If your credit history is bad but you still find yourself in need of financing, it is best to assess just how bad your credit is. If you are within three years of a bankruptcy, repossession, foreclosure, or collection you can pretty much consider traditional lenders and banks out the window. If you are not in this group, and if you feel your credit score might still be able to get you approved with these lenders, try with the traditional lenders and banks first, as they can only say no, but you should explore cheaper loan opportunities first. For readers with extremely bad credit and still need of financing, read on and we shall explore some lender secrets to help get you approved.
The first secret of lending is that you the borrower are the customer and lenders both want and need your business. This wisdom has lessened some since the tight money times of the credit crisis, but it will return, and even with your bad credit score they need you to borrow their money for their profit. So what does this mean for us as a consumer shopping for a new loan product?
Hard money lenders include small companies and individual investors, and are a good source of quick cash. Although the money is readily available and easily accessible, you might find that it also comes with a pretty high interest rate. For this reason, it is a wise idea to consider a hard money option if you are planning to finance on a short term basis as it is an excellent short term financing tool.
If you are in a bind and need emergency money immediately, receiving a hard money loan sounds ideal. Even though there are usually high interest rates attached to such loans, you generally have the option of refinancing the property at a better interest rate. The criteria for being accept for this type of loan is based on the collateral, the property being financed, instead of the actual financial strength of the one borrowing the money. It is definitely the way to go if an investor has issues with his/her credit.
I’m sure many of you have heard over the past few weeks, or maybe even saw some of the advertisements touting that FHA will now allow First-time Homebuyers to use the stimulus packages $8000 tax credit as a down payment for a home. As exciting as that may sound to a first-time homebuyer, it is not entirely true.
As you may remember, when the Bush administration came out with the original stimulus package, the amount was actually $7500 and in truth was not as much a tax credit, but a 15 year loan. With the Obama stimulus package the tax credit amount was raised to $8000 and did not have to be paid back. However, this money could not be used for the down payment mainly because the borrower would receive the tax credit after the close. However, over the past weeks, HUD has come out with a new policy for FHA loans announcing that the stimulus tax credit can be used for down payment on an FHA loan. But can it?
You may also want to try for a no credit check loan while also trying for a poor credit loan. Again, you’ll need to do enough research to find the right loan for your needs. For a no credit check loan, you may be required to make a bigger down payment. This is one of the disadvantages of a no credit check loan. Rem ember, however, that this is a no credit check loan, and that if you gain something, you also lose something in order to maintain a proper balance. If paying a bigger down payment will not be too harsh on your pockets, you can very well go for a no credit check loan instead of a bad credit score loan.
If on the other hand, you think you have the time to improve your credit and then try for a loan, you may want to consider trying the few guaranteed ways of improving your credit rating. Always remember that improving your credit score will help you in the long run and can give you many huge benefits in your day-to-day financial and work life. Getting a bad credit loan is only a temporary solution and the next time you need financial help, you will again have to hunt for a similar kind of loan that’s not normally encouraged. Therefore, improving your credit rating is good any day and definitely a much better option than going for a bad credit score loan.
The answer is there is a huge and growing demand for financial products for people with bad credit that cannot otherwise get approved because of their poor credit history. Traditional loans and credit cards are denied to them until they improve their credit score, but how does one establish a good credit reputation of on time payments if one cannot get approved for financing. This is where these credit lenders step in to help the consumer.
By providing loan products and credit cards to the credit tainted, they provide the second chance these borrowers need to reestablish their credit reputation. Through managed bad credit loans and credit cards, an on time payment history is rebuilt and reported to the credit bureaus and their credit improves as a consequence. Over time, one finds themselves again able qualify for more than just the bad credit lenders offers and can again enjoy all the benefits of a sound financial foundation can provide.