Imperfect Credit Programs

An imperfect credit program is really just a lender who is willing to issue loans to people with a poor credit score and/or a history of bad credit or a bankruptcy in their backgrounds. Banks and brokers who issued all those “subprime” loans that are making headlines these days are examples of people in the loan business who have imperfect credit programs. Perhaps its unfair speculation, but it may be possible that all these defaults on subprime loans are more the responsibility of the lender than the borrower. The professionals that issued these loans knew exactly what they were doing. They were aware that people with a history of financial difficulties are not good candidates for mortgages that effectively put them in over their heads.

So let’s define an ‘imperfect credit program’ as one that balances the financial capacity of the borrower with the loans, the rates, and the loan costs that are available. An effective imperfect credit program should be one that helps keep the borrower right side up on the loan instead of putting him/her in a position that will be untenable once the ARM they’ve taken on adjusts.

Loan companies that make their marketing theme “bad credit OK” probably aren’t the best choice when you’re shopping for a loan. These are companies that find high risk acceptable; that means that they are willing to accept a certain level of default and are going to charge a premium price for a loan because that’s their goal – sell the loan regardless of the client’s worthiness or ability to pay over the long term.

Loans issued under bad credit programs can also tend to have some unsavory clauses tucked into the fine print. You may find a substantial penalty for prepayment. If you take out a mortgage at 11% and five years later you’ve improved your credit rating to the point that you qualify for a better deal, it should not cost you thousands to retire your original mortgage. A quality “bad credit program” should not make prepayment penalties mandatory.

People with good credit are just as susceptible to borrowing over their heads as people with bad credit. However people with good credit are more likely to be able to refinance out of an overextended financial situation than people with a mixed credit history. So a good “bad credit program” should provide advice to the potential borrower on the impact of the loan that he/she is seeking. Can you manage the monthly payments once the ARM adjusts? Are you planning to refinance out of this loan at some point? These and similar issues should be addressed in a bad credit program.

Loan brokers and bank officers who see potential problems for the consumer should spell them out and keep the discussion firmly rooted in reality. Find a loan provider who will tell you what he/she thinks your limits are.

Money for funny

There are times when you do not have cash on hand. You do not want to add to your credit cards and be paying for this small amount for months or years. Borrowing from a relative is looking for trouble. Therefore, you get quick cash loans from direct lenders £££. You probably will not be able to get one from your boss, if you do, pay it back as quickly as possible. It will be for only a small amount and could be taken out of your next two checks.

Another possibility is a payday loan for the small amount you need immediately. The interest is high, but you will be paying back this amount, of probably no more than £500-700, back to the lender in about two weeks. You needed the money for a gift for your child. You did not want to disappoint your child. Maybe your car broke down and you would rather pay cash than have it piled onto your credit card. To go without your car could make you late for work and it is possible that in these times you would be terminated. The cash advance loan for your car is a necessity.

Never get a cash for something you do not need. Certainly not for eating out in a fancy restaurant. Paying your utility bills is a necessity, a new HD television can wait until you have built up some cash reserves. You do not want to be late paying your credit card bill, because your rates will go up and you might have the card canceled.

A cash loan is something you take for emergencies and for relatively small amounts of cash. It is easily transferable to your checking account and can be done almost instantaneously. You must be disciplined to pay the quick cash advance back as soon as you can, even if other sacrifices must be made. You do not want to incur added penalties and make an already high interest rate higher. Like in all things financial, discipline is an integral part of dealing with money. You cannot spend (credit report) what you do not have, only the government can do that.