Your credit score plays a significant role in your financial health. Aside from impacting your ability to qualify for loans with better interest rates and terms, having good credit can help you secure housing and possibly receive discounted insurance rates. Whether you're building credit from scratch or repairing financial blemishes – improving your credit score can be done with confidence and less stress.
How to Qualify for a Loan and Raise Your Credit Score
Qualifying for a loan isn’t always easy if your credit score is low or has a few flaws, but there are options that may help you get approved. One way is by adding a qualified co-signer to your loan. A co-signer is someone who allows you to use their good credit history to help you get approved for a loan or credit card.
Examples of When to Use a Co-Signer
- Student loans
- Renting an apartment or applying for a mortgage
- Credit card
- Personal loan
- Some auto loans
Impact on Credit: A co-signer shares equal financial responsibility for the loan – meaning they are legally obligated for the loan if the primary borrower doesn't pay. Any late or missed payments will negatively impact both the primary borrower’s and co-signer’s credit.
Special Loan Programs Designed for No Credit and Less than Perfect Credit at Peach State
For individuals who do not have a qualified co-signer or choose not to use one, there are special programs designed to help you get approved for a loan on your own. These programs provide you with a safe way to build your credit score and improve your financial health.
- Share Secured Loan: Your savings serves as collateral for the amount you want to borrow – meaning the funds are ‘frozen’ in your account and unavailable for withdrawal until the loan is repaid. Once you’ve repaid the loan, your savings account is ‘released’ and your money becomes fully accessible for use.
- Fresh Start Auto Loan: Offers financing for individuals with less than perfect credit who might otherwise struggle to qualify for traditional auto loans on their own.
- First-time Car Buyer Auto Loan: This auto loan program is designed to help individuals with no credit or limited credit history finance their first vehicle. Peach State offers Ready, Set, Drive! for members between the ages of 18-26.1
- Student Platinum with Rewards Credit Card: Made for young adults 18+, who are just beginning their credit building journey. A guarantor may be necessary if your annual income is not sufficient for repayment.
Guarantor: Similar to a co-signer, a guarantor is someone who legally agrees to cover the loan if the primary borrower is unable to do so.
Use Credit Responsibly to Help Improve Your Score
Unlocking the balance between responsible credit use and incorporating healthy money management practices is the key to improving your credit score. By following these best practices, you’ll be well on your way to creating a brighter financial future.
Best Practices for Boosting Your Credit
- Always make payments on or before the due date.
- Don’t borrow more than you can repay or take on a loan payment that stretches your budget thin.
- Create a budget and carefully monitor your spending and saving habits. Consider trying a budget calculator to help you determine where your money is going and where you can afford to cut back.
- If your budget allows, pay more than the minimum payment each month. Even if it's just a few extra dollars, you'll save money in interest while paying down the balance faster.
- Check your credit report at least once a year for any errors or discrepancies, and correct them immediately.
The Power of Smarter Budgeting
A well-structured budget does more than just track expenses – it creates a roadmap for your money and paves the path to your financial wellbeing. Adding good spending habits to your daily routine and prioritizing saving using a budget will ensure that all your hard work towards improving your credit continues to be worthwhile.
Smarter Budgeting Starts Here!
- List all your income (include side gigs and part-time work too).
- Identify all expenses and sort them into categories (food, housing, utilities, car, entertainment, etc.).
- Create a spending plan using one of Peach State’s ‘3 Practical Budget Templates That Actually Work’. Use a budget calculator to help you determine where your money is going and where you can make adjustments.
- Open a designated savings account and be sure to prioritize saving for emergency situations.
- Monitor and adjust regularly as your financial situation changes.
Budgeting Tip: Divide each of your bills by your pay frequency. For example, if your car payment is $255 a month and you get paid weekly, divide $255 by four, tuck that amount away each pay period and don’t spend it. This tactic will help ensure that all your necessary costs are covered and bills are paid on time.
Keep Your Credit on Track with the Help of Peach State
Whether you’re just starting to build credit from ground zero or working to raise your score, achieving your financial goals is possible! At Peach State, we offer a variety of credit building solutions to help you get your credit score back on track. From special loan programs to educational resources and even financial tools for spending and saving, we're here to help you maintain your journey towards long-term financial stability and health.
If you’d like to find out more about ways to take back control of your credit and how we can help, contact a Peach State team member or visit a branch near you today!
1 Certain conditions apply.
