What is a Credit Builder Loan – 3 Things to Watch For

So, you’ve been researching ways to repair bad credit. Along the way, you’ve heard of several different tactics. Perhaps you’ve even tried a few of them. But now you need something more efficient, which leaves you with a pressing question: “what is a credit builder loan, anyway?”

Well, when done through a reputable company, a credit builder loan is an effective way to rebuild your credit. It’s a simple loan. You won’t find it widely advertised or even offered by smaller financial companies such as credit unions or banks.

Financial companies look for reliable people. That means, when someone gives you a loan, you pay it.  Show this reliability enough over time and banking institutions will begin to trust you. This type of loan supports you throughout the process.

However, it’s important to keep an eye out for loans. As with any type of interest-based income stream, you’ll likely come in contact with plenty of unreputable places. Run.

It’s important for banking institutions to trust you, but trust extends both ways. Not all institutions care about what’s best for you; they’re just in it for a profit. So, when choosing a company for your credit building loan, make sure to keep an eye out for a few red flags.

The Ever-Present Scam Artist

Credit builder loans also go by names like ‘fresh loans’ or ‘restart loans’. They come with their own set of payment schemes and fulfillment obligations. This is a trap for many people as they don’t read the fine print, and say yes to anything that gets the ball rolling.

They’re so desperate to get their credit back, they’ll do anything to get some relief.

Unfortunately, sharks smell fear. This type of desperation attracts the wrong type of business person. If you want to survive in shark-infested waters, you need to watch out.

Don’t see someone who isn’t officially accredited.

Ask to see proof. If they become defensive or evasive, this is a clear sign to look elsewhere.

Only meet with someone who does this as their full-time income.

Don’t settle for a person who offers loans as a side hustle. Chances are, they’re just looking for a quick buck.

Avoid places that have received poor ratings and reviews.

Check Yelp, Google, and Facebook for feedback from previous customers. This often gives a good idea of who they are.

A Lack of Improvement in 3-4 Months

Aside from the initial scam, you should also watch out for how things are progressing. If your credit score hasn’t improved within 3-4 months of taking the loan, then something is wrong here. This is a key indicator that something is not working.

You should watch out for these types of schemes. Some warning signs include:

  • They don’t offer any direct solutions. Only intangibles like time.
  • They only promise. No results.
  • They don’t answer your questions. Only evade and change the subject.

Want to make sure your credit builder loan is working? Ask the staff direct questions. Inquire about how your score is improving, along with what steps they’re taking to do even better.

Requesting You Take Out a Large Loan

Sketch financial firms will often push you to take out too large of a loan. You know how much more of a debt burden you can handle — and so do they. Be wary of any company pushing you beyond your limits.

Not only is it bad business, it could end up hurting your credit instead of helping it.

For many people, taking out small loans over time makes more sense than taking a giant loan that you pull off after a few years of financing. A good financial institution wants to keep you financially healthy. Pressuring you beyond your limits is a huge red flag.

Would you like to work with a reputable credit repair company? Contact us today!

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