Bad Credit Loan: How Lenders Categorize Credit Blemished Borrowers? |
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Your credit report may not be satisfactory, but still you can apply for a bad credit loan. In recent years, a lot of people with a compounded history of foreclosure and bankruptcy applied for bad credit loans to finance their homes. So why wait for? If you are suffering from a bad credit but want to fulfill your dreams, then there is nothing better than a bad credit loan. Bad credit loans are available from banks, credit unions and other financial institutes. And they are now available online also. Today, you need not run from pillar to post to get such kind of a loan. Sit comfortably in your room and contact them any time you like. But before contacting them, be sure that your credit report is in a good shape. If your credit report is good--that is, if your credit rating is high--you can apply for a bad credit loan from any institution. There are several lending agencies that want good credit rating from the customers before they sanction them the loan. But all the lending agencies are not like that. If you shop a bit, you would find hundreds of agencies that offer loans to the people even if they have charge-offs, collections or tax liens on their credit report. When you approach the bad credit loan lenders to get your loan, they give you a grade by going through your credit report. Depending on your credit history they typically place borrowers into the following credit categories: A: Lenders quote you their best rate and terms. If you have sufficient income, flawless credit and the required down payment, you are considered an A credit borrower. A borrower can fall short in one of these areas and still be considered an A credit borrower, as long as the other areas can compensate for the weakness. An A credit borrower can walk into almost any bad credit loan lender and get a loan. A-minus: You're an A-minus credit grade if you have charge-offs and collections within the last two years. The bad credit loan lender usually disregards medical bills, including hospitalization and clinic visits. If you are an A-minus credit borrower, it might cost a little more in rate and fees. B: If you have blemishes on your credit report within the last 18 months plus four lates of thirty days, you are given B credit. If the credit ding is an isolated incident, a 90 day late payment is allowed within the last 12 months. Charge-offs, or collection accounts, which are isolated, insignificant, and less than $1,000 in all, are acceptable. However, outstanding collection accounts less than four years old must be paid. C: If you have acceptable blemishes within the last 12 months and no more than six 30-day late payments, three 60-day late payments, or two 90-day late payments you are conferred C credit. Open collections accounts and charge-offs may not exceed $4,000 and must be paid in full. Bankruptcy or foreclosure that had been discharged or settled prior to the last 12 months is acceptable. D: A sporadic disregard for timely payment or credit standing categories the borrower in this class. Open collections accounts, charge-offs, and judgments must be paid through bad credit loan proceeds. The borrower who had filed bankruptcy and had been discharged prior to the last six months is acceptable, as much as the ex-homeowner who had his previous home foreclosed and settled prior to the last six months. However, your bad credit loan payments cannot be longer than 90 days past due. E: Hardly anyone sinks this low. If you are an E, you've flat out ignored your payments. You won't get a good deal from a bad credit loan lender. |
