A personal loan might seem the best option if you need $1,000 now. Unfortunately, you’ll need a minimum credit score of 600 to 660 to qualify for most personal loans. Despite having bad credit, it’s still possible to get the cash you need and even boost your credit score in the process. A credit builder loan is a great option for borrowers who need money now but don’t meet the credit score requirements for traditional personal loans. The application process is fast and simple.
What is a credit builder loan?
A credit builder loan is an installment loan designed to help people who have little to no credit history start building credit. It’s a safer and less expensive financing alternative to credit cards and payday loans.
With most credit builder loans, the amount you borrow is kept in a bank account while you make payments. You typically won’t be able to access the money until you have fully repaid the loan.
Credit Builder loan application
Follow these steps to build credit and access loans up to $1,000.
Step 1: Find a credit builder loan provider
There are quite a few credit builder loan providers to choose from. Ideally, you want to work with a lender that has a good reputation and is in line with best consumer financial practices. Most importantly, you’ll want to work with a financial institution that is FDIC-insured. This means that if you open a banking account, your funds will be protected by the Federal government for up to $250,000. Even if you’re not looking to open a banking account, this qualification can help ensure you’re working with a legitimate institution.
When in doubt, make sure to review ConsumerFinance.gov. You’ll find a wealth of resources on best consumer financial practices as well as how to spot and prevent potential scams.
Step 2: Review loan details
After you’ve found your loan offer, funds will be released to you in two parts. A portion of your loan funds will be given to you the day you’re approved, while the remainder of your loan funds will be saved until you pay off the loan in full.
Keep in mind that with credit builder loans, it’s best to repay your debt as soon as you receive your paycheck. This will ensure interest charges don’t pile up and that you won’t fall into debt.
Step 3: Build your credit and monitor your progress
FICO says that 35% of your credit score is based on your payment history. We can’t stress enough how important it is to never miss a due date. The best way to make processing payments a breeze is by syncing up your automatic payments with your pay schedule. This way, you can ensure you won’t miss a payment and that you won’t have to repay more than you should in high-interest rates.
What to know about $1000 loans
Credit builder loans can be one of the fastest ways to get same-day cash in your hands while increasing your credit rating over time. But it’s also important to explore other options for fast financing. Another responsible way to obtain extra cash is by asking your employer for an advance. You can also try asking friends or family for a loan. If you do decide to go this route, make sure you get the details of the loan in writing so that the repayment terms are clear.
When you need extra cash, an additional $1000 can make a ton of a difference. Although borrowing this amount of money can seem daunting, you may be able to obtain a solution through a credit builder loan. So long as you understand the terms you are agreeing to, and you’re able to pay back what you’ve borrowed in a timely fashion to avoid high-interest rates.
Can I get a $1,000 loan with bad credit?
In most cases, borrowers won’t qualify for traditional loans with bad credit unless they have a cosigner. Borrowers with bad credit can apply for a Credit Builder Loan through MoneyLion to get $1,000 fast.
Where can I get a $1,000 loan instantly?
You can get a $1,000 loan instantly by turning to a bank or credit union for a personal loan, but you must meet their borrowing requirements to qualify. MoneyLion offers a Credit Builder Loan with no minimum credit score needed.
How much does a $1,000 payday loan cost?
Payday lenders usually charge $15 to $20 in interest for every $100 borrowed, which amounts to $150 to $200 on a $1,000 payday loan.