Guaranteeing a Loan: Bad Credit? ….join The Clan!

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Bad Credit is not beyond reality. In fact today, it is almost the neighbour next door! This is a common misconception that we as borrowers tend to conceive when it comes to taking a loan. Today, the pace of life is constantly bettering its own record with price hikes and rises in the standard of living becoming a regular feature. Circumstances have made it logical to take loans to meet the requirements of day to day life. Many of us take this step and falter i.e. we fail to keep to our loan repayment terms and therefore end up with something called “Bad Credit”. Bad credit doesn’t happen to one in a million. It happens to many of us.

Bad credit is sometimes unavoidable in case of a family crisis, a financial crunch or a medical emergency arising during the loan term. At such times, it becomes difficult to make regular loan repayments. Result: “Bad Credit”. A bad credit score definitely makes our loan-journey a little less smooth but definitely not impossible.
Bad credit can be caused by: Defaulting in payments, Bankruptcy, County Court Judgements (C.C.J’s), Arrears, etc.

The growing number of people falling prey to bad credit has made it clear to lenders that they cannot do without doing business with defaulters. It is also illogical to penalize people for defaulting due to unavoidable circumstances. Besides, there are few means to guarantee that people otherwise rated with perfect credit, will not default on the loan. Since lenders have started accepting this fact, they have opened up new avenues specially catering to those with bad credit like bad credit personal loans, bad credit car loans, bad credit debt consolidation, etc.

Bad credit is bad after all and so has its drawbacks:
• Most loan requests by those with bad credit are declined.
Lenders prefer avoiding the risk they will have to face if they grant a loan to a person with bad credit. After all, it is money at stake!

• The few loans granted, too, come with extravagant interest rates.
To balance the bad credit and risk, lender charge exorbitant interest and inflexible terms even on basic loans. Besides this, bad credit loans, bad credit consolidation, etc. all come with extremely high rates. So, humongous interest is inevitable.

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