Banks Tighten Fists on Personal Lending: loans still hard to get

By: Ellen Frick, Outreach Coordinator, NHS of Baltimore

The current economic climate has everyone wary of financial loans. Risky lending practices that enhanced the mortgage crisis have hurt lenders, borrowers, and the economy as a whole. Consequently, many lenders are changing their loan policies, especially concerning unsecured personal loans to individuals with a poor credit rating. An unsecured, or signature loan as it is also known, is one that is not backed by collateral. Often this means higher interest rates as well.

One financial institution that has changed their lending policies in the wake of today’s economy is Bank of America. As of October 31, 2009 Bank of America is no longer offering personal loans. Other large banks such as Wells Fargo and CitiBank continue to offer personal loans, however Subprime Blogger anticipates that other banks may follow in the footsteps of Bank of America. Other places to look for loans are smaller regional banks and credit unions.

As Bank of America has shown, many lenders are less willing to lend money to individuals with bad credit. Minimum credit score limits to get a loan have been on the rise and a lower credit score will likely mean higher interest rates on any loan. Thus it is increasingly important to keep your credit and other financials in shape. One way to improve your credit is to make small purchases using a credit card and pay them back right away.

Research other ways to raise your credit score and consider consolidating your debt to lower interest rates. NHS of Baltimore offers financial fitness classes free of charge, which discuss the importance of building your financial stability and offer advice on how to do so. And as always, NHS of Baltimore's counselors are available to answer any of your questions.