Why There Is A Need For Bad Credit Loans?

Answer 1

Bad credit loans are not as readily available as they used to be. There were finance companies in the past that specialized in lending money to consumers with poor credit, but many of these companies have gone out of business or been bought out by other companies that instilled stricter lending guidelines.

Companies that dealt with people with poor credit used to work with people to resolve issues on their credit report in order to be able to get them the money they needed. These days most companies rely on a person’s credit score to determine if they will be able to get approved for a loan. What they fail to consider is a person’s credit score, as well as their credit report, only tells part of the story.

Many consumers may have fallen behind on their bills due to medical problems. While this can effect someone’s credit due to the fact that they may not receive any income or only part of their income while they are incapacitated, it can also affect their credit when medical bills start coming up. Many medical bills are covered by some form of insurance. However, there have been occasions where paperwork may not have been filed correctly or the caretaker received the wrong insurance information and the bill was mistakenly sent to collections. Now, through no fault of the patient, the medical bill will show up on their credit bringing down their credit score.

The whole issue of medical bills is something that many lending institutions should look into further before determining someone actually has bad credit. The majority of the time, medical bills are not planned for. It just doesn’t make sense that someone’s credit should be effected by something they had no plans on having to pay to begin with.

While this is not the situation of all people trying to obtain bad credit loans, it is a major factor for a number of people. Others may have experienced a layoff from work, divorce, or a number of other things that could have caused their credit to slip. This does not mean they will never have good credit again, or mean that they are not responsible enough to get more credit in the future. Credit scores are king in this new world, but knowing the reason behind people’s credit problems and doing a proper analysis to determine their actual capacity to pay the loan back is a part of bad credit loans that more companies should consider.