If you're making noble efforts toward building or rebuilding credit, stop what you're doing right now and read this. It may prevent you from making the same weird credit mistake that Beth made. Who's Beth? She's the unfortunate young woman who just wanted to furnish her apartment, but ended up damaging her credit.
A Practical Way to Build Credit?
Right out of college, Beth fell into some credit trouble. She was let go from her first "adult" job, and ended up having her car repossessed, while two of her credit card accounts went into collections. It was a rough couple of years, but she eventually bounced back. Beth landed another job, got back on track with her bills, and even moved into a bigger, better apartment. Things were looking up.
Realizing that she would need furniture for her new place, Beth started to shop around for the best deals. She noticed that a local store that allowed buyers to purchase items on credit was offering 0% interest for a year. "Great!" she thought. She could get everything that she needed while building up her credit score a little in the process. Right? Wrong.
Beth and the Loan of "Last Resort"
After selecting everything that she would need to make her new apartment feel like home, Beth submitted a credit application with the furniture store, getting immediate approval. It all seemed a little too easy to Beth, but she didn't question the purchase. She needed the items and knew that she would easily be able to pay off her balance within a year. All seemed to be well . . . Until about a week later when she checked her credit score.
Her rating had dropped several points. "What the heck?!!!" she screamed at her laptop. This was the exact opposite of what she had been hoping for. Beth was planning to buy a car soon, and she needed a higher score for that, not a LOWER ONE. What, in the name of blue blazes, had happened?
The dreaded, sneaky "Last Resort" loan happened.
What is a "last resort" loan? These are loans that the credit bureaus may interpret as "acts of desperation," or loans that consumers take out after they have mismanaged money to the point that they have nowhere else to turn. These loans include:
- Title Loans
- Payday Loans
- Pawn Shop Loans
- Reverse Mortgage Loans
- Furniture Store Loans
Granted, there are cases where signing up for a line of credit from a furniture store won't be interpreted as a warning flag, but it is good to know if this will happen before engaging in this kind of transaction. Beth wasn’t buying furniture on credit as an act of desperation, and she was unfairly penalized. Don't let this happen to you.
Beth Buys a Car: A Happy Ending
Worried that her low credit score would prevent her from purchasing the car that she needed, Beth followed the advice of a friend and applied for a loan with the help of Auto Credit Express. Much to her happy surprise, she was approved. She got a car that she loves, and her credit rating is growing with every timely payment she makes. Things are really and truly looking up.
You can get your car too. Auto Credit Express can help you regardless of what calamities you've been through with your credit. Just fill out our fast and secure online application to get started today.