Everyone knows that during the past several years our economy has taken a severe blow. In turn, so have our finances. Not only did gas prices increase, but our 401(k)s took a hit and we faced higher prices for food and clothing. Many people had to sell their homes for far less than what they were worth or lost them to foreclosure. People were forced to choose between car payments or paying for food, electric, water, etc. for their families.
One of the worst side effects of this economic downturn was that many people lost their jobs or had their hours or pay cut due to layoffs or downsizings. Businesses just could not afford to stay open at full capacity any longer or had to close down their business all together. Millions were forced to file bankruptcy.
As a result of all of these factors, many individuals’ credit suffered as they fell behind on credit card or house payments. Many people had to resort to living and surviving on credit just to make ends meet. This caused credit scores to go down significantly. Merchants report past due amounts and turning them over to collection agencies and people are not qualifying for loans because of this negative reporting.
Now, Let’s Rebuild That Credit
But there is a solution to this problem. SECU can give you the opportunity to rebuild your credit or establish new credit for first time borrowers who don’t have co-signers to help them. If you put $500 in a savings account, you can be approved for a share secured loan with a low interest rate of 4.65% while earning interest on the money in your account each quarter.
If you open a shared secure loan, SECU will place a hold on the money in your savings account. They will give you $500 at closing to use as you see fit – to pay off loans or make a purchase you’ve been saving for. Then, you would work toward paying off that $500 by making monthly payments.
Of course, an even better idea would be to put that $500 right back into your savings account. Then you would have $1000 in your account. The terms of the loan would require you to pay it off in 3 – 6 months. Then you could borrow against the $1000 you have in your account, put that back into your savings, and then you’re working with $2000. You could then pay the loan off in 9-12 months. If you were able to keep doing this, before you know it you will have a nice little nest egg and setting money aside for the future.
This system will help you build a solid payment pattern which will increase your credit score. In addition, if you were able to pay off any additional loans with the funds, that will also raise your credit score. Before you know it, you will qualify for loans with lower interest rates and have your financial future back on track.