Bad Credit Home Equity Loans |
By Max Bellamy |
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You can obtain a home equity loan even if you have faced bankruptcy
or have a bad credit rating. There are institutions that cater to
this segment, however, interest rates and terms are likely to be
stiffer. Additional fees also could be charged. The lender may offer
high down payment and lower interest burden or vice versa. Loans
with both fixed interest and variable interest are available. The
maximum repayment time may be up to thirty years.
Usually
lenders depend on reports by credit rating agencies like Trans
Union, Equifax, and Experian, together known as FICO, to evaluate an
individual's credit rating on a scale of 300 to 900. The factors
considered by these agencies include, past payment history, recent
credit applications, and outstanding debt. A score below 600
indicates that you are in the bad risk group. It is possible that
the rating of the same person given by each FICO agency differ. Some
lenders score in the middle range.
There are ways and means
of improving the FICO rating. Certain banks also offer credit
counseling. Agencies approved by the U.S. Department of Housing
&Urban Development (HUD) too give free counseling, including review
of your financial situation. Some lenders may not even bother with
FICO ratings. In such cases the maximum loan would be only 70
percent of the net value. They may insist on the borrower paying off
some of the outstanding debt with the money loaned.
Do some
research and see what different lenders have to offer. Don't blindly
believe everything that is said. Study them, ask questions; there is
no need to feel timid about your present financial situation. And be
careful. There would be people waiting to exploit your seemingly
desperate situation. |
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