Damaged Fiscal Record

by : David Wilson

Inappropriate planning and ad hoc expenditures are not the only reasons for a bad credit rating. Sometimes, the reasons are simply inconceivable... However, whatever the reasons may be, a person trapped in an adverse credit situation has every right to fix his finances.
Over the years, the lenders have become more receptive towards people with bad credit history and are easily offering bad credit personal loans. From a feared set, it has changed into a specialised one and creditors are now especially targeting this group by offering affordable loan products.
When one applies for a loan, the lender evaluates two parameters:
Credit history - which is calculated as good or average or bad
Debt to income ratio (DTI = Debts/Income) - which calculates the persons current fiscal state
Based on the above-mentioned parameters, the lender categorises the loan seeker as:
Prime customers - people with good credit record
Near prime customers - people with average credit record
Sub-prime customers - people with poor or bad or adverse credit record
The above-mentioned sub-prime customers are further sub-divided as:
Light - low adverse credit customers
Medium - medium adverse credit customers
Heavy - high adverse credit customers
After this detailed evaluation and classification, the lender approves the loan amount, and decides loan terms and conditions. A bad credit personal loan too can be of secured and unsecured nature.
For a secured bad credit personal loan, one has to pledge his asset as collateral, which makes it a safe transaction for the lender. If the borrower fails to payback repeatedly or goes bankrupt, then the lender gets the right to sell the pledged property to recover the full amount of the loan.
On the other hand, for an unsecured bad credit personal loan, one does not need to pledge any asset as collateral. This is probably the only option for those UK residents who do not own any valuable asset.
The APR of a bad credit personal loan is always higher and loan terms stringent, as compared to a standard personal loan. However, a secured bad credit deal is gainful and is generally easier to get as compared to an unsecured bad credit personal loan. Use online bad credit personal loan calculators to get an estimate.