral register, setting up direct debits and clearing your existing debt.
But you don’t often hear advice that you should take on more debt, do you?
However, there are some circumstances where borrowing money can actually help you rebuild your credit in the long run.
Let’s take a look at them…
Before we start, here’s a quick (and fun!) refresher on how credit scores work, if you want to brush up…
Credit scores can be a little confusing, so it helps to understand how they work before we look at how you can rebuild credit with a guarantor loan.
So, can you rebuild credit with a guarantor loan?
Yes: if you’ve got a lot of smaller debts that you’re finding difficult to manage…
This first scenario is the most common: rebuild credit with a guarantor loan for consolidating debt.
If you’ve got lots of payments that you’re finding difficult to manage — perhaps a credit card payment on this day, a loan repayment on that day, a store card repayment on another day… — then it can be easier and cheaper to use a guarantor loan to pay off all of your existing debts and roll them into one monthly payment.
Not only does this mean that there’s less to stay on top of — one payment is much easier to manage than 3 or 4 — but you know exactly how much you’ll be paying back every month, so you won’t be surprised by a big credit card bill or increased interest.
By making regular, on-time payments and paying down your overall debt, you’ll take consistent strides towards rebuilding your credit score.
Yes: if you’ve had money troubles in the past and need to borrow money…
If your credit score has taken a bit of a hit in the past — perhaps through lots of missed payments or a CCJ — but you need to borrow money, then you can rebuild credit with a guarantor loan and borrow the money you need.
Having somebody that guarantees your loan repayments makes you more likely to be accepted for a loan, as it makes you a safer bet to the lender. And being a safer bet to your lender will help you get more affordable rates (making your loan cheaper in the long run).
This is fantastic news because making regular and on-time repayments on your guarantor loan can help fix your credit score by paying down debt and demonstrating financial responsibility.
Yes: if your credit score is stopping you from finding affordable borrowing options…
If you’ve been struggling to find affordable borrowing options because of your credit score, it can be tempting to go with the only options available to you (like high-interest loans or credit cards).
However, these kinds of debt can be trouble. It’s not uncommon for people to fall into a debt spiral where high-interest debts lead to more debts which lead to more debts, and so on…
Debt spirals are not good for your credit score, either.
Instead, a guarantor loan can help you borrow money, even if you’ve got a poor credit score. In fact, guarantor loans were designed specifically for people with no credit history or bad credit scores to have access to more affordable borrowing options by leveraging a friend or family member’s good credit score.
If you’re thinking of rebuilding your credit with a guarantor loan – why not get an instant quote to see how much you can borrow? It’s quick, easy and – most importantly – leaves no mark on your credit history.
- Author The Bamboo Team
- Posted 18 September 2019