Generally seen people take loan to fulfill their present needs and requirements, but they forget the aspect of repaying it back. This results in poor credit of a person. In other words, a poor credit can be referred to the tag that gets attached, when you make default in repayments.
What is poor credit score?
When the person make defaults in repayments of debts, his score gets bad. This in turn brings the financial reputation of person down. People with poor credit score often find difficulties in applying for a loan. Generally, the credit score of a person goes bad due to the following:
Arrears
Defaults
Late payments
Bankruptcy
Poor credit history loan
It is almost impossible for individuals with poor credit history to get conventional loans. However, there is solution to it known as poor credit history loan. Poor credit history loan is just intended for the people with bad credit history. A number of agencies and organization have commenced offering these loans due to significant increase in the number of individuals having financial problem and bad credit score in the financial market.
Forms of poor credit loan
Secured poor credit loan :
This loan is taken against any collateral. It acts as security to the lender. Collateral makes the lender feel secure, against the loan taken by the borrower. So, the interest charged is lower as compared to the loan taken without security.
Unsecured poor credit loan :
No collateral is required while taking unsecured poor credit history loan. Since there is no collateral against the loan, the lender solely relies on the borrowers promise and his credibility to repay the debt. Thus, the lender usually charges a high rate of interest to compensate the risk involved
Like all other loans, if you extend or make delay in paying the monthly repayments, you will have to pay higher interest and penalty.
The borrower can make his credit score worst by defaulting in payments. Not only the credit score will further worsen, but also the person may lose his asset placed as collateral against secured poor credit loan.
Positive aspect
Poor credit history loan helps in improving the credit score. By making payments on time and repaying the loan as soon as possible, you will start getting positive score to your credit report.
Poor credit loan can be used for any purpose
Nowadays, various lending agencies, banks and companies also offer online facility. Online option makes the evaluation of various lenders easier. Moreover, let borrowers choose the lender, which suits their needs and requirements. It saves lot of time as you dont have to go to each and every lenders place for the loan.
Thus by evaluating the above points, we infer that the poor credit history loan is golden opportunity for the people having poor credit score. Though high rate of interest is involved but it can improve your credit score by making timely repayments.
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