Friday, May 2, 2014

Horrible Credit With Loan Opportunities in Sight

A FICO score of below 600 classifies people as having terrible credit. Low credit score prevents such borrowers from obtaining credit cards, loans, and mortgages, setting them back compared to folks with good credit. While many people tend to think that their good credit history will always be there, a recent financial crisis has proved many of them wrong. Massive job losses, layoffs, decreasing home values have affected many to a point where some were not able to keep current on their obligations. Some have seen their good credit diminish in a matter of few months just because of unexpected illness or injury. No matter what the reason may be, there are financial solutions out there to assist people with extremely bad credit. In fact, as much as $5,000 may be borrowed in the form of a personal loan from lenders willing to help you.

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Money For Any Possible Purpose

Loans for individuals with extremely bad credit allow them to use the loan proceeds in any way they desire. It is a relief for many that provide help in many aspects of everyday life: catching up on bills, paying off high-interest payday loans, making large purchases, or even rewarding your family with a so-needed vacation. There are flexible underwriting criteria put in place by certain lenders, allowing you to get a loan even if you have negative credit experiences: repossessions, judgments, collections, or even a bankruptcy.

Application Guidelines For Borrowers With Extremely Bad Credit

People may not be judged by a unified numeric score. Every situation is unique when it comes to reasons why credit history was ruined. That is why bad credit lenders have developed a unique approach to meet the needs of people with serious credit problems. There are lenders out there that would issue loans to anybody provided that collateral is in place, such as a home or a car. Such loans, commonly known as secured loans, are the best option to get necessary funds in case of a really bad credit history. Not only ability to secure the loan with an asset may be a key factor for a lender when deciding whether to issue a loan or not, but it also has a huge effect on the loan terms and rates. Lenders feel more comfortable, knowing that there is an asset out there that may be sold in case of a loan default. Secured loan could be a win-win compromise between a lender and a borrower.

While unsecured loans are reachable for people with terrible credit, they are way more expensive to obtain and maintain compared to secured loans. Logic behind it is very simple: since there is no collateral needed, in cases when borrowers default on such loans lenders have little or no means to recover the losses. Therefore, such risks are offset by higher interest rates and fees. Since you intend to pay off the loan anyway, why pay more! If you have anything that a lender may consider as collateral, go with a secured bad credit loan.

Cosigners Are Money Savers!

Should there be no assets suitable to serve as collateral you may be asked to get a co-signer on a loan. This person could be anybody with a decent credit history, no matter what relation he or she has to you. A co-signer, however, takes responsibility for your potentially irresponsible lending behavior. In other words, a co-signer would cover the loan should you default to do so. At times lenders offer early liability release, meaning that once a positive payment track is established by a borrower, a co-signer may be released from liability to repay the loan. Typically if you have made timely payments for six months or a year, your co-signer would not have any liability relating to your credit behavior from that point on.

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