Tuesday, 15 September 2009

Home Equity Loan For Bad Credit - The Best Way to Lower Your Monthly Outgoings During Hard Times?

It's a sign of the times that many of us our struggling financially. One of the best ways to improve your financial status would be to consolidate all your debts with one lender. Often the easiest way for a homeowner to do this would be to apply for a home equity loan. However, what happens if you have bad credit?

All finance is issued in principle by how good your credit score is. So if you do have a poor credit rating or some form of adverse credit, it is likely that you will be declined for a loan. Having said that there are an increasing number of specialized lenders who will provide you a home equity loan even with bad credit.

Prior to approaching a lender, i would always suggest obtaining a copy of your credit report and see if you can make any improvements there first. You are entitled to a free copy of your report once every 12 months. You may approach one of the 3 credit bureaus, Experian, Equifax or TransUnion and request a copy of your credit report.

Once you have your report, see if there are any indiscretions or things that shouldn't be there. You would be surprised at how many people have bad credit, but are not 100% sure why. Even worse, is having black marks on your credit file that shouldn't even be there in the first place. If you have a specific lender with whom you have arrears or defaults, you should try and come to some sort of voluntary arrangement with them. This will also help to slowly improve your credit score.

Now when applying to a specialized lender for a home equity loan with bad credit, you should be aware that you may face higher than normal set up fees. In addition a lender may well ask you to increase any supplementary mortgage insurance as this will cover some of the "risk" your lender is taking. Having said that, whenever you are seeking a home equity loan for bad credit you should still be able to secure favourable terms and conditions. Just because you have some form of poor credit, doesn't mean you are not entitled a good deal!

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