Getting a new loan for a person with a damaged credit history is quite difficult. Regardless, there are legitimate ways to fix it. Let’s look at the options:
Special lending programs in banks.
The best option for obtaining credit funds is special lending programs in banks for citizens with a bad credit history.
Credit broker service
A loan broker is a person who mediates between a borrower and a credit institution on a professional basis. You can learn more about non-qm loans here. Currently, their activities are not regulated by special legislation, where their rights and obligations would be prescribed. The work of credit brokers should be carried out within the framework of existing legislation.
Since a credit broker operates on a professional basis, he knows all the subtleties and nuances in the field of lending, advantageous programs and offers of credit organizations. Thanks to this, he finds profitable options for his customers.
The reasons for contacting a credit broker may be different:
- the search for a profitable loan with a minimum loan rate;
- find offers of banks to receive a large amount for specific purposes (targeted loan);
- saving time on finding and processing a loan;
- simplification of the procedure for obtaining a loan;
- obtaining credit funds for people with bad credit history.
The activities of credit brokers include:
- conducting an initial consultation with a potential borrower: getting acquainted with the goals of the client’s appeal, his credit history, etc.;
- analysis of the financial situation of the client and his solvency;
- choice of lending options and credit organization;
- performance of work on the preparation of applications to credit organizations for obtaining a loan, as well as the preparation of the necessary documents for this;
- sending out online customer applications and selecting the appropriate option from the total number of approved applications;
- familiarization with the loan agreement and explanation of important points to the borrower;
- full transaction support;
- large brokerage organizations can provide discounts to the borrower on the interest rate at a partner bank. However, when working with people who have a bad credit history, it is not always possible to get it.
The activity of the credit broker is paid according to the concluded agency agreement with the client. It can be either a fixed amount or a percentage of the approved loan.
Like any other type of activity in the economic sphere, whose activities are not clearly regulated by specialized legislation, brokerage activities are highly important.
A credit donor is a person who draws up a loan in his own name in order to help a person with a damaged credit history. However, such activities have nothing to do with charity. The remuneration of the credit donor consists in receiving by him a predetermined percentage of the amount received. The credit donor in this scheme is a borrower from a bank, which also enters into a separate loan agreement with a person with a bad credit history.
The ideal procedure for a loan donation is as follows: a loan donor contacting a bank – receiving a loan amount – concluding an additional loan donor agreement with a person with a bad credit history – transferring funds to the debtor – paying the loan donor a specified amount of money – repaying the loan within the time specified in the loan agreement.
The considered method of obtaining funds for a person with a bad credit history has 2 significant disadvantages:
- Overpayment not only of interest under a loan agreement, but payment for the services of a credit donor;
- Great risk of scammers.
Benefits of non-qm loans
Summarizing all of the above, it is worth noting:
- Bad credit is not a death sentence. If you need to obtain credit funds, you should thoroughly approach its recovery, and most importantly, pay off debts. It is worth soberly assessing your financial situation and opportunities.
- A person with a bad credit history can use the following legal way to obtain a loan.
All considered methods of obtaining a loan for a person with a bad credit history have both their pros and cons. Always choose cooperation with professionals to achieve your goals.