| If traditional lending route doesn't work, try nonprofit
Q: I have been unable to get a loan from my bank because my credit is weak. I only need a few thousand dollars for working capital. Are there any lenders out there who are willing to take more of a risk than my bank? A: You might look at Acción Texas, a nonprofit lender whose mission is to help microentrepreneurs strengthen their businesses. Acción operates only in Texas and deals with small businesses like yours that fall just beneath bank guidelines and so are unable to obtain conventional bank financing. Acción is willing to work with businesses that have weak credit, limited experience or poor financial records. That does not mean, however, that there are no requirements for borrowers. Depending on the type of loan you want, you will have to put up collateral, show a good payment history with creditors such as landlords and suppliers, and demonstrate that you'll be able to repay the loan.
Charcol starts to cater for borrowers with poor credit rating
Mortgage broker Charcol is offering free mortgage advice to homebuyers with a poor credit history who might otherwise find themselves at a disadvantage when applying for a home loan. Sub-prime borrowers are vulnerable to intermediaries who advertise as specialist adverse credit brokers, some of whom charge very high fees. Charcol.co.uk estimates that the annual lending in this sector is around £30 billion, or approximately 8% of the market, and this is a figure that is growing as more borrowers have difficulty meeting higher interest charges. Repossessions are already predicted to rise to as high as 55,000 in two years time and unsurprisingly those with a poor credit history account for 70% of the rise. 'The amount of personal debt in the UK continues to grow, particularly in a rising interest rate environment and for financially vulnerable borrowers to be charged outrageous fees for consolidating their debt is simply not right,' said Peter Barrett, managing director at Charcol.
Charcol offers free mortgage advice to those with poor credit
Charcol.co.uk has decided to offer borrowers with a poor credit history the chance to get tailored mortgage advice for free. In a market that is awash with brokers who charge exorbitant fees, Charcol.co.uk is determined to break what it sees as the vicious circle of debt. Borrowers spend so much on organising a non-standard loan that they are never offered the chance to break the cycle.
Charcol.co.uk estimates that the annual lending in this sector is around £30 billion, or approximately 8% of the market, and this is a figure that is growing with the increasing interest rate environment the economy is currently in. Repossessions are already predicted to rise to as high as 55,000 in two years time and unsurprisingly those with a poor credit history account for 70% of the rise.
Bad credit history 'doesn't have to mean bad mortgage deal'
Having a bad credit rating does not necessarily mean customers can only obtain a poor mortgage deal, a leading lender has claimed.According to L&C, 71 per cent of people who have come to the company with a bad credit rating have been able to secure a mainstream mortgage deal with a competitive interest rate.Many people believe that a recent history of bad debt or County Court Judgements (CCJs) would prevent them getting competitive mortgage deals. However, L&C revealed that the situation is less clear than that, and that some lenders are more lenient that others."All too often, people assume that because they've had some credit problems in the past, they will have to pay a much higher interest rate and in some cases, high broker fees," explained James Cotton, a mortgage specialist at L&C."In fact, our research shows that by getting whole of market advice from L&C, borrowers can seek out the best deal for their circumstances and can often secure a better rate than they thought possible."A recent study from the Mortgage Trust found that record numbers of people were opting for fixed-rate mortgages.As interest rates have risen, the percentage of people choosing these sorts of mortgage has increased from 48 per cent to over 60 per cent.
Your Credit History Could Be Worth Thousands: The Loophole That ...
Disclaimer: I always have a difficult choice on whether to report these loopholes because even if they may technically be legal, they certainly are an abuse of the intended law. I do not recommend that people participate on either side of this scheme to raise poor credit scores. That being said, it does exist and I try to pass along to people information of what is going on in all areas of personal finance. There are a growing number of companies on the Internet that claim they have found the perfect loophole that allows them to boost the credit scores of those with bad credit without breaking the law. They are able to do this by exploiting a common way that children first gain a credit history - piggybacking upon someone (usually a parent) that has good credit by becoming an "authorized user" of the person with a good credit history.
Bad credit does not have to mean a higher mortgage rate
Having a poor credit rating does not always result in a higher mortgage rate according to research from London and Country Mortgages (L&C), fee-free mortgage broker.
So far this year, 71% of borrowers who have come to L&C with some credit problems have been able to get a mainstream mortgage deal.
Most high street mortgage lenders will not accept borrowers will a recent history of defaults or County Court Judgements (CCJs). However, it is not a simple case of black and white and some lenders are more lenient that others. L&C has found that many borrowers with only minor blemishes on their record are surprised to find themselves accepted by a mainstream lender.
James Cotton, Mortgage Specialist at L&C comments, “All too often, people assume that because they've had some credit problems in the past, they will have to pay a much higher interest rate and in some cases, high broker fees.
|
