Every borrower has a credit score. All your loan transactions
are recorded by credit rating agencies. These transactions build
up your credit history. Your credit history is considered good
if you have repaid all your loans as per the terms and
conditions. If you fail to repay a loan or its interest, either
completely or partially, you acquire a poor credit score.
Borrowers do not always default intentionally. Sometimes they
default due to some unavoidable circumstances, such as death of
the borrower, disability or involuntary unemployment. In such
cases, the borrowers or their families fail to repay loans and
consequently, they acquire bad credit score.
If you have a bad credit score, you may still require a loan.
There are times when your savings are not sufficient to fulfill
your needs. You can take out a loan which is known as a bad
credit loan. Although it is risky for lenders to offer bad
credit loans, yet there are many lenders who are willing to
offer such loans. This is because bad credit loans carry higher
rates of interest than other loans. This gives a good business
opportunity to lenders.
You can avail a bad credit loan for any purpose. There are bad
credit home loans if you wish to buy a house. A bad credit home
loan is usually secured against the house that is being bought.
The loan amount is large and is repaid over a long period of
time. Lenders also offer bad credit car loans. Bad credit car
loans can be used to buy old as well as new cars. There are bad
credit loans available for home improvement too. Whether you are
going for petty repairs or a renovation job, a bad credit home
improvement loan can help you solve your problem. Borrowers
having bad credit history can also avail personal loans,
education loans, etc.
As mentioned above, the main disadvantage of bad credit
loans is high rates of interest. You can assuage this
disadvantage by availing a secured loan. The rates of interest
on secured loans are lower than the rates on unsecured loans.
This can give some kind of respite to the borrowers with a bad
credit history. However, if you do not want to offer your
property as collateral, you may go for an unsecured bad credit
About the author:
The author is a business writer specializing in finance and
credit products and has written authoritative articles on the
finance industry. He has done his masters in Business
Administration and is currently assisting http://www.ask4loan.co.uk
as a finance specialist.
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