How Personal Loans Can Help You Get Out of Bad Credit Scores

Oct 22, 2020
Personal Loans

You may have heard this seemingly-delightful bit of news in recent years: the number of South Africans relying on loans from financial institutions is becoming smaller each year. For a nation whose borrowing culture has become synonymous with poor financial management and increased debt, it can seem like a significant decline is too good to be true, which is the actual truth. 

Although surveys and studies claim that the number of loan-reliant South Africans drops each year, they have made an apparent oversight. The main flaw with the studies above is that they don’t account for the significant percentage of people with no access to banking facilities because of bad credit, making it difficult to secure loans. 

The financial battle that more South Africans need to be aware of

While the country’s financial institutions tend to minimize the number of borrowers, they fail to account for the crucial factor of poor credit.

It may seem like the number of loan-dependent natives being on the decline is excellent news to hear, but the truth is that the reason behind this is much bleaker than people expect. With more South Africans struggling with bad credit and being unable to secure loans for their needs, we may be looking at a crisis that isn’t being solved as it should be. 

Thankfully, the solution to bad credit scores and the inability to secure a bank loan is in using personal loans to build a better score over time. 

How a personal loan can help you build a better credit score

Now, you probably see personal loans as a small form of financial assistance that can be used to secure quick and easy funding for small expenses. Considering their easy-to-pay nature, accessibility, and the fact that Hoopla Loans’ online application process makes it easier to secure one, it’s clear that these loans are a convenient option for many.

However, most people don’t realize about these loans because they’re also great stepping stones for building credit scores. For the same reasons that they’re so popular among South African borrowers, personal loans are also great credit builders because of the following: 

  • They are easy to attain, which means that you can start building your credit at any time. 
  • They bear significantly-lower interest rates that are easier to deal with during the repayment process.
  • They come with flexible payment deadlines that won’t do anything else but help you successfully build your credit score over time. 

A few tips to help you get started

Now that you know the potential that personal loans bear for improving your loan, we will tackle the next important point: having a smoother borrowing experience. If you want to improve your current score so that you can take out more money for larger bank loans in the future, here are a few tips you can consider for a smoother experience:

  1. Only take out the amount that you need (in most cases, the minimum borrowing amount) to ensure that you have a much easier time repaying the loan.
  2. Use online applications to your advantage because they will help you secure the funding to build your credit score at a much faster pace.
  3. Pay your loans ahead of time (if possible) so that you get a more substantial bump for your score after you’ve finished paying off your loan.
  4. Understand the terms and conditions of your loan so that you don’t get trapped in unfavorable situations (or take a loan out with Hoopla Loans, one of South Africa’s most reputable lending institutions!)

Conclusion

If you’re struggling with a low credit score that’s holding you back from securing the funding you need, then personal loans bear the solution you need to get on your feet again. By keeping this guide in mind and following the key points, you can improve your score to become the best for bigger loans with every personal form of financial assistance you apply for!We’re an online loan provider in South Africa that provides personal loans for those needing a credit score boost with a quick and easy process. Check out our website to apply for a loan today!