Bad Credit can really be an obstacle when trying to get finance. There are few loan types that do not require credit checks to be run in order to see if you qualify for the loan. Besides, these loans that do not require installment loans for bad credit, assume that you have bad credit and thus charge exorbitant interest rates
Bad Credit is a Drawback
Even though that home equity loans are not a new concept, lately, they have become more and more popular as people begin to understand their benefits. With such demand, the loan market got filled with new lenders specialized in this kind of loans competing to get a share of the market and offering excellent deals with lower interest rates every day.
Bad credit can determine approval or decline when it comes to regular loans, either secured or unsecured. A recent bankruptcy will prevent you from getting almost any kind of financial product. But, if approved, bad credit will also determine a higher interest rate charged for the money you request. A good credit history, on the other hand will ensure you get a lower interest rate.
Risk and Bad Credit
Risk and bad credit are directly related. Bad credit implies a higher risk for the lender and thus he will charge higher interest rates, offer smaller loan amounts and shorter repayment programs. Reducing the risk is the key to obtaining better loan conditions when it comes to loan qualification.
There are different ways of reducing the risk of a financial transaction. Most of them imply improving your credit score and history. But these processes require patience and a significant amount of time in order to show some results. Alternatively, you can request a home equity loan instead of an unsecured loan. The secured nature of these loans provides an immediate risk reduction.
Equity and Risk
Equity loans can be easily qualified for even by those who have a past bankruptcy on their credit report. One would think that such high risk applicants wouldn’t be able to get approved for a loan. Yet, as stated above, the secured nature of home equity loans guarantees the lender that he will recover his money one way or another.