subject: A Look At Bad Credit Lenders [print this page] What if you need a bad credit lender? Do you know what one is, or what kind of credit is "bad", in the first place? Well, for starters, standards for what constitutes bad credit can vary from credit bureau to credit bureau. It's generally accepted, though, that credit is deemed bad when it sinks below a 500 score as ranked by the Fair Issac Credit Organization (FICO).
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.
Bad Credit Lenders: The more common name for bad credit lenders is "sub-prime lenders." Lenders of this sort are more willing to take a chance on an auto or other type of loan to somebody with so-called "challenged credit." And because bad credit can sometimes happen to good people, they may get a lot of business in tough economic times.
Varying Lending Rates: Because the risk to the lender is greater, the interest rates on these loans can be higher. Sometimes by a lot, as illustrated by loans that go right to the interest limits set by law. You should check around, though, to see if one of these sub-prime lenders will offer a better rate before signing any loans.
Lavish Service Fees and Rates: Watch that a sub-prime lender isn't tacking on phony or excessive late fees or other charges. Also, watch for increases in interest rates with little or no notification from the lender. Still, honest sub-prime lending will always have a place in good times and bad.
