Peer To Peer Loan Sites

Just as the name implies, peer to peer loans are made to individuals by individuals. This means that traditional financial institutions have been bypassed. The saver (investor) chooses which loans to fund. The hopeful borrower gets to make a case that he or she is a good candidate for a loan. 

If you are interested, you can learn more about the advantages of peer to peer lending here.

People have always gotten peer to peer loans by asking friend or family for help with financing. But I am discussing the new peer to peer loan sites, like Prosper, that actually serve as a sort of financial-EBay for this sort of thing. The sites do collect a small fee each time a loan payment is made. In return, they provide the active business center, and also do some preliminary credit checks on borrowers.

How Can Peer To Peer Loans Inprove Your Credit Score

If you have a bad credit, or even average credit scores, you may be able to benefit from using this sort of social lending service.  You may be able to obtain cheaper rates, and you may also be able to improve your credit scores quickly.

• Soft Inquiries – During the initial phase, when you apply for your loan, only a so-called “soft” inquiry is generated. This should not affect your credit score, and is the same sort of inquiry that would register if you pulled your own credit. Only after your loan is approved and funded, will a “hard” inquiry happen. But by then you already have your loan funded.
• Debt Consolidation – If you have a large balance on high interest rate credit cards, this is one way to transfer your balance to a lower rate loan. Hopefully, the lower rate loan will be a lot quicker and easier to pay off. Having to pay less to service your debt should free up more of your cash so you can save for emergencies and stop pulling out plastic. Getting the debt paid off faster should mean that you can earn a better debt to maximum loan balance quicker. These things should improve your credit score too!
• Installment Debt – Installment debt has a fixed repayment period. This is regarded more favorably by credit bureaus. Revolving credit, like credit cards, gives you more flexibility, but is also regarded as much more risky by creditors.

Peer to peer lending can improve your credit scores, and help you get debt paid off in a timely manner if you use it right.

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