Bad Credit Increases Borrowing Costs

Unsecured personal loan lenders charge borrowers with bad credit higher interest rates—it’s a standard industry practice called charging a risk premium.

If you have experienced financial difficulties in the past that have negatively affected your credit history, you should expect higher borrowing costs, and prepare to resolve them.

Knowledgeable loan consultants may advise you to first consolidate and close your late-payment accounts before consolidation all your accounts. The reason: you’re likely to qualify for better interest rates and loan terms after the late-payment accounts are closed.

Bad credit loans are a viable option, but make sure you get the best possible terms for your individual credit score.