There are times when a bad credit lender comes in handy. In hard times, they serve a useful purpose. And what's called "bad credit lending" can vary. Also, so do the standards for what truly is bad credit. Most of the time anybody with a credit score below 500 is thought to have bad credit. This is according to the Fair Isaac Credit Organization (FICO).
Credit Reporting Bureaus: All three of the major bureaus (Experian, Equifax and TransUnion) have their own methods for generating a "FICO score" (pronounced "Fy-Koh"). Yet most of the time, all of them are within a dozen or so points of each other. These bureaus also take a lot of factors into account when it comes good or bad credit.
Bad Credit Lenders: The preferred name for bad credit lenders is "sub-prime lenders." Lenders of this sort are more willing to take a chance on an auto or other type of loan to somebody with so-called "challenged credit." And because bad credit can sometimes happen to good people, they can do a booming business in tough economic times.
Sub-Prime Lending Rates: Also called, "sub-prime lenders," these people or companies have to pay more for the same money they lend to you. As a result, typical interest rates go from several points above the normal prime lending rate to just under maximum lending rates as set by law. It's always best to check with a few of these sub-prime lenders to see if you can get a better deal.
Beware Loan-Shark Lending: Sub-prime lending serves a useful purpose, especially when truly good people fall on poor credit issues. Some probably have nobody else to turn to in tight credit markets. It's best to keep an eye out, though, for lending which resembles loan sharking in appearance. By this, we mean tacking on double surcharges, extending the life of the loan without permission, and funny service charges, for example. - 15224
Credit Reporting Bureaus: All three of the major bureaus (Experian, Equifax and TransUnion) have their own methods for generating a "FICO score" (pronounced "Fy-Koh"). Yet most of the time, all of them are within a dozen or so points of each other. These bureaus also take a lot of factors into account when it comes good or bad credit.
Bad Credit Lenders: The preferred name for bad credit lenders is "sub-prime lenders." Lenders of this sort are more willing to take a chance on an auto or other type of loan to somebody with so-called "challenged credit." And because bad credit can sometimes happen to good people, they can do a booming business in tough economic times.
Sub-Prime Lending Rates: Also called, "sub-prime lenders," these people or companies have to pay more for the same money they lend to you. As a result, typical interest rates go from several points above the normal prime lending rate to just under maximum lending rates as set by law. It's always best to check with a few of these sub-prime lenders to see if you can get a better deal.
Beware Loan-Shark Lending: Sub-prime lending serves a useful purpose, especially when truly good people fall on poor credit issues. Some probably have nobody else to turn to in tight credit markets. It's best to keep an eye out, though, for lending which resembles loan sharking in appearance. By this, we mean tacking on double surcharges, extending the life of the loan without permission, and funny service charges, for example. - 15224
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