Bad credit is bad news across the board, especially in several key areas including applying for a loan, applying for credit cards, getting employment, and even in getting married. People will base their conclusions of your integrity on your credit worthiness because of one reason: your credit history demonstrates how you?ve been able to keep your commitments. And being able to keep your commitments is a good indicator of your personal integrity. This is why there is more to your credit history than the effects of bad credit on a loan application. Your credit history should be guarded vehemently because it is a major component of your life.
More than needing to get away from the effects of bad credit on your loan applications, though, you have other reasons to work your way out of a bad credit rating. As we mentioned, getting a job and even getting married are hinged on your credit worthiness, even your credit score. Renting your own apartment is another life decision that will also hinge on your credit worthiness.
So there is no other way to go about this: you really need to get back into a good credit standing, no matter what.
However, if you are in bad need of a lifeline, a new personal loan or a refinancing of the personal loan in default could be the shovel that gets you out of your bad creditfinancial ditch, for the moment.
Due to the existing bad credit a new personal loanmay have better chances of approval if you have collateral to back your loan application. Remember that it is already hard to get approval for a loan with bad credit, but lenders would be willing to invest in giving you a loan if:
1. There is collateral to be attached to the loan. Collateral is not just a form of security to be put up to back a loan: it is an item to sell when the borrower defaults on the loan. The lending company has already taken a big risk with lending to a person with bad credit. A person with bad credit may actually mean that he had previously defaulted on other loans, so there is a higher likelihood that he would default on this one, as well. If the borrower can offer collateral, then the lending company will be able to regain their loan investment, should the borrower default on the loan.
The borrower may offer property or other items of value for the refinancing. In most cases, he will have to offer the item he took out a loan for: his house and lot or his car, as collateral for the refinancing loan. If he is able to pay the loan in full, then he gets to keep the item offered as collateral. If he defaults, then the lender can repossess the item and resell it to regain their investment.
2. The borrower would be willing to take on a loan with a higher interest rate. If the lending company will be willing to take on the risk of seeing a borrower default on his loan, they would logically find ways to be able to profit from the deal in a faster way. Putting a higher interest rate is one of those strategies.
Usually, collateral and the acceptance of higher interest rates are the factors that would allow a personal loan with existing bad credit to be approved.
Bad credit cannot be glossed over, in the long run. Neither can you act like an ostrich and bury your head in the sand when it comes to the affects of bad credit on loan applications. More than that, though, you should always think long-term and think about the doors that would open the moment you get back to having a good credit standing. More than the ability to secure a personal loan, good credit helps you be able to apply for other credit card lines. Should you need it in the future, good credit can also let you sail through a mortgage application. Should you be thinking about an auto loan, good credit will also secure you that auto loan in a jiffy. And another thing that good credit can get you is that it can get you through a job application.
If you ever had one of those moments where you could have been a shoe-in for a better position or even a new job, but lost that opportunity after a credit check was run on you, then that moment could count as one of those effects of bad credit. So think beyond your personal bad credit; think beyond the effects of bad credit on a loan application. You have your whole life ahead of you; don?t let bad credit get in the way.
Amy Johnson is an active blogger who is fond of sharing interesting finance related articles to encourage people to manage and protect their finances. Follow her and know the benefits of checking credit report regularly and how to keep your credit secure.
London 2012 China muhammad ali Opening ceremony London 2012 Google Fiber Olympics Schedule 2012 Olympic Medal Count 2012 Olympics 2012
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.