Loans or other lines of credit are typically difficult to acquire for bad credit borrowers, but there have been some reports over the past months, and most recently in June, that have stated that there are cases where lenders may be willing to offer borrowers who have seen a decrease in their credit score access to credit for either the purposes of rebuilding their credit score or in cases where a particular situation has arisen that led to a decrease in a consumer’s credit rating. As an example, there is a growing trend that has been covered over the past weeks related to homeowners who may have defaulted on their mortgage but kept other areas of their financial life in good standing, and these individuals may be viewed in a positive light by lenders.
Obviously, the risk that a potential consumer brings to the table is what decides whether they will either be offered some form of credit like a personal loan or credit card, and if so what rate they will receive. Some consumers who may have defaulted on their mortgage but were able to keep payments current on other lines of credit may now be in the market for a debt consolidation loan, car loan, or some may even be looking for a credit card, but questions as to whether these options are available still remain due to the fact that a foreclosure will typically stay on a consumer’s credit score for seven years.
What this relates to in terms of borrowing for those who may strategically default but keep other lines of credit current is that some banks could be offering credit but it may come at a higher cost, if it is offered at all. Bad credit borrowers do still have options when it comes to borrowing in some cases, as secured loans or credit cards are available for those who are facing financial setbacks due to the loss of their home. While strategic defaulting may be viewed in a more negative light than someone who simply met financial hardships and could no longer afford their mortgage payment, it’s unlikely that anyone who kept other areas of their credit life intact despite losing their home will find affordable unsecured lines of credit, even though some banks may deem these men and women to be less of a risk.
Essentially, borrowers who are looking for bad credit loans or access to credit for the purposes of rebuilding a credit score that was damaged due to defaulting on a mortgage may have more options now available, if they kept other areas of their debt obligations current, but consumers must keep in mind that secured lines of credit may be their only option. While secured loans or secured credit cards have been used for bad credit repair and, in some cases, debt consolidation, the factors that surrounded these lines of credit for bad credit borrowers must be carefully reviewed by each consumer as it will depend on an individual’s situation as to whether these options will be helpful for their purposes of either consolidating debt in order to pay off what they owe or simply repair their bad credit score.