The mortgage market is a busy place. And that is good for people who have a history of bad credit and yet need another loan.
Here in the UK it would be common for more than 40,000 mortgages to be approved for home purchases during a month. (There were 44,105 of these in October last year, for example.) And in the remortage section of the market the same or more business is being transacted every month.
Huge numbers of loans given every month in UK
In fact, the six monthly average value of all approved mortgages in the UK is almost £20 billion. That is a lot of money.
The good news for those of us who have struggled with repayments in the past, is that not all these loans were given to borrowers with perfect credit histories. Many of them were bad credit loans.
A bad credit loan is one given to someone with a less than perfect credit history. There are two important things to notice about this.
The first is that your history of credit is recorded. Each time you apply for a mortgage on a home, or sign up for a mortgage, or accept a credit card from your bank, or seek out a personal loan (for a car or an urgent medical operation), that is noted down in the financial industry’s data bases. So every time you failed to get your repayment into the bank on the due date, your record is updated.
Even if you had a perfectly good reason for this delay, and even though you did make the repayment after a short delay, this is noted down. There are things you can do to ameliorate this, and a good mortgage broker can help you do that. But the banks and other institutions will know about any difficulties you had repaying past loans, so get some professional help when you come, with this record, to ask for another loan.
There are lenders willing to lend to people with bad credit histories
The second thing is more positive. It’s this. While it may surprise us, there are lenders who will give loans to people who have not been able to repay on time all or some of their earlier loans. To people who might be called “bad credit risks”.
A bad credit loan is structured and designed to help people who might have had these financial difficulties problems get new loan finance. And those where the borrower can give security such as a house, are almost certain to be given. This is because lenders can look at a client with bad credit and reduce the risk of making a loan because with the security of a house on the table they will be able to recoup their money if the borrowers falls on hard times again and is not able to keep up the loan repayments. There is risk, however, so the lender will ask in return for a slightly higher interest rate on the loan.
But there is also good news for people who don’t have a home or equity in it. Unsecured loans are also possible, even with bad credit. The risk to the lender is higher, so he will need even more interest from the borrower. But if you are in this situation, and can meet the regular repayments, this will not be a barrier for you. Your bad credit history need not stop you raising a fresh loan from the bad credit loan market.