Given the rate at which consumers are increasingly getting listed with their country’s version of the credit bureau, one would perhaps be justified in truly believing that the rating system in use favours the creditors and is perhaps a little bit biased against the debtors. The regulations for issuing credit appear to be rather lithesome, with creditors often proving to be the instigators of bending those regulations just so that they can add that next debtor to their books.
How many times have you gone through the parameters and minimum requirements of some sort of loan or credit extension you’re trying take advantage of, realised that you actually don’t quite qualify to get the credit you want and yet you take a chance anyway? Upon filing the application, you delight in the fact that against all odds, you got approved for your financing….
A lot of the time (if not all the time), creditors are fully aware of the fact that they are approving and going ahead with the provision of credit to debtors who aren’t good for the repayments and will essentially eventually default on their loans. It’s a practice mostly instituted by the bigger financial institutions such as banks, but the reason behind them doing this is because holding lots of debt on their balance sheets is big business, perhaps even bigger than the actual interest they earn on the loan repayments. Debt can be repackaged and sold on to other creditors or even to debt collectors, but that’s perhaps a topic for another day because of its technical intensity.
What you need to know is that if you haven’t been reckless with your spending as a consumer and you find yourself sitting with an increasingly bad credit record and a growing pool of debt, it probably isn’t your fault that you have so much debt to deal with and that you’re struggling to pay it back.
That’s where you should look as the first step to clearing your bad credit record and getting out of debt and this can be done through simply looking beyond the big lending institutions by way of credit providers. Why do bad credit car financers exist, for example? They exist because they operate in that little pocket of the industry banks resort to as part of their plans to re-structure the loan repayment terms they’ve essentially shoved down clients’ throats by operating at the very edge of the regulatory parameters. If a bank can give you much better interest and repayment rates on a loan you qualify for, there’ll still try to hit you for the most favourable rates they can benefit out of, so chances are you can always go back to your bank and re-negotiate your repayment terms as a means through which to be able to afford paying the debt back.
That won’t repair your credit record as quickly (if at all) as perhaps going to those specialists who do consider lending to consumers with bad credit records on a case-by-case basis though. These bad credit lenders, so to say, will only give you credit if they are confident you can pay them back after assessing your unique financial situation and working out a plan for you to further reduce the debt you currently have.
This shows up as a positive factor with the credit bureau or ratings agency and thus works towards repairing your credit rating.