There are many different loans that you can apply for to build your credit but the best one that seems to build your credit the most efficiently is a secured loan. A secured loan is a loan where you give the financial institution the amount of money you want to take out first and then you get a loan for that same amount. Basically, you are taking out a loan from yourself!
You then pay the loan off each month just like you would a regular loan but the difference between a secured and non secured loan is that with a secured loan you get the money you put down back at the end of the loan term as long as you pay your loan on time. Also with having money down for a loan, it allows your credit to not go down the toilet if you happen to miss a payment. You don’t end up getting your full amount of money back but your credit doesn’t take a hit either. Secured loans are the only way you can buy credit. You essentially borrow from yourself but you don’t need a cosigner and are almost always approved because you put down money first so the bank is already confident you can pay it. The only hard part about it is that you have to have the money to pay for the loan each month and the money to give to the bank to secure your loan. Secured loans are highly recommended for buying a first car, especially if it’s not purchased through a dealership because it builds your credit and you get the money back after the loan term. The only down fall to it is that you have to pay an interest fee but it’s a small amount and a small price to pay for a good credit score.