The Finance Blogger


Poor Credit Home Loan

Poor Credit Home LoanOur last reader is looking for help obtaining what is called a Poor Credit Home Loan. Their credit rating is poor to bad and they are having trouble finding a lender who will take the risk and lend them a small home loan of $15,000 due to the fact that their credit rating is poor.  Managing your credit rating is extremely important these days if you want to obtain a loan of any kind and at decent rates and terms. Lenders appear to just not want to take the chance on a poor credit risk.

How He Ended up with a Poor Credit Rating

Our reader mentioned the reason that he felt that his credit rating was relegated to the poor category and he is probably right. He learned a tough lesson while disputing a charge with a local company. Basically what happened is that he paid for an item with his credit card and then decided to return the item, expecting that the company would credit his credit card for the full amount. Apparently there was some sort of disagreement which ended with him and the company in small claims court. Eventually they settled and our reader got his money, but not after a significant time delay. While a frustrating experience, at least he got his money  back!

He also tried to use his credit card in this dispute by not paying his credit card company. This simply does not work! As far as the credit card company is concerned you owe them money for something you purchased and if you have any kind of disagreement, it is between you and the company you purchased the item from. End of story. So lesson to be learned for us all, always pay your credit card on time and avoid being hit with a poor credit rating.

Poor Credit Home Loan – Difficulty in Finding Lenders

As a result of their problems in this area, they have to look for lenders who will provide what is called a poor credit home loan, which is another way of saying that they will charge a higher interest rate to their customers and they may charge extra fees as well. This is all about dealing with higher risk customers who do not pay their debts on time or never, so they need to make more money off the rest of us who do pay their loans on time, even though we have a poor credit rating.

This reader may not even get to the point that the lenders will want to review income levels, ability to pay and how much they owe on their mortgage. We can only encourage the reader to be persistent in looking for a lender and also offer some security of they can. Using their home is always a good idea if there is sufficient owner equity in the home to support using it as equity. With 19 years left on the mortgage, there may not be sufficient equity to use as collateral to support this home loan.

Be Persistent

We wish them luck and encourage them to continue focusing on improving their credit rating. Readers should feel free to leave questions for us. We will try to provide an answer based on the information provided. The more detail you can provide, the easier it will be for us to address your questions. For more information about poor credit ratings and how to recover, click here.

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