Having a poor credit rating can be intimidating when one seeks lending from conventional lenders. Banks and credit unions often shy away from extending loans to consumers with a bad credit history. They often never wish to have a client whose future mode of payment looks sketchy. All the same, there is no need to lose hope as currently, several lenders are willing to extend loans for people with bad credit, and most of them never ask for collateral.
So many reasons could lead to a consumer having a poor credit rating. These include failure to regularly make payments to offset certain loans, having a CCJ or County Court Judgment leveled against an individual or there being no evidence to show that a consumer is able to service a loan. In the latter case, it does not matter if one has had a previous loan or not. In case an individual needs emergency funding but has a poor rating, remember there are loans for people with bad credit available from lenders at the moment.
Currently, there are online lenders willing to overlook the poor credit rating and extend lending to borrowers whose records are less than appealing. They have flexible lending terms too, but they also make decisions to extend loans for people with bad credit based on what an individual is able to service. As it is, they are in business as well and try to minimize risks associated with lack of payments.
There are certain circumstances when an individual may be denied lending by the most liberal lender in town. This may be due to too many debts by a consumer. If things get to this extent, a client has no otherwise but to seek a part 9 debt agreement.
How does it work?
When an individual is struggling with debt and bad credit, there is genuine difficulty. In this case, it becomes impossible to offset the debts as was previously agreed. To get some reprieve, an individual could apply for part IX debt agreement so that there is renegotiation with creditors. Of course the agreement only covers unsecured debts like tax debt, credit cards, school fees, personal loans, power bills and the like. Secured debts that were borrowed against a given asset like a car or home are not covered under the agreement.
When renegotiating with creditors, they have to approve the new rates for the new deal. In other words, if they accept to extend the period for repayment, it is to be a deal that does not harm them as well. Debt agreements are executed by debt administrators who look at the client’s income against expenses. After determining a repayment figure that will be favorable for both parties, it is presented to lenders who may accept or decline the proposal.
Usually, most lenders accept fair proposals if the borrower is in genuine trouble. When the agreement is accepted, the person makes payments to the administrator who then pays the creditors as initially agreed. Even though this is the way to go when there is real financial hardship, it is important to remember that it qualifies one to have poor credit rating. It is therefore important to avoid falling into a debt trap by being financially responsible.