Many people often think that they cannot access collateral loans with bad credit but this is not always the case. Essentially, all forms of credit are associated with risk but the major notable issue here is that the level of risk varies depending on your credit history. Some people may have bad credit history but this does not automatically disqualify them from accessing different types of collateral loans. Conventional lenders often consider your credit history before approving your collateral loan application in the event that the applicant wants to buy a house. The first thing that is considered by the lender is that the applicant is capable of repaying the loan despite their tainted credit history. However, loan applicants with bad credit history pose a higher risk and this implies that they are also charged high interest rates. Lenders take this into consideration and the can approve loan applications for people with bad credit history but on condition that the borrowers are willing to pay high interest rates at sites.google.com/site/speedycashreviews.
Apply for fha loan even though with bad credit
The other method that can be used by borrowers with bad credit history to get collateral loans is related to getting fha loan. This type of loan is specifically designed for first time home buyers. With a credit score of 580, you are eligible to get a down payment of 3.5 %. Those applicants with a credit score within the range of 500 to 579 are eligible to get a down payment of 10 %. The good thing about an fha loan is that the lenders are not very particular about your bad credit history. What is only required for you is to prove that you can honor your obligation to pay the fha mortgage loan. The other issue is that the house you will be buying will be used as collateral to secure your mortgage loan. This makes it easier for prospective home owners to access a loan even with bad credit.
Bad credit secured loans
The individuals with bad credit history can apply for loans that are secured by collateral. This is meant specifically meant to ensure that the borrower pays the lender within the agreed period. Even if the borrower has a bad credit history, the lender can take advantage of the collateral that is used to secure the loan since some people are characterised by high risk of failure to repay their loans. There is no limit to the amount of money that can be borrowed as long as it is secured by valuable collateral. The other issue is that the borrowers should be prepared to pay high interest rates. The money can also be used to improve the bad credit history by repaying all the outstanding loans and other bills.
On top of these methods that can be used to access collateral loans with bad credit, you must also make an effort to rebuild your credit history. This can be achieved through showing commitment to repaying all your bills and other outstanding loans. This helps to improve your credit score such that the lenders can have confidence in approving your collateral loan application in future.