Drug testing

Tackling Bad Credit

The first time I heard the term credit history was when I approached a lender for a secured loan. Being a first timer I was completely ignorant of the procedure and didn't even know that a credit record of our transactions is prepared by some credit reference agencies.

Thanks to the discipline in making the repayments to the loans and mortgages, I never let my credit history degrade. But there are many who are not as fortunate as me. A recent statistics revealed that one out of every five people is having a bad credit history, i.e. a sizable part of the population has defaulted at some point of time in the past.

Loan providers are not as generous to the people having a bad credit history as they are to people like us. Whatever be the reason of the default, loan providers always believe that the borrowers intentionally default on the loan. A play safe policy describes their dealings with such borrowers. The more cautious lot of lenders will immediately reject the applications. The remaining lenders provide for the security of the amount lent through a higher interest rate.

Lenders may peg the interest rate according to the risk perceived. Some lenders may try to overcharge borrowers who are facing an urgent need of money and lesser sources whom they can approach for a fulfilment of the need. Borrowers may thus have to pay excessively for the bad credit that they have acquired.

Are the borrowers responsible for the bad credit that tarnishes their credit history? In the legal circles, the borrower cannot be absolved of the responsibility, even though they are unintentional or due to his ignorance. "Ignorance of law is no excuse", thus goes the legal maxim.

Putting aside the legal point of view, we find that it is the lenders who are responsible for the majority of times. They try to sell inappropriate financial products to ignorant borrowers, by concealing basic details about the product or by misleading borrowers by furnishing wrong details. For instance, borrowers are advised to take unsecured loans, with the lender stressing more on the disadvantages of the secured loans. The borrower being ignorant about the loans market completely depends on the lenders advice, and thus takes unsecured loans which are more costly. These may become burdensome in the long run and may lead to defaults.

Bad credit history can be better understood by learning about the various causes of bad credit history. This can also give an insight the ways to escape the bad credit cases to maintain the credit image.

Arrears:

The number one reason for bad credit is arrears. Arrears are the result of failure to make the payments to the debts taken. While lenders believe that the borrowers do intentionally default on debts, this may not be the reason every time an arrear takes place. Borrowers try their best to be regular on payments, but the sizable share that they take of the salary or wages, leave too little even for the necessary expenses. However, borrowers cannot be absolved entirely of the responsibility of the arrears. Had the amount of debts been lesser, the chances of arrears would have lessened.

County Court Judgements

Except in cases of bankruptcy, it is difficult for borrowers to not pay the amount received. Lenders recover the amount through legal action against the borrower known as County Court Judgements. However, lenders fear dealing with borrowers who have County Court Judgements. They contend that it is difficult to recover the amount lent from people having CCJs. A few lenders may however accept two-three CCJs as admisssible. The rules to deal with the lenders may differ according to the lending policy of the lenders. Lenders however, stretch the rules not with a sense of generosity, but with the intention to get a higher rate of interest.

Individual Voluntary Arrangements

Individual Voluntary Arrangements or IVAs for short are drawn in order to escape bankruptcy. While the lender could have received a lump-sum payment, he has to make do with a monthly payment through instalments, because of the instalments. Thus IVAs are often counted along with the other bad credit causes and people with IVAs face difficulties in qualifying for the loans

Self employment

Self employment is treated as a bad credit case because of the lack of stability in income that characterises them. Profits comprise the main sources of income of self employed people. These are dependant on the operations and vary over the months and years. Lenders fear that the self employed people would not be able to make the repayments during the periods when the profits are low.

Unemployment

Unemployment is a condition when a person is off work because of reasons that may be controllable or uncontrollable. Though these people receive aids from the government, lenders fear offering loans to them.

Miscellaneous reasons

Many more reasons may affect the credit history over a period. Sometimes these are as trivial as a divorce. However, if the lenders feel that these reasons are irrelevant to the persons finance, they may not discriminate on these bases.

Whatever be the cases of bad credit, no borrower is ever starved of credit, provided they have the patience to search over the hundreds of lenders and the readiness to pay the extra cost.

James Taylor holds a Master's degree in Commerce from JNU he is working as financial consultant for http://www.chanceforloans.co.uk To find a personal loan, bad credit loans that best suits your needs visit http://www.chanceforloans.co.uk

limousine chicago service
In The News:

How To Avoid Becoming A Victim of Identity Theft

With identity theft statistics currently at an all time high,... Read More

Your Credit Score

Credit scores: all lenders use credit scores to determine interest... Read More

Choosing A New Credit Card

1. Choosing A new credit cardThere are many reasons for... Read More

Getting Your Credit Report and Understanding Whats On It

If you intend to apply for a loan, you need... Read More

What is a Bad Credit History?

A bad credit history can sometimes seem like a curse...... Read More

My Student Credit Card Adventure

And some practical advice too!My first credit card?I remember my... Read More

Credit Report ? Watch Out for Parking Tickets

The economic downturn of the last five years has affected... Read More

How Does a Creditor Determine Whether to Grant You Credit?

Credit 101How does a creditor determine whether to grant you... Read More

How You Can Help Prevent Identity Theft

How can I prevent Identity theft from happening to me?... Read More

Important Things to Know About Divorce and Credit

Joint debts remain joint debts.Both spouses signed a legally binding... Read More

How To Eliminate Credit Card Debt

There is almost nothing more troublesome than having too much... Read More

Why Your Credit Score is Important

Your credit score can either haunt you or reward you.... Read More

Choosing The Best Credit Card To Apply For

Always shop around to get the best deal when choosing... Read More

Identity Theft ? Additional Protection for Soldiers on Active Duty

Congress passed the Fair Credit Reporting Act several years ago... Read More

Fight Credit Card Fraud with Common Sense

By now, you have undoubtedly heard of credit card fraud,... Read More

How To Use Your Credit Cards Wisely

Are you one of the thousands pulling your hair out... Read More

Some Truth About Credit

Credit is currently and has been historically an integral component... Read More

Collection Agency Secrets for Collecting on Bad Debt

Getting worried that one of your clients, customers or patients... Read More

The Easy Way To Gain Access To Your Free Online Credit Report

When you apply for credit, those lending you the money... Read More

10 Tips To Prevent Credit Card Fraud

Imagine opening your credit card statement one morning and discovering... Read More

Credit Damage: Getting Compensated for Your Loss

Until recently lawyers for victims of credit damage had little... Read More

How to Improve Your Credit Rating

So you got into debt, had problems but you got... Read More

Annual Credit Report and Free Annual Credit Report

Getting an annual credit report review has been the advice... Read More

Credit Card Is Adding The Silver Lining To Your Pocket

In the new millennium plastic money or credit cards has... Read More

Ethical Finance: Who Benefits From Our Spending?

On one hand consumers are being universally criticised for running... Read More

solar led flood lights induction pedestrian lights Pete's produce ..