Personal Loans for People With Bad Credit

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In the not so distant past, credit was flowing at fire-hose strength with seemingly any one able to be authorized for finance of one kind or another. Loan lenders were falling over themselves to extend credit to people of all circumstances and credit report, with a blemished credit card debt rating not necessarily being a hindrance to having an application accepted. These times seem very long ago now, with the world finance markets in turmoil and credit lines being frozen left, right and center.

The liquidity crunch has left most banks scrambling to rearrange their balance sheets, with lending either stopping altogether or being charged much more for in higher interest rates, and capital reserves being built up. Other banks, naturally, are now not with us having either gone bust or been subsumed by rivals.

Given these circumstances, can people with poor credit statuses still expect to be able to get a loan?

House owners might have an easier ride, but this will rely upon them having masses of equity in their home - i.e. Their home must be worth far more than any money they owe on it, for example a mortgage or secured loan. The reason being because the bank should be assured that even if property costs keep falling, the house can still be sold at a price high enough to recoup the debt if the borrower defaults on the loan.

Specialist lenders do exist who will offer finance to people of less credit-worthy backgrounds, including people who hire their home and have had a checkered monetary history when it comes to keeping a clean credit record. Often, these lenders will require weekly collection of payments in person, that may be off-putting to some, hinting as it does at the murky arena of personal loans for people with bad credit loan sharks even when the loans are nothing of the sort.

Other options include guarantor loans, where somebody with a better credit record vouches for the loan - this is going to be a parent or other relative, for example - but this is something of a niche product which isn't yet particularly widely available.

There are, signs that things are starting to improve as banking institutions come to terms with their losses and credit starts to flow more openly again. There's little prospect though of a return to the days of such simple credit as we saw just a 2 years back, so people with blemished credit ratings still could have to set their sites lower when looking for a personal loans for poor credit, and pay more in interest than they ideally would like.