Even when you’re at a stable place financially, a personal loan is a great stepping stone toward improving your credit whether you think you need it or not. As a key way to receive funds, a personal loan could protect you from overdrawing your bank account and ensure payments are made.*
Here are the top 5 reasons to apply for a personal loan:
1. Avoid late payments
From utility bills to credit cards paying all bills on-time matters. One late payment could hurt your credit score because on-time payments are a major factor in your overall payment history. Your payment history represents 35 percent of your total credit rating, according to credit score provider FICO. Credit Karma also pointed out late payments can raise your interest rates and increase the chance the lender could charge a fee. With the risk of having higher rates in the future, you could apply for a personal loan to make sure you have the funds to pay bills or other credit obligations.
Monthly bills can include:
- Electric bills
- Water/sewer payments
- Internet/cable bills
2. Build your credit history
The better your credit history, the better your options to save money with respect to repayment terms when getting a loan for a car or a mortgage. To strengthen that history it’s important to demonstrate you can maintain a variety of credit, both revolving and installment. Many of us have credit cards, which are a form of revolving credit. That’s why it’s essential to also have installment loans. A personal loan, helps increase your credit mix and build a history of on-time payments, which can potentially raise your score.
3. You need cash fast
While other credit obligations can take time to apply, be approved and have money deposited into your account, you could acquire a personal loan quicker than obtaining a credit card or other line of credit. Some alternative lenders can transfer money into your account as soon as the next business day depending on when you apply.
4. Unexpected expenses and repairs
Although you might be comfortable in your finances, there are events that could shake up your budget and bank account. Whether you’ve suffered an injury or got into a car accident, there are times when you need money quickly to cover all of these out-of-pocket expenses. If you do not have an emergency fund, you could apply for a personal loan to pay for unexpected home or car repairs or personal injuries.
Unexpected costs could include:
- Home improvements and disaster recovery
- Urgent repairs
- Medical payments
5. You can’t qualify for certain lines of credit
Traditional lenders have very high standards and only see you as a credit score, and are inclined to ask for collateral. Many lenders have strict qualification requirements that could block borrowers from being eligible for a loan.
Why apply for a personal loan with LoanMe
While some traditional or other alternative lenders might have demanding credit standards that can prevent borrowers from qualifying, LoanMe offers loan products designed to be more inclusive of borrowers. We believe in second chances that should not be overcomplicated with a dense and slow application process. This is why LoanMe’s application process is fast and requires just three documents: bank statements, proof of income and a valid form of ID.
Apply for a personal loan with LoanMe today.
*This article has been prepared for general information purposes only. The information presented is not legal, financial, tax or accounting advice, is not to be acted on as such, and is subject to change without notice. Credit approval is subject to LoanMe’s credit standards, and actual terms (including actual loan amount) may vary by applicant. LoanMe requires certain supporting documentation with each new application. If you have any questions regarding this, call us at 844-311–2274. California loans are made pursuant to LoanMe’s California Department of Business Oversight Finance Lenders Law License #603K061. LoanMe also offers loans in certain other states which may have higher minimum loan amounts. Copyright © 2015 LoanMe, Inc. All rights reserved.