Getting finance with a bad credit history in today’s economic climate is nearly an impossible task. After more than a decade where getting bad credit rating mortgages was very easy, the collapse of the economic and housing markets in 2008 has changed everything. Now, banks, finance companies and other lenders are extremely wary of extending finance to someone with a bad credit history.
In the early part of the 2000s, lenders were happy to make sure a customer got financing, especially for homes, with a bad credit history. These mortgages, known as subprime mortgages, were offered to those customers with negative credit ratings and lenders with better credit scores but little in the form of down payments. Excited consumers interested in getting a house of their own rushed to get a bad credit rating mortgages, obtained funding—and promptly defaulted on their mortgages.
Millions of subprime mortgages were defaulted on, a trend that continues today. The bust of bad credit rating mortgages began to be noticed in 2006 and had become a wave by 2008. Banks and other lending institutions that had invested billions of dollars in subprime mortgage began to see their investments go up in smoke, leaving them in severe financial distress.
As a result of the subprime mortgage crisis, customers interested in getting finance with a bad credit history are looked upon with scorn by many lenders today. They are not willing to take a risk similar to that of the past several years, especially as those loans continue to default and foreclosures continue at a rapid rate.
If a customer is to get bad credit rating mortgages, they are going to pay heavily for the opportunity. It is likely the interest rate on the mortgage will be much higher than on standard mortgages, and the consumer will be expected to make a substantial down payment and bring a great deal of collateral to the table. If a customer cannot meet and exceed a lender’s requirements for getting finance with a bad credit history, there is virtually no way they’ll get the money they’re looking for.