Rebuilding your credit score with guarantor loans
There are numerous ways to improve your credit score from a particularly bad position, but any of these may be unachievable without a little help from your friends. One particular route you can go is through is to rebuild your credit score with guarantor loans. Leaning on someone you know with a fair-to-good credit score to endorse your credit file, you can help your credit score along, so long as you deliver on your promises – otherwise, things could go even sourer.
How to rebuild your credit score with guarantor loans
You can show you’re a changed person in the eyes of your credit file by meeting every single one of your repayments on a guarantor loan. It will effectively give you better options in future if you want to reapply for another guarantor loan, and can even unlock one of many “mainstream” unsecured loans and credit cards that offer lower rates of interest than you many have ever had access to before.
Sustainability
Don’t get ahead of yourself: focus on one agreement at a time, even if it takes you a long while to do it. While borrowing money helps rebuild a poor credit score, borrowing in an unsustainable way can lead to you missing repayments. Services like Noddle give you your credit score for free, and can even recommend a number of options for you.
Things to ensure with your guarantor loan
Firstly, you must be completely honest about your history with money with your potential guarantor. Aside from losing a friend or relative’s support, lying about (or reneging on) your commitment could not only affect your financial future, but drastically impact on theirs, too.
After all, if the worst comes to the worst, you may default and they could have to cover your repayments. If it’s too much, it could lead to them even losing their home. Similarly, it pays to be as candid as possible with your lender, especially if you’re ever in danger of missing a payment. Prevention is better than the cure, and it’s often in lenders’ best interests to help you through a rocky patch, especially if the problem could effectively be reduced to a “one-off”.
Only get what you need
Guarantor lenders tend to put forward loans between £1,000 and £5,000 (and even as much as £8,00), but think about how much you actually need. The more you lend, the more commitment you and your guarantor need. With your credit score at the front of your mind, it may be better to take out several smaller sequential deals and complete them, instead of taking out one huge one – even if you don’t have any problems making each payment.
- Author bambooloans
- Posted 6 July 2018
