There are consumers who may be in a position where their credit score could use some improvement, as lower rates that are being sought on lines of credit like a personal loan could be unavailable for men and women who are in a position where they cannot afford these rates that will come with available loans for their particular financial situation. A consumer’s credit history can be viewed by a lender as risky if they have various stains, missed payments, or even a default in the past, but some consumers may also be hindered from getting an optimal interest rate on a particular type of loan if they have little or no credit history to review.
In some cases there is a likelihood that someone who is new to the credit game, meaning a consumer who has no real credit history, might find a lender that will give them a chance if they have a stable income through their job, but even in cases such as this there are some young consumers who may carry a high amount of debt in relation to the overall amount of credit they have, which is also another aspect of a consumer’s financial life that could hinder their credit score. Sadly though, young men and women who may be in a position where they are earning decent wages at their place of employment might find that getting something as simple as a car loan could come with a higher interest rate than they had hoped if they have not improved a poor credit score or begun establishing a positive credit history.
While there are some options for borrowing, like peer-to-peer lending networks, that may offer interest rates of anywhere between 5% to 8%, some larger banks may be only able to offer a certain consumer an interest rate of around 18% or much more. Some borrowers feel that this is simply too high for their financial situation, and they may be right in regards to their ability to even meet the minimum monthly requirement on such a loan, but again, if bad credit repair or establishing a positive credit score is a priority for some consumers, this could reduce these interest rates at a later time.
Yet, a secured line of credit may be necessary before building a positive credit score is possible, but again there are lenders who are willing to offer unsecured credit cards for new cardholders in the hopes of allowing these men and women to prove themselves in terms of their ability to charge and repay their obligations. No matter what the credit card option or route a consumer chooses for improving a low credit score, the situation will obviously differ for a bad credit borrower versus someone who simply has no real credit history available.
However, even if the borrower is able to meet minimum payments on a personal loan that may come at a higher interest rate, it needs to be remembered that unless bad credit repair takes place, lower interest rates are made available, and generally a consumer proves themselves to be a safe financial risk, even this affordable minimum payment on a personal loan will lead to much higher overall costs thanks to the interest rate that may not have been as optimal for a particular borrower.
The opportunities outside of traditional lenders that consumers can consult may, once again, come in the form of a peer-to-peer lending network or even a small community bank or credit union, but it will benefit a consumer in the long run if they focus on repairing their bad credit or improving their credit history now as they may have the opportunity in the future to borrow from major financial institutions, if they so choose, and still receive an affordable rate on their loan.