The issue of bad credit loans is of course one that has plagued the West in recent times and indeed internationally as well. One aspect of bad credit loans has become ubiquitous namely “subprime lending”. Bad credit can also be known as ‘adverse’ credit history, ‘non-status’ credit history, ‘impaired’ credit history, additionally ‘poor’ credit history and and indeed ‘negative’ credit rating. By having a negative credit rating, this may be considered as less preferential to lenders and they may be wary of such types of loans.
Furthermore, the loans may be at a higher interest rate and thus the person with the lower credit score may find that they have to pay more in the shorter term and generally overall. In terms of subprime lending (which can also referred to as near-prime, non-prime, and second-chance lending), this issue has been very much in the news recently because of the disaster in the US and other countries where people were issued with mortgages where they had little likelihood of being able to pay them back – in a downturn many of these people were then found to be in an unstable situation.
The process for ascertaining a credit rating in the US is done by a consumer’s credit history and is made by certain reporting organisations. Certain data that may be provided is the high and low balances that were available in borrowing and for instance any actions that were undertaken to recover money. If one is looking for a loan with a bad credit rating many of these and other issues may be taken into consideration as well as your present level of salary and monthly outgoings etc.. A credit score will be an approximation for one’s appropriateness for a loan. Scores may normally be based on numbers which could range from 300-850 for the US and the statistical analysis would be an attempt to forecast your worthiness as a borrower.
The higher the score when taking a loan with a bad credit rating, the higher will be the likelihood that you will be chosen to take out a loan. Issues that might significantly affect a credit rating for instance might include repeated missed payments and adverse legal judgements etc.. The three major agencies that will participate in producing a score are Equifax, Experien and TransUnion. It should be noted that for instance in the UK Experian is also a big player etc..
Thus, it is apparent that the issue of credit rating is very important in regard to loans. By having a bad credit score this might mean that one will not in the first place be able to take out a loan. Furthermore, it might be apparent that even if one is able to get a loan, that one might then have unfavourable terms that one is taking out. Of note that it is not the actual agencies themselves that will determine what is adverse – rather it will depend on the lenders’ particular policies.