Bad Credit History Loan

People with histories of bad credit often have a very hard time getting loan. A bad credit history can even prevent people with good incomes from getting a loan.

A credit history is simply a record of how well a person pays back loans and debts such as loans, credit cards and mortgages. In the United States, this record is created and maintained by three big national credit bureaus. Banks, credit card companies and others tell these credit bureaus when a person doesn’t make a payment or makes a late payment.

A person’s credit history determines their credit score which is a ranking of credit worthiness. A person with a high credit score can get more credit because it is assumed that they are more likely to pay it back. A person with a low score is less likely to get a loan because it is assumed they won’t pay it back.

Income doesn’t determine credit history

Contrary to popular belief a person’s income doesn’t affect their credit history. A person with a high income can have a bad credit history because they have a poor record of paying off their debts or making late payments. A person with a low income can have a good credit history if they have a record of paying off their debts.

Income doesn’t affect credit histories because the credit bureaus don’t look at a person’s income when compiling a credit history. They only look at a person’s record of paying off bills and making payments on time.

Many people with bad credit histories are able to get loans because lenders know that credit history isn’t determined by income. A person with a bad credit history who can prove they have a good source of income can usually get a loan; however, such a person will usually have to pay more interest.

A bad credit history can be improved

A person with a bad credit history can improve or fix their credit history by taking certain actions. One of the best actions a person can take is to look over their credit history to determine what is on it.

Since credit bureaus don’t do any research or checking when they compile a credit history, there is often inaccurate and even false information on credit histories. Credit bureaus will take such information off if a person challenges it.

Anyone can order their credit report from www.freecreditreport.com and other sites. Any person can challenge anything on their credit history. Ordering a credit report and removing damaging information can make it easier to get a loan because it can improve credit history.

Some other alternatives

One alternative that people with bad credit histories have is to locate a lender that doesn’t consider credit histories when making a loan. There are many lenders that only look at the amount of income a person has available and not a credit history. These lenders know that many people who have bad credit have the money to pay off loans.

Such lenders will have to see proof of the income such as a bank statement or the pay stub from a job. Lenders to people with bad credit histories may charge higher interest rates and apply stricter terms to their loans.