The history of your credit is a record which reflects all your previous financial obligations and the total load of your debt. Agencies of credit reference utilize this record in order for them to assess if you are worthy of being offered a loan. You will also be assigned with a credit score based on the history of your credit. Your lender is going to utilize this credit score to assess if he should underwrite a loan for you or not.
You may get a bad history of credit when you make late payments, when you miss out a payment, when there is a default on your debt or when there is failure to fulfill a commitment or contract on finances. The more your bad history of credits pile, the more likely it is that you are not going to get a loan. Another factor that could mar the report of your credit is the constant change of your address or employment. If you think that you will not be able to get a loan because of your bad credit, then you are wrong. Fortunately, there are lenders who provide loans to borrowers with a bad history of credit. This kind of loan is called a bad credit loan. With a bad credit loan, the chances are, you are likely to settle a higher rate of interest compared to a borrower with a reputable history of credit. Aside from high interest rates, the amount that is available for you will possibly be lower. And what is more, you can redeem the history of your bad credit once you obtain a bad credit loan. When you are responsible over the repayment of your bad credit loan you can enhance the score of your credit.
When you avail of a bad credit loan, you are offered with two alternatives which are the unsecured or secured bad credit loan. The secured bad credit loan, usually, includes using a property as a collateral against the loan that you will be availing. In the case of residence owners, they use their homes as their collateral. Your lender will ascertain the amount of your bad credit loan and the interest rates depending on several factors. These factors basically includes the worth of your house, credit score and, the total load of your credit. The weighing of these factors differs with various lenders. There are lenders who consider most of these factors while, there are also other lenders who do not. It is essential to be aware of the criteria that each lender accepts. On the other hand, the unsecured bad credit loan is hard to obtain. It presents a risk for the lender, so he is cautious whether he should underwrite your loan or not. When you badly need an unsecured bad credit loan, you can apply for one from sub-prime lenders. They are the type of lenders who work especially with borrowers who have a bad history of credit.
So, when you have a record of bad history in your credit, you have to remember that you can still avail of a bad credit loan. This is your option in order for you to clear your record, as well as, get a loan. With your bad credit loan, there is still hope for a new car and a redecoration of your house.