Here is a useful guide to Bad credit loan. Bad credit loan mean that you are taking out a loan that may depend on your credit history. Your credit history includes county court judgements, and defaults on repayments of previous loanor financial transactions. To loan officer in your bank, this may mean that giving you a loan could be a risk because according to your history, you are more likely to have late or defaulted repayments.
However, some institutions may approve bad credit bank loan applications. Keep in mind that they may charge you a higher interest rate. If you have bad credit or poor credit history, you may have trouble convincing lenders to approve your loan.
You may increase chances of getting approved by applying for a secured loan or by reducing your loan amount. Your credit history will be checked when you apply for a loan so lenders can assess your credit rating. This is one of most important factors for them to consider when deciding whether to offer you a deal. If your loan application is accepted you will be given a sum of money, which you will usually have to pay back in monthly installments over an agreed period of time.
Having a bad credit rating doesn't mean you are a financial disaster, but missing payments on other loan against you is a guaranteed way onto credit blacklist. Other unexpected events such as divorce, or redundancies could also have a negative affect. But even most unlikely person could have a bad credit rating. You might be too young, or just may not have had any form of credit before.
What do you do if mainstream lenders don't want your business? If this is case and you need a loan you should concentrate on firms that offer bad credit loan. Some lenders specialise in this type of loan, which is designed for people other lenders may not want to deal with because of their poor credit history.
These lenders generally specialise in making bad credit loan that are substandard by normal banking criteria, and that traditional banking community passes up because borrowers' previous credit is poor or there is not enough collateral.
Since these lenders make these substandard loan, financial regulators allow them to charge much higher interest rates than regular banks can charge.
Though these lenders make bad credit loan other lenders won't touch, each has its own acceptable criteria. One major advantage of using alternative sources of capital is that they may make you a loan when no one else will. And, of course drawback is that you will pay a very high interest rate for privilege of borrowing.
Interest rates on bad credit loan can be higher than other personal loan because of perceived risks to lenders, but they are a readily available alternative source of funding for people affected by poor credit ratings.