Working to improve your financial situation requires some know-how, and even though there are plenty
of resources at the tip of your fingers, it can be confusing to know where to begin. If you’ve fallen on
hard times, the most important step is to recognize what it is you’re trying to achieve with your money.
For many people, that includes gaining an understanding of how to get out of a financial pickle, like
having bad credit, needing quick access to cash, or needing to reduce the amount they owe in debt.
Each of these common financial challenges has a connecting thread: loans. Using loans to better your
financial situation differs for each situation, but overall, loans are a powerful tool in managing your
money.
Improving Credit History
Bad credit can happen to anyone with as little as a missed payment or two or not knowing about an
account that found its way to collections. But when bad credit strikes, it takes time and effort to
improve it. A loan from a bank, credit union, or online lender can be beneficial in improving credit over
time. This is because loans require fixed monthly payments over the course of several months or years.
With each on-time payment, the lender that initially provided the loan reports the good behavior to the
credit bureaus. The more on-time payments are received, the more one’s credit score improves. Taking
out a loan and repaying it as agreed isn’t a quick way to boost your credit score, but it can help over the
long haul.
Access to Quick Cash
When the need to improve your financial situation involves an emergency bill or a major expense that
cannot be covered from savings, loans can play an important role. Traditional loans from major financial
institutions are not always available to those who have inconsistent income, or a credit history sprinkled
with negative marks, but there are alternative if you need access to quick cash. A California title loan is
an option for those who have full ownership of their vehicle and a clean title, even when credit history is
an issue. Some online lenders also offer quick loans for those with not so great credit, but there may be
additional requirements that are difficult to meet. Having these loan options is helpful in managing
expenses and bills that come out of nowhere when savings isn’t there.
Refinancing Debt
Loans may also be used to restructure debt you already have. Credit cards are a common source of
frustration – and cost – for many consumers today, and with interest rates reaching as high as 29%,
getting out from under credit card debt can seem impossible. With a strong credit history and verifiable
income, individuals may have an opportunity to consolidate credit card balances with a single loan. This
strategy is beneficial if borrowers can reduce the interest charged on outstanding debt while
simultaneously creating a predictable payment plan to knock it out.
Loans are not for everyone, but they do offer a solution for many of life’s common financial challenges.
Recognizing which loans are available, their cost, and the time it will take to pay off the balance are
necessary considerations before using a loan as a financial tool.
