I Have Bad Credit, Can I Still Secure a Loan
Can I Still Secure a Loan
In years past there was a certain stigma that went with having a bad credit report. Lenders were often at an advantage, being able to pick and choose borrowers with the best credit scores, and simply avoiding bad credit risk borrowers. The world economy has changed. The number of people seeking loans with bad credit or challenged credit has grown exponentially in the past two or three years. Lenders have adapted to this change and now provide loans for people with bad credit.
Watch out for the stipulations
Loans with bad credit are now being made available to borrowers, with a few stipulations. It will be necessary however, for borrowers to document why their credit scores are lower than they had been in the past. If you indeed have had good credit in the past, it is quite possible that securing a loan with bad credit is only a few explanation documents away.
Good credit scores make your life comfortable
For example, if your credit and payment history suggests that at one point in time you made all your payments in a timely fashion, lenders are more apt to extend credit to you again. Lenders realize that circumstances and personal finance matters are sometimes beyond the control of the borrower. Lenders also realize that if you have made payments in the past, it is likely you will again pending changes in your financial situation.
Explain your situation
Providing a perspective to the credit lender with an explanation letter as to why payments were not made on time will generally suffice to reassure the lender that you will make payments in the future. This is not always the case, however, many lenders work in this manner.
Bad credit loans dissected
Lenders for bad credit determine whether or not they will make a loan to a bad credit borrower by assessing risk. Generally, the higher the risk for the lender the higher APR the borrower can expect to be charged. While a higher interest rate isn’t always desired, it is part of the consequence of a lower credit score. Borrowers should keep in mind that even if the only loan available is one with a higher APR, that loan can always be refinanced at a later date. Once you have reestablished your credit history and more importantly your payment history, it is much easier to secure a loan at a lower APR.
Economy driven loans
The most important thing for a borrower to remember when trying to secure loans with bad credit is that lenders profit only when they make loans. The economy has created an entirely new pool of borrowers from which lenders choose. Bad credit borrowers are more numerous today than ever. Lenders will always find a way to accommodate the needs of their customers. The truth is their customer base is not only larger, but many have challenging credit.
The way of the lenders
Do not get discouraged should you be turned down on your first application. There is a remedy and lender out there for just about any circumstance or situation. You may have to jump through a few more hoops, in other words, provide documentation, but there may be loans available for those with challenged credit.