Consumer credit is a sensitive issue for most individuals. It often only takes one unfortunate event to destroy years of good payment history. A divorce, bankruptcy, or foreclosure will leave a black mark that is difficult to overcome.
Since these events often occur with other outlying conditions, such as loss of employment, consumers feel helpless. They are not sure if and how their credit histories could ever be rebuilt.
Evaluating Credit Applicants
There is a high standard for contractors and retail sales outlets to carefully screen their credit applicants. Many factors are reviewed in the determination of credit approval and the available terms for a consumer. A good source of income, e.g., consistent employment, is an obvious determinant of the ability to repay a debt. Credit history details may be indicative of the character of a person and give clues about their willingness to repay a new loan.
Lenders try to evaluate all the key details before reaching a credit decision. All things being equal, poor credit histories pose an increased risk to lenders. But that doesn’t mean that nobody with a poor credit history can be approved for credit. Some lenders specialize in determining which applicants deserve a second chance and should be extended credit.
When to Grant a Second Chance
Lenders often take a bit of a gamble when it comes to granting credit to applicants with below-average credit. Lenders who are willing to give applicants with bad credit a second chance make a big difference. Bad credit does not have to be a life sentence, and successful lenders know that sometimes taking a chance can reap rewards for both parties. For example, these loans help consumers with the credit rebuilding process. Credit score recovery is possible over time and with steady repayments.
Slow payment history and other patterns that result in poor credit make an applicant a high-risk investment. These second-chance loans also require higher interest rates to make them profitable. Borrowers are willing to accept the higher interest loans as they work on their credit score recovery. They expect to pay a high-interest rate until they rebuild and qualify for lower interest rates.
Partner With Second Chance Lenders
There is an option for businesses to extend credit to applicants without taking a major risk themselves. Businesses who partner with highly reputable lenders, such as Medallion Bank, can help consumers rebuild their credit. Contractors, recreation dealers, and many others can offer financing without posing an unnecessary risk to themselves. Medallion Bank assumes the risk based on their review of an applicant’s creditworthiness. Businesses simply provide their product or service and leave the rest to us.
Partnering with an experienced second-chance lender allows business owners to reap the best of both worlds. If you are interested in partnering with Medallion Bank, please contact our team today to learn more about our credit evaluation process.