When it comes to bad credit loans, there are a lot of confusing myths that are terribly misleading to the majority of potential borrowers. Still, our advice is that if you wish to get approved for a loan, you must get acquainted with the accurate facts concerning loans. Here are the main five myths that you’ll hear most often.
Bad credit loans are specially designed for people with defaults
Given the fact that bad credit loans seem to be the right choice for people who, in the past, have experienced bankruptcy, there’s a popular misconception that bad credit loans are designed only for such cases. As a matter of fact, such a loan will offer you the possibility to shield your credit record. If, say, you are no longer able to make repayments on your loans, consolidating the loans into a single loan can be significantly more affordable. While it is true that the interest rate will be higher, it will be more convenient than making repayments to multiple lenders.
Bad credit loans equal paying high interest for 30 years
Bad credit loans are, in most cases, a short-term solution that enables you to purchase your dream home, regardless of previous financial hardship. Still, once the defaults from your credit report come to an end, you can refinance to a different type of loan and obtain a lower interest.
You won’t be accepted for a credit loan if you have bad credit history
A lot of people are hesitant to apply for loans, given their bad credit history. However, you should find out that there are bad credit loans that are specially created for people with negative credit history. A useful tip is doing your research before approaching a lender. Also, perhaps, consider discussing your financial status with a specialist, so that you make the right decision.
All defaults are perceived in the same manner
The way in which the lender conveys your defaults will be highly influenced by their recentness. Lenders need to be offered an accurate, recent picture of the financial status of the potential borrower. The moment you, as a borrower, provide past defaults that are not accurate, you will come out as a rather irresponsible individual who is unable to control his/her finances. For instance, paid defaults will portray you as a responsible potential borrower while unpaid defaults can detrimentally impact your application.
Lenders don’t want to hear your story
Another popular misconception concerning bad credit loans is that lenders won’t care to hear the reasons you had experienced financial hardship. That is utterly wrong. As a matter of fact, most lenders will want to hear whether your bad credit history was determined, let’s say, by a marriage breakdown, sick relative, surgery, so on and so forth. The bottom-line is that you should be entirely honest and accurate when discussing your financial situation with a lender.
To sum up, don’t hesitate to ask for professional guidance if you find yourself in the situation of opting for a bad credit loan. It could make all the difference.