Bad credit loans are for people with bad credit standing. Because of this interesting and unique feature of bad credit loans, there is no doubt why these loans are getting more and more popular today. In fact, statistics show that the industry of bad credit loans services approximately 20 million consumers every year.
Having stellar credit scores can indeed bring several benefits to consumers, especially when taking out loans through traditional lending methods, such as from banks and other financial institutions. Credit consumers get more flexible financing terms if they have higher scores. “Typically, the higher the score, the more favorable the interest rate,” says Heather Battison, the senior director of TransUnion, one of the country’s major credit bureaus. Thus, credit consumers of today aim for high scores, especially the elusive and highly coveted FICO score of 850, which is indeed attainable, but could take a while and require a significant amount of work in order to achieve and maintain.
However, Rod Griffin, director of public education of another credit bureau, Experian, asserts that having a perfect credit score should never be a goal of a credit consumer. “Lenders aren’t looking for perfect scores.” He adds, “They’re looking for good lending risk, that you can manage your credit well.”
Besides, research shows that different credit bureaus have different scoring models, so an excellent score from one bureau may be considered average in another
If you are applying for credit cards, or home and car loans, through traditional methods, it is certain that a loan rep will look into your credit score and gauge your risk. For such institutions, credit score is crucial – very much unlike bad credit loans wherein credit consumers are not evaluated and gauged based on their credit scores.
Emergence of bad credit loans
Bad credit loans have penetrated the credit industry, another reason why having a not-so perfect and impressive credit score isn’t much of a big deal these days. In fact, it may no longer seem bad as it was before. These loans make it easier for consumers, whether those with stellar or poor credit scores, to easily acquire money in times of dire financial needs. The interest rate may be higher than the normal ones, but most lenders still offer reasonable rate.
This is not to say, however, that credit consumers should not aim for an impressive or even a perfect score, or may be to not fix their credit standing. Having a good or more-than-average credit score can still bring credit consumers huge benefits, including getting a better and lower interest rate such as for home mortgages and auto leasing.