Bad Credit Personal Loans: Both Sides Of The Story
A common misinterpretation of bad credit loan lending is that bad credit lenders are only non traditional lenders which are willing to take a higher risk
by lending to people who may not be able to commit to repaying the money. Some sort of kamikazes that love to put their money in danger just for the
sake of it or villains who like to rip off underprivileged people who are in desperate need of money.
So, if we have to trust peoples’ exaggerations, bad credit loan lenders are either magnificent philanthropies or greedy and abusive burgesses. But the
truth about bad credit loans and bad credit loan lenders is different. As with all in the financial industry, bad credit loans are nothing but business. And
though some lenders may come close to the above descriptions, most of them are neither philanthropies nor greedy green monsters who take money
from people in desperate situations.
Bad Credit Loans: The Lender Story
When a lender is facing a loan request from someone with bad credit he sees exactly that: Someone who, in the past, has failed to honor his debts on
time, who has borrowed too much money or who has even defaulted or gone through a bankruptcy. What he sees and what he can trust to be true is
the information contained in the credit report.
So it does not really matter if the borrower had to face unexpected circumstances than no one could predict or if there is someone else to blame for
the bad credit tag. Unless the credit report shows that, the lender has no way of knowing for sure and though unfair as it may sound, the lending
business is not a matter of trust, it is a matter of risk.
A bad credit score screams “risk” and the lender takes note of that. A lender does not make money with a single loan, in order for his business to work
he has to lend to many people. Statistically speaking, bad credit applicants miss payments and pay late more often. Thus, the higher interest rate
charged for bad credit loans compensates for the possibility of a certa