Debt Consolidation Credit Counseling In Phoenix

In a tough economic world, sometimes there's a need for a bad credit lender. But, who out there really knows what constitutes bad credit lending? Also, what's the standard for "bad" credit? Most major credit bureau standards vary slightly, but all are pretty close. For the most part, you have to have a 499 or lower score as based on Fair Isaac Credit Organization (FICO) standards to have bad credit.

How Credit is Determined: There are several credit scoring agencies out there that most lenders rely on. Equifax, TransUnion, and Experian are the top three. Somehow, even though all three have different standards for scoring a person's credit, they all seem to be pretty close to each other. We do know that these agencies use a number of different factors when deciding scores.

Giving Loans to People With Bad Credit: There are many lenders out there who specialize in people who may have bad credit scores. Known, as "sub-prime lenders," they're able to many times give a loan when most traditional lenders can't or won't. But, their loans can cost more, in terms of interest. Still, people of high character but poor credit, for one reason or another, may need to use these lenders. This is especially true in tough times.

Sub-Prime Lending Rates: Also called, "sub-prime lenders," these people or companies have to pay more for the same money they lend to you. As a result, typical interest rates go from several points above the normal prime lending rate to just under maximum lending rates as set by law. It's always best to check with a few of these sub-prime lenders to see if you can get a better deal.

Watch Out for Predatory Lending: Bad credit lending as a practice definitely has its place at the financing table. After all, some truly good people get caught up in bad circumstances and have nowhere else to go. Beware, that you don't fall victim to predatory lending such as exorbitant late fees, huge down payments, suspicious or nonexistent "service charges," etc.