A myth pervades our society that individuals who have filed bankruptcy or developed bad credit will never again obtain a credit card, car loan or home mortgage. Perhaps this myth grew out of truths in prior decades about bad credit or perhaps it continues to exist through inaccurate threats made by unscrupulous credit collectors. People with bad credit must understand, however, that while the doors to the world of credit are not closed to them they will open to a different place compared to individuals with good credit. One's experience in the world of bad credit will vary based on the degree of their problems.
Some issues effect all bad credit borrowers but vary in severity.
Interest rates will be higher. While some may be surprised or offended by this the concept is understandable. A rate of interest is computed by taking into consideration the general rate of interest nationwide at the time the loan is made and the specific risk of the particular loan in question. Commonly the prevailing rate of interest in the US is expressed as the prime rate, which is the rate of interest a bank may charge its very, very best customers. Competition results in the prime rate at most banks being the same or within a half a point or less.