What Fresh Start Loans Can Do For You

When I was a little girl, I played T-ball in gym...and I will tell you what - I was terrible. You would think that hitting the ball would be no problem; it was right there in front of me, in the same in the same place as ever, but it I always seemed to strike out – or at least I would have if my coach had not instituted the do over rule. For us athletically challenged kids, that fourth attempt always seemed to be the golden one, and we could finally hit the ball – or at least bunt our way to first base. As I grew older, it became clear to me that real life rarely offers do over’s; particularly when it comes to financial matters.

Get Your Do-Over

If you are one of the millions of people out there who have made poor financial decisions, dealt with the loss of a job or faced financial ruin due to illness, your credit score has likely suffered. A credit report, while a helpful tool, does not show the full story. Your situation may have changed – you have learned to make wise financial choices, you are gainfully employed or your health woes are behind you - but you are finding it difficult to prove this to a lender.

You may find yourself stuck in a vicious cycle: you can not rebuild your credit without making loan payments on time, but you can not find anyone to lend to you until your credit is improved. This catch-22 is all too common, and all too disheartening - this is where a so-called fresh start loan can help you rebuild your credit.

Benefits And Basics

Fresh start loans have become increasingly popular for consumers, and it is not hard to see why. With this type of loan, the terms are tailored to fit your needs and income.

Because of their small amounts (Between $500-$1500) and flexible term length (usually anywhere from 12 and 36 months), these loans will help you to improve your credit scores one on-time payment at a time.

There are two types of fresh start loans; secured, where you put up collateral (such as your car or house), and unsecured, where you have no collateral. As with most other loan programs, secure fresh start loans typically have a lower interest rate than their unsecured counterparts because the lender has a way to recoup their money if you default.

Shop Around

As with all loans, it is a good idea to shop around until you find the interest rates and loan terms you feel comfortable with. Make sure that you are using a reputable lender. When looking, it is also important to note that fresh start loans are not the same thing as payday loans (although some lenders use the terms interchangeably). Though fresh start loans are designed with high risk consumers in mind, their rates will still vary depending on your credit history.

When used wisely, fresh start loans provide a valuable service for those people looking to rebuild their credit. Whether you have filed for bankruptcy in the past, had delinquencies, or even collection accounts, these loans offer a concrete way to improve your credit score – a little bit at a time.