5 Credit Lines that Help Rebuild Credit

It may seem counter-intuitive, but taking out a loan can help rebuild credit for an individual or a business. It is important to remember that taking a loan will only improve your credit score if you make regular payments and pay off the loan on time. You will not see changes overnight, but usually within 90 days of payments, you will have a higher credit score.

Credit Consolidation Loans

If you already have too much debt, taking a credit consolidation loan can be the first step to repairing your credit. A consolidation loan is a new loan that you use to pay off your existing debt. Then, you make one payment to the new lender each month instead of the multiple payments you are currently making. The goal is to find a new loan at an interest rate lower than those you are already paying. Credit consolidation companies can help you achieve these steps.

Debt Settlement Loans

Debt settlement loans are another form of loan modification. They allow you to pay off your existing loan at a fraction of the total you have remaining. A debt settlement lender can provide you with this payment; in some cases, the company may even be able to negotiate your existing loans to a lower settlement. Both consolidation and settlement will lower your credit score at first. However, if you pay off the loans, they can get you out of the debt you are currently trapped in and set the stage for positive credit in the future.

Bankruptcy Loans

Bankruptcy loans are a type of financing available to those who still have a bankruptcy on record. There is a statute of limitation on bankruptcy in all states, and if you are within this time period you will have a hard time getting financing. Rebuilding your credit after bankruptcy, however, relies on your ability to get new loans and manage them effectively. If your salary is high enough, you should be able to secure a new loan. You will have a high interest rate, so you should seek a short loan on a small purchase. Bankruptcy car loans are a good way to start the process of rebuilding.

Unsecured Credit Lines 

Unsecured loans do not rely on the use of collateral to achieve financing. Because these loans are considered higher risk to the lender, getting this type of loan will rebuild your credit faster than using a secured loan. You will have a high interest rate, which is again why it is best to seek a short loan. You may also consider using an adjustable rate in some unsecured lines in order to benefit from increases in your credit in the future. This is risky, however.

High Risk Personal Loans

High risk personal loans are a type of unsecured credit line. They are typically offered through specific high risk lenders who make money by engaging in big pay-off loans. Your income and financial stability will be a larger factor than your credit up front. Again, these loans will have high interest rates but will rebuild your credit more rapidly than safer loans if you pay them off responsibly.


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