Bad Credit Loan: Antithesis Of Finance Geniuses

Loans for a long time have acted as a relief aid under various circumstances for various eras of time. Centuries ago, vast kingdoms would lend infantry, gold, staple food items among many other necessities to smaller kingdoms in return for their allegiance or loyalty. As monarchy dwindled with passing of time and democracies were established many historical activities were either modified to fit the current narrative or were renounced, but the one policy that remained untouched was loans. Leaders all over the globe still continue to give and take loans and this process will never cease to exist.

Loan Process:

Usually, loaning involves the process of lending an entity whatever they desire, provided that they can afford to pay it back. Terms of repayment are often set by the loaner where they can either charge an interest on the loan or just accept the repayment without any additional charges. To protect the protect the loaner from loss or fraud, loans are only sanctioned when a collateral of some sort is involved. Collateral can safeguard the lender from losing their loans without any returns.

In almost every case, loanees are allowed to repay the loans in a series of instalments for a fixed duration of time. In ancient times, people relied on the opinions of others or examined the loanee personally to see if they could really repay the loan. But as technology progressed, banks devised a credit rating system which can be used by the loaners to identify the financial strengths of the loanees among various other factors before lending. Higher credit rating can help in availing a loan with low interest rates and flexible payment options.

Finance Geniuses

What is a Bad Credit Loan?

Bad Credit Loan is offered to people with a low credit rating. Individuals who are either bankrupt or are on the verge of it, payment defaulters and other similar entities are often credited with a very low rating. This hinders them from accessing any more loans or even if they can, the process involves too many hassles with lesser flexibilities and other such perks.

Reasons for low credit rating:

  1. Defaulting Payments: When loanees do not repay the loans back on fixed date(s), it starts reflecting on their credit ratings.
  2. Mismanagement of Finances: Individuals or entities with improper management of their finances usually have a very low credit rating.
  3. Lack of Records: Banks or any other entities offering loans usually ask for the previous records of payments to verify the ratings, failure to provide valid records can malign your image thus resulting in a bad credit rating.
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