This blog is mostly dedicated to Prosper.com lending. However, I think about all aspects of the process at Prosper. Lately there have been a number of postings that list repairing credit as an ancillary benefit of borrowing on Prosper.com. Repairing damaged credit is a critical step in reducing debt since better loan rates mean more principle can paid off for the same amount of payment. Can one really repair one’s credit with Prosper.com alone? How much would it cost? How would you go about it?
I think the answer is yes, one could use Prosper.com as a tool for creating better credit, but only after fundamental problem has been addressed. What I am saying is that your debt must be under control and you need the ability to pay the fees. If you debt is out of control then paying the fees to repair your credit doesn’t help, since your out of control debt will just sink your credit again. Be serious and dedicated. Examine your income and look for ways to make more money. Examine you debt and look for ways to spend less. Live within your means.
So you are on track and want to speed the process along with Prosper.com. How do you do it? Take out the minimum loan for the maximum interest rate. (If you are HR or NC you might need to partner with a reputable group to get you loan funded.) Once your loan is funded, pay it on time (early even) for at least 3 months. After 3 months spend the next 3 months paying it off completely (on time of course). At the end of the process wait 1 month to allow your credit report to be updated with the payoff and repeat. In addition, to you normal debt being paid on time you now have a new unsecured loan being taken out and paid off every 7 months. Every bit helps and you should see you credit improve each and every time. Be sure to stay current on all other debts or this technique is just a waste of time.
How much did that cost you? Assuming the minimum loan amount and maximum interest rate ($1,000 and 30% for most states) it cost $10 (1%) when you took the loan out and $143.13 or less over 6 months for the interest. If you are able to reduce your loan rate percentage on a $50,000 dollar loan by 0.5% then monetarily it is a wash.
In summary, getting your credit repaired is hard, but if you are on the right track you can help it along for approximately $150. Over time as your credit improves your Prosper Loans will become cheaper because you will receive better interest rates.
Good luck!
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[...] Kevin presents Use Prosper.com to Repair Your Credit. “Repairing damaged credit is a critical step in reducing debt since better loan rates mean more principle can paid off for the same amount of payment. Can one really repair one’s credit with Prosper.com alone?” [...]
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