Monthly Archives: October 2014

Can You Secure a New Loan if You are in Credit Counseling

Many people find themselves in credit counseling at one time or another. There are an almost endless number of reasons why people find themselves in financial distress and in many cases, finding a good credit counselor can help them develop the tools that they need to get their finances back on track even after something devastating has happened. However, in rare instances people that are actively involved in credit counseling may also need to apply for a loan. This can happen for a variety of reasons but it is usually related to something that suddenly happens which requires a great deal of money to deal with. For example, a car may break down or there may be a sudden illness in the family. Major appliances may need to be replaced. Any of these things could force a person to require a loan and many people fear that if they are in credit counseling that they will not be able to qualify for anything that is available.

The fact is that it is possible to secure a loan even when actively involved in credit counseling. However, it is likely to be far more difficult to successfully secure the loan. This may be due to the credit counseling that is taking place but in all likelihood it is much more likely related to the previous credit issues that existed which prompted credit counseling in the first place. Loans can be found for almost every individual but loans that are available to people who have unresolved credit issues are typically known as high risk loans. These are more difficult to find and they come with a number of differences that people should be aware of before they ever sign a piece of paper agreeing to take a loan of this type out.

High risk loans are simply harder to find than other types of loans and when they can be located, there may be more rules and regulations that are associated with applying for and being granted a loan. Perhaps the biggest difference is that they typically cost a great deal more. People that qualify only for loans of this type can expect to pay much more in interest rates and additional charges. A person that qualifies for a loan and has excellent credit may be able to get a loan that has less than 10% interest. On the other hand, a person that is only able to apply for a loan that is designed for people with credit issues may find themselves paying more than 300% interest, as well as additional fees. By the same token, a person that has a typical loan may be able to make a payment a few days late without it being a catastrophic event. People that have to take out high risk loans almost always have to make prior arrangements if they are going to pay a loan even a single day late or they will have creditors calling them right away.

The bottom line is that loans can be found but it requires effort. It is also a good idea to work directly with the credit counselor to find the best option that is available. If done correctly, it can actually help rebuild a good credit rating.