Even with the best will in the world, some of us can end up with a less than perfect credit history. And occasionally, in spite of being careful with our pennies, the cruel hand of fate can deal us a band hand from time to time. Thus the bad credit loan came into being.
In simple terms, a bad credit loan is a loan specifically designed to take into account the past credit track record of applicants. Unlike other forms of loans, a bad credit loan does not impose crippling interest rates. On the other hand, a bad credit loan requires that the advance is set against your prime asset, your home, as security. This means your home may be at risk if you do not keep up with your monthly loan repayments.
Recent research suggests up to 50 per cent of homeowners in the UK will have experienced some form of credit problem in the past. This could take the form of a County Court Judgement, a loan or HP default, mortgage arrears, or long running credit card debts.
While poor financial management is no doubt to blame in some cases, the reasons for being adjudged to have a poor credit record are many and varied. Often divorce, redundancy or bereavement are major contributory factors for falling behind with financial commitments and being labelled a ‘poor risk’ by lenders.
