Loans for Those with Poor Credit
Is it possible to obtain a loan if you have a poor or even if you've declared bankruptcy? The answer is yes. However, not surprisingly, the loans available will have higher interest rates and restrictions that are more stringent. One should also be wary of unethical loan companies who seek out people with poor credit to lure them in with very high interest loans accompanied by high penalties, large payments, and other unfair terms. While any loan may be tempting for someone with bad credit, no loan is better than a bad loan.
Even with poor credit, varieties of options are available, from unsecured credit cards to mortgages. However, for all consumers, not just those with poor credit, having a clear idea of what is affordable is necessary before entering into an agreement. In addition, of course, lenders will need . In instances such as mortgage loans, people with poor credit will likely need to provide a larger down payment, or ensure that the difference between the loan and the property value is greater than required for those with high credit scores.
Consumers need to understand that they will have less leveraging ability if they enter into a loan with poor credit. However, some lenders will work with consumers in setting-up a plan where the interest rate lowers over time after the buyer has demonstrated a consistent history of paying on the loan. Working with a loan officer or a consumer credit counselor may assist this process, as well as help the buyer determine what is affordable within his or her budget.
Some purchases may need to be delayed until a person can rebuild his or her credit history. Credit cards can be one way of doing this, although they are potentially dangerous for someone with a history of excessive spending. For those who have existing , it may be possible to either switch the balance to a lower-interest card, or, if this is not an option, work with the lender to pay off the balance.
Many creditors would rather lower the interest rate on an existing card and avoid a default on the loan. Credit pay-down agencies can also work with consumers in paying down credit card and other debt, which in turn can assist in rebuilding credit. In order to avoid a fraud program, ask a consumer credit counselor about potential options or inquire with your credit card company to see if they offer or work with a particular program.