What is Poor Credit
What is meant by poor credit? It is very important for us tofirst
understand the exact meaning of the term "poor credit" in order
to understandour topic completely. As is well known to all of
us that a person has to takeloan or borrow money from others
on many occasions to fulfill his financialrequirements.
This money can be borrowed from any financial institution likebank
or any other such company engaged in providing the financial
assistance ofvarious types. When a person borrows money from
such financial institutions, healso signs agreement regarding
the repayment of the loan. The amount that isrepaid by the borrower
necessarily includes the original loan amount as well asthe
interest and other charges that are debited in the loan account.
Is itnecessary that a person would be able to repay the loan
as per the agreedschedule? The answer is no. It has been observed
in many cases that a person isnot able to repay the loan as
per the schedule due to many reasons.
The reasonmay be any untoward incident or it may even be the
intentional default.Whatever is the reason, when a person who
has borrowed money from any financialinstitution is not able
to repay the loan, it is said that his loan has becomebad and
it is in such circumstances that it is said that the person
has a pooror bad credit. So, the non-repayment of the loans
taken by the person resultsin the poor credit. Now the question
arises is that can a person with poorcredit take a loan? This
is because the financial needs of a person are endlessand even
though poor credit has already been created in the favor of
a person,he still requires money on many occasions. So, what
has to be done in suchcases i.e. how will a person meet his
financial requirements after having thepoor credit created in
his favor? The answer is the "poor credit personal loans" Let
us discuss it in our next part of discussion.
Poor Credit Personal Loans
As the term suggests, the poor credit personal loans arethose
personal loans that are obtained by a person after the poor
credit hasbeen created in his favor. It should be properly understood
by the reader thatit is not very easy to obtain a personal loan
after the poor credit. This isbecause a person has already defaulted
in repaying the earlier loan and it canbe easily presumed that
this time too, a person would default.
Thus, it dependsupon the risk taking capacity of the lender
whether it can rely on thestatements given by the borrower regarding
the creation of poor credit and givehim the personal loan. Also,
it is not like that a person cannot get thepersonal loan after
the poor credit because there are many financialinstitutions
and lenders that provide such loans. Before a reader makes anydecision,
it is very important for him to understand some of the intricacies
ofthe matter. Let us discuss it next.
Intricacies Related to Poor Credit Personal Loans
As said above also, it is not easy to obtain a personal loanafter
the poor credit. It depends upon the lender whether it is going
to takerisk or not. Even if the lender agrees to provide a person
poor credit personalloan, there are some aspects that need to
be understood. The first one is theinterest rate. In the above
case, it is certain that the lender would notprovide a personal
loan to a person with poor credit at the same rate at whichit
is providing personal loans to the other customers. This is
because of thereason that it would try to recover its "risk
cost" from the borrower itself.
So, a person should be ready to make more payments towards
the high interestrates on the poor credit personal loans. The
other aspect that needs to beunderstood is that once the poor
credit has been created, the way a person canget the personal
loan is by providing some security to the lender against theloan.
In other words it can be said that a person can get the secured
poorcredit personal loans and not the unsecured one. A person
would hardly find anycreditor that would provide him with the
unsecured poor credit personal loan.It is possible only in cases
where a person has improved his poor credithistory considerably
after it was created.
In such cases, it is quite obviousthat there is some time gap
between the creation of the poor credit and therequest for the
poor credit personal loan. But if the poor credit has beencreated
in the favor of a person recently, a person would have to provide
somesecurity in order to get the loan. The other aspect that
requires out attentionis that a person might be asked to pay
some other charges apart from theinterest rate. The reader should
understand that the bottom line is that when aperson obtains
a personal loan after the poor credit has been created, he hasto
pay more towards all the charges as well as the interest rates
and it is notincorrect to say that the lender is of course exploiting
the necessity of theperson and the person is helpless in such
cases where there is acute requirementof money and there are
no other alternatives. Thus, getting the personal loanis no
problem but paying very high cost for the above loan is the
problem. If aperson agrees to pay higher charges for that, he
should remember that the loanhas to be repaid as soon possible
otherwise he would find himself in viciouscircle of charges
and exorbitant interest rates.
You can get the personal loan after the poor credit
After going through the above article, it can be rightlysaid that a person can of course get the personal loan even if the poor credithas been created in his favor. The only requirement is that he should be readyto pay high costs for that. If a person has taken such a loan, he must try torepay it as soon possible because of the reasons mentioned above.