Build Credit with Loans Chalkboard and Stick Figure Animation

4 Ways To Build Credit with Loans

Are you looking for more ways to improve your credit score? Building credit can be difficult for some, especially after financial difficulties like bankruptcy. Thankfully, there many ways to help this process along, with credit building loans being one of them. Credit building loans are nothing new, but they aren’t widely advertised since banks can’t profit from them. With these loans, however, you can kick start the credit building process. You don’t need excellent credit to be approved for these loans, so long as you can make repayments on top of your existing monthly expenses.

How Do Loans Help My Credit?

credit building by paying loans Borrowing money and paying it back in a timely manner is reflected on your credit reports, reports made by financial institutions you interact with. This, in turn, makes you look reliable to future lenders. When your credit takes a hit, however, it can be difficult to finance larger purchases. Your credit score can impact everything from getting a job to buying a house, so it’s important to keep your credit in shape by paying things back on time. Defaulting and having bills end up in collections negatively effects your credit, so it’s best to only borrow amounts that you can afford to make payments on.

Loans That Build Credit

building your credit with loans There are different types of credit building loans available when it comes to building credit. These are a few of the more common options:

1. Passbook or CD Loans

cd used as loan collateral A CD (certificate of deposit) is similar to a savings account in that your money is insured by the bank, making it a relatively risk free investment. Your bank may allow a CD to be used as loan collateral, though you may only be allowed to borrow up to a certain percentage of the money in your CD account. There are some banks that will allow 100% of your CD or savings to be used for this purpose.

2. Credit Builder Loan

This type of loan is great regardless of the type of credit you have because you will be approved. The reason that you will be approved is because you must pay all the money that you borrow into a designated savings account. You are not able to have any access to that money at all until you have paid the full amount of the loan.

3. Secured Installment Loans

secured installment loans An Installment Loan allows you to borrow as much as 98% of the balance of your savings deposit. It is the usual policy of most banks that the least amount of the money borrowed is $1,000.00. There are generally no costs or fees associated with this type of loan, and the borrower does not need to confirm their employment status or income. You are borrowing money against the money you have on deposit at the bank, and this allows you to continue earning interest on those funds. These types of loans offer lower interest rates than traditional loans or credit cards.

4. Credit-Builder Loans

credit builder loan These loans are a good tool for someone with bad credit to have the opportunity to build their credit from the ground up. The main reason that loans are necessary for credit building is because the progress and timing of payments are constantly being reported to the credit bureau which establishes a credit rating for the borrower.


Credit building loansOpens in a new window are a great tool for people to use when they need to rebuild their credit or if they do not have any credit history. Taking out a loan is a better option than credit cards because the interest is a lot less and the payments are fixed. When you are trying to rebuild credit using a credit card there is the temptation to use the room that you have on the card by racking the balance back up again. This is harmful because balances should be kept at 30% of the limit. If you are a person that is not disciplined with credit then you should avoid credit cards altogether. The first step is to contact a bank that you deal with or hold accounts at. Speak to someone about loans that improve credit scores and rebuilding credit. You should be able to get access to a loan that can help you set up a new and positive credit history.

10 Payday Loan Benefits and How They Can Work For You

Read More

What are the Advantages to Working With a Direct Lender?

Read More

About Check Into Cash

Check Into Cash specializes in small-loan lending with Payday, Installment, Title Loans, and more, depending on your state.

It’s Quick, Easy & Confidential®  to get the cash you need today. We reach over 25 states with more than 650 store locations and easy online lending, too.

Popular Articles

How To Get Water Turned Back on After a Shut Off

Read More

Can't Afford Childcare? Here are 9 Tips for Working Parents

Read More

Jobs That Pay You Cash the Same Day You Work

Read More

CIC on Facebook

3 weeks ago

Check Into Cash
Now with the weather growing warmer, it’s time to bring your swimming pool out from storage and ready it for some sunshine action. But before you can host your annual backyard bash, you are going to need some serious water- and cash to pay for it. Good thing there is a Check Into Cash nearby where you can cash your check before your water delivery arrives. and fees apply. In GA, check cashing transactions by Check Into Cash of Georgia, LLC – NMLS lic. # 1247873. ... See MoreSee Less
View Post on Facebook

3 weeks ago

Check Into Cash
Your niece’s birthday is coming up, and you not only have no idea what gift to get her. But you also may have waited until the very last minute to remember as well. No time to shop, you do the next best thing. Send her cash securely using Check Into Cash’s Western Union® money transfer service. products & services may not be available at all locations. Rules & Fees Apply. See store for details. ... See MoreSee Less
View Post on Facebook

The information provided on this website does not, and is not intended to, constitute legal or financial advice. Rather, all information, content, and materials available on this site are only meant for general informational purposes. Information on this website may not include the most up-to-date legal, financial or other information. This website contains links to other third-party websites. Such links are only for the convenience of the reader, user or browser. We do not recommend or endorse the contents of the third-party sites nor are the owners of such third-party sites recommending or endorsing our services. Check Into Cash is not affiliated with nor endorsed by any of the websites, companies or entities mentioned in this blog. See a licensed attorney for legal advice and see a certified public accountant or financial planner for financial advice. No reader, user, or browser of this site should act or refrain from acting on the basis of information on this site without first seeking professional advice. All liability with respect to actions taken or not taken based on the contents of this site are hereby expressly disclaimed. The content on this posting is provided “as is,” and no representations are made that the content is error-free.