Posted on: 24th Dec, 2009 03:39 am
your credit score is low, your credit history is bad, but how low and how bad? For a lender, an applicant with some delinquencies like late payments or missed payments is definitely not the same as someone with a past bankruptcy or several defaults. Though these loans are meant for people with bad credit, your credit score and history will still define the interest rate you’ll have to pay on the loan.
Moreover, in certain circumstances it may also imply a decline on your loan application if there are recent serious delinquencies like a default on a big loan or an ongoing bankruptcy process. In any case, the interest rate charged for financing the amount borrowed will depend on the applicant’s credit score because the credit score is reflecting a measure of the risk implied in the financial transaction. And the more risk involved, the higher the interest rate has to be in order to compensate for the probable loses.
Moreover, in certain circumstances it may also imply a decline on your loan application if there are recent serious delinquencies like a default on a big loan or an ongoing bankruptcy process. In any case, the interest rate charged for financing the amount borrowed will depend on the applicant’s credit score because the credit score is reflecting a measure of the risk implied in the financial transaction. And the more risk involved, the higher the interest rate has to be in order to compensate for the probable loses.
Not sure if I agree or understand what you are saying. Mortgage lates are worse than a bankruptcy in many instances. Recent mortgage lates can eliminate a borrower from being qualified immediately because lenders simply do not tolerate those who make a habit of not paying their mortgage. Meanwhile, a borrower can have a bankruptcy in their past and still get a mortgage if they repaired their credit since that time and have no negative items on the report other than the bankruptcy.