Getting your credit history started or restarted can be challenging. If you have cash-on-hand, Shared Secured Loans are an option to consider and White River Credit Union can help.
What is a Shared Secured Loan?
Simply put, you are borrowing the money you already have. With a Shared Secured Loan, your financial institution loans you money, up to the amount you have in savings. Let’s say you have $10,000 in savings. If your share secured loan is $4,000, that amount is locked, in case you can’t repay the loan, but the rest ($6,000) remains available for your immediate use.
You simply make payments on the loan just like any other — through automatic withdrawal from checking, via direct deposit or manually each month.
How to Use a Share Secured Loan to Build Credit History
A good credit rating is among the most important measures of financial health. Good credit scores tell lenders that you’re financially responsible, making loan approvals easier — or possible! Solid credit also helps secure the lowest interest rates whenever you borrow.
But you have to start somewhere. Research suggests one in five Americans have a thin credit file, meaning their credit report lacks sufficient information to generate a credit score. Taking out a Shared Secured Loan is a safe way to build credit because there’s minimal risk. In fact, you can simply take the loan money and put it in your credit union if you don’t need it for other expenses, so there’s almost no chance you’ll have trouble repaying.
These loans often have lower qualification thresholds. They have few (sometimes no) restrictions — you can use them for car repairs or buying new furniture. They may have very low-interest rates compared to credit cards or other loans. Payments can be scheduled to fit your financial circumstances, avoiding an undue burden on your budget.
Find a Credit Union You Can Trust
White River Credit Union wants to be your long-term financial partner for loans in Washington — Enumclaw, Maple Valley, Buckley or Black Diamond. Whether you want a line of credit, mortgage, vehicle loan, savings, checking or you need business accounts, contact us today, we have answers to all your questions. It’s more interesting here!