In the current economic client, filling out a credit application with bad credit can be a frustrating and disappointing experience. There are fewer places willing to approve a credit application with bad credit, as memories of scores of defaulted loans from several years ago continue to haunt them.
If a consumer makes a credit application with bad credit at a bank or credit union, they will almost certainly run into difficulty. There are some possibilities that they will have that application approved, but there will likely be significant strings attached. Many banks or other lending institutions will not approve a credit application with bad credit today unless the consumer is willing to enter into a long-term relationship with the lender. The lender, be it a bank or credit institution, will expect the consumer to open a checking or savings account and keep a minimum amount of money in that account at all times. Even in this case, it is likely the loan amount will not be for a large sum and will come with a high interest rate.
Filling out a credit card application with bad credit will likely end up with the same result. In the rare case that the application is accepted, the consumer will probably have to pay more fees than usual, have a low credit limit and pay more in interest than most credit card holders would. Credit card companies, like banks, are currently wary of those with bad credit as they also significantly suffered from defaulted accounts.
Some consumers, desperate for extra money, have taken to filling out credit applications with bad credit at short-term, or “payday” loan institutions to obtain the money they need. These kinds of lenders are more flexible in who they will lend money to, and frequently do not even run a credit check at all. However, there are number of drawbacks in doing business with such lenders – the amount of money they are willing to lend is usually small, the interest rates are extremely high and the loan must be repaid in a shorter period of time than it would be with a normal lender.