The banking industry is built on trust.
Customers deposit cash in the bank with the belief that when they need the cash, they can simply walk into the bank and get the money. On their own part, banks lend money to customers and they trust the customers not to default. This act of mutual good faith is one of the foundations on which the banking industry is built.
If you know this already, then you also know that if you have a bad credit history, you will find it difficult to get loans from most banks.
There is nothing surprising about this because it is simple common sense at work. No bank will want to lend money to people who are likely to default. More to the point, no bank will like to give loans to people who have defaulted in the past.
How bad credit history affects you:
If you have bad credit history, it will be better if you do not apply for a personal loan. This is because applying for a loan under the circumstances may damage your credit rating some more. In fact, the best thing for you to do at this point is to try to repair your credit rating first.
Repairing your bad credit:
One thing you should not ever do is try to con a bank into giving you a loan. If you have had credit rating at one bank, other banks are bound to know about it. The good news is that it is possible to get personal loan for bad credit but you need to show evidence that you are in the process of repairing your credit rating. One way to do this is to stop piling up credit card debts. Another option is to start paying off your debts on a consistent basis. Once you have shown some commitment, the banks will notice and this will improve your rating.
Sensible loan options:
Having a bad credit report is not the end of the world. It is possible for people with bad credit to get loans but the approach has to be a bit different. For a start, there would be no point in trying to get a loan from the big and reputable banks. These banks have many customers already. They also have corporate clients so they are not likely to grant personal loan for bad credit. The smart move would be to try smaller banks. The individual with bad credit should have an account and run the account for a while to get some good history with the bank. It will also make sense to apply for a small overdraft first. Once this is promptly paid off, the bank will have more confidence in granting a bigger loan.
As stated already, banking is about trust. The customer with bad credit needs to earn the trust of the bank. This is the only way to get a bank loan even with a bad credit rating.
Shelly Evans is a freelance writer and loan consultant. The website http://www.badcreditresources.com offers resources that specialize in providing personal loans for bad credit.