In this episode of
Money Creation Explained we are going to cover How to Use
Secure Loans to Build or Rebuild your Credit Score.
A credit score is a three digit number that is calculated
from information on a credit report and generally ranges
between 300 and 850. It is a numerical rating that measures
a person’s likelihood to repay their debt. Common factors
that affect a person’s credit score is their payment
history, credit usage, length of credit, type of credit
accounts, and recent activity. A good credit score is 700
and above, and an excellent credit score is 800 and above.
Credit scores are used by lenders and others to help
determine the likelihood that someone will pay what they owe
on debts such as loans, credit cards, auto payments,
mortgages, rent, and utilities. The industry standard is the
FICO Score which was first introduced by FICO (then called
Fair, Isaac, and Company) and a newer competitor called
VantageScore started to compete with them in 2006.
A popular option to build or rebuild credit is to use a
Secure Credit Card. It is used by people with no credit
history or poor credit history. Instead of companies
advancing credit to the user, these people utilize their own
funds to get credit. For example, $1,000 put into a secure
credit card will allow the user a $1,000 credit limit. Then,
as it is paid back, the user receives credit again to work
with. Secure Credit Cards do charge the same high interest
rates as regular credit cards.
An alternative solution would be
Secure Loans which is a
service offered by IOU Notes. It allows users to leverage
their own funds to obtain small loans for personal and
business use as needed and never pay more than 5% interest
per year on those funds. Using our service, a user can have
a dependable emergency loan option, help build or rebuild
their credit, budget their money better, and stop paying
high interest fees from other loans. This service was
created because of the need for affordable small loans.
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