Bad Credit Loan
Definition
- A loan made out to an individual or entity with a bad credit score. In addition to charging those with bad credit a higher interest rate, lenders often require the loan to be secured with some form of collateral.
Synonyms
sub-prime loan
Related Terms and Acronyms
- Bad Credit — Definition,
- Someone who carries a higher credit risk.
- Collection — Definition,
- The efforts used to bring an overdue mortgage, or other debt current, and the filing of necessary notices to proceed with foreclosure when necessary.
- Credit Bureau (CB) — Acronym, Very Important,
- A company that collects and sells information about how people handle credit. It issues credit reports that list how individuals manage their debts and make payments, how much untapped credit they have available and whether they have applied for any loans. The reports are made available to individuals and to creditors who profess to have a legitimate need for the information.
➥ Company that determines one's credit worthiness. - Credit Rating (CR) — Acronym, Very Important,
- A judgement of a person's ability to repay debts. The rating is often based on a person's current and projected income and past debt payment history. Also called a credit score.
➥ A metric to measure the credit worthiness of a debtor. - Credit Worthiness — Definition,
- How likely an individual or entity is to default on their debt.
- Default — Definition,
- When a borrower fails to fulfill the obligations of a loan or lease.
- Delinquency — Definition,
- Failure to make mortgage payments when mortgage payments are due.
- Foreclosure — Definition,
- The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.
- Good Credit — Definition,
- Someone who carries little credit risk.
- Guaranty — Definition,
- A promise to assume responsibility for a debt if the borrower defaults.
- Loan Shark — Definition,
- A lender that provides loans at usuriously high interest rates, often ensuring repayment with the threat of force.
- No Credit History — Definition,
- To have no record of an individual's credit worthiness.
- Predatory Lending (PL) — Acronym, Important,
- Lending practices that are unfair, deceptive or fraudulent.
- Secured Credit Card — Definition,
- A credit card that a cardholder secures with a savings deposit to ensure payment of the outstanding balance if the cardholder defaults on payments. It is used by people new to credit, or people trying to rebuild their poor credit ratings.
- Secured Loan — Definition,
- Borrowed money that is backed by collateral.
- Sub-prime Borrower — Definition,
- A borrower with a less-than-perfect credit report due to late payments or a default on debt payments.
- Sub-prime Mortgage — Definition, Important,
- A mortgage loan that is granted to a borrower who is considered sub-prime (has a less-than-perfect credit report). Sub-prime borrowers have either missed payments on a debt or have made late payments. Lenders charge a higher interest rate to compensate for potential losses from customers who may default on the loan.
- Title Loan — Definition,
- A loan that uses a car as collateral.
