Why People with Bad Credit Turn to Sources of Finance Other than LOC
Whether you want to spend on a pricey gourmet kitchen or you are dreaming of a vacation, an LOC (line of credit) represents an appealing financial resource. However, most lenders limit the flow of LOC amounts to borrowers with high FICO® credit scores and substantial assets. Prospective borrowers with bad credit who seek a line of credit are often confronted with both frustration and disappointment on that path. A credit based financing option may also be a viable route for these individuals.
For households and individuals seeking a bad credit line of credit, there are not many options out there. In some cases though, a home equity line of credit may be available to them. Some desperate borrowers often turn to other sources of credit, such as a payday loan to name one. Oddly enough, although a payday loan is not exactly a line of credit, several payday loans still carry the obligations and a few of the benefits of a LOC. Payday loans have a fixed credit amount but what makes these less desirable is the short repayment period and a very high interest rate.
Some lenders do not give a line of credit to potential borrowers with bad credit, but not every company follow this policy. For those with a less than a perfect credit score, some lenders look beyond it and consider people’s overall credit profile instead, and often serve as the best option to source the money which the former require. Those that hold a good repayment record still have the chance to borrow such loans at a reduced interest rate.