Personal Rates

Types of Loans that Help Build Credit

The best uses of credit typically involve borrowing for things that: appreciate in value, generate future income or maintain their value once the loan or debt is paid off.

Don’t have any credit – or trying to build a more positive credit history? Consider these types of loans:

  • Loan options to help build credit A savings secured personal loan . A savings secured personal loan means you’re borrowing against the funds you have in your savings account. Your credit is not reviewed at the time the loan is made and making on-time payments for at least six months helps build your credit score.

  • A Credit Builder loan is a combination loan and savings program available at Ent that can help you build good credit history when you make your payments on time.

  • Consider starting with a store credit card. It’s often easier to get a store card than a bank or credit union’s credit card. Make sure to pay the card off each month as store cards often carry high interest rates.

  • Research the availability of a secured credit card. Secured cards require a deposit to the card company, and your credit limit is equal to the amount of the deposit. As with all cards, keep the balance low and make on-time payments for the most positive impact on your credit score.

  • Apply for a major credit card . Shop around to make sure you get the best card for your situation. Look for a card with a low interest rate and no annual fee. Don’t apply for more than one card at a time; applying for too many cards at once can negatively impact your credit score and decrease your chances of being approved for a card.

  • Finance a vehicle purchase . If you don’t have a good credit score or you have no credit history, consider having a cosigner. If you choose to have a cosigner – remember that making your payments on time (or not) impacts not only your credit score but your cosigner’s credit score as well, because they are equally responsible for your loan.

For more information, visit Savvy Money’s blog on Credit .

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