How Secured Loans Can Help
Consumers who need to rebuild their credit histories can take secured loans to start the process. A secured loan is an advance that a lender gives to a person who is willing to offer some type of collateral. Usually, borrowers allow the lending institutions to place liens on their homes or their automobiles to ensure that they repay the loans.
Who Qualifies for Secured Loans
Generally, to receive an unsecured loan, the debtor has to have a credit score of 650 or more. Therefore, those who expect to qualify for secured loans should have a credit score in the range of 450 to 650. Some organizations will accept applicants with lower scores than that.
Any consumer who is 18 years of age or older may apply for secured loans. For the applicant to be eligible to offer something as collateral, the property must belong to him or her. That person’s name must be clearly stated on the ownership document as the owner. The individual must also have identification and proof of income for the lender to consider. If the person meets all the previously stated criteria, the lending organization may approve secured advances.
The Benefits of Secured Loans
The greatest benefit of secured loans is that they give a person a chance to reestablish a trustworthy payment history. After approximately six months to one year, a debtor will start to see a rise in the overall credit score. Eventually, that person will once again be eligible for traditional unsecured loans and credit cards.