Advertisers continually work to hammer home the idea that we deserve to own bigger, more expensive cars, extensive electronic equipment, and new or more luxurious clothing, home accessories and jewelry. Even if an individual does not purchase any big-ticket items, it is all too easy to watch innumerable small purchases add up become a huge problem. At times, of course, the debt may be due to circumstances beyond one’s control, such as debts resulting from medical expenses or natural disasters. However, many times these problems are the result of choices which have been made. Either way, a great deal of hard work will be needed to restore one’s credit rating. Meanwhile, debts must be paid, and a person may have to seek out a high risk credit loan to help keep himself or herself afloat until the financial situation stabilizes.

Unlike previous financing, which was all too easy to obtain, getting a high risk credit loan may prove to be somewhat difficult. Not every lender is willing to take a risk on a bad loan. It is possible to find places which are willing to grant the loan, yet this will almost certainly be at an extremely high rate of interest. A better rate may be able to be obtained if an individual can secure the loan with some type of collateral. An unsecured high risk credit loan is less frequent; these have an even higher rate of interest! This is only reasonable, though, considering the risks that these lenders are taking by extending a loan to a borrower who is in this type of situation. Besides, look at the bright side of this picture — at least the person in this dilemma can get a loan. By making continued on-time payments, he or she can begin to rebuild a credit rating. Along the way, as the rating improves, a person may be able to refinance the loan to a better rate.

Although many sources of secured or unsecured loans can be located with an Internet search, be aware that there are many organizations which engage in fraudulent activity as well. To protect the already strained financial situation, be careful never to send money in advance of obtaining a high risk credit loan. Although some lenders will require some form of collateral, this is usually in the form of some item of value, such as a house, car, or jewelry. However, legitimate lenders will never require a person to send money as collateral or insurance that the loan will be repaid. Avoid such lenders, for they are probably involved in some type of financial scam.

Unless one wants to continue to give a great deal of his or her income towards interest payments on a further high risk credit loan, some fundamental changes must be made. There is a great deal of information online about frugal living and about establishing healthy financial practices. Libraries offer free books and other materials on the subject. Most pastors can recommend certain financial principles, or at least direct a person toward reputable authors who deal with these matters. Many banks offer free financial consultations to their customers. (Note: One does not have to be wealthy to benefit from such services.)

In broad strokes, there are several major principles which will help an individual use his or her finances wisely. Recognize what true wealth is, and where it comes from. As James 1:17 states, “Every good gift and every perfect gift is from above, and cometh down from the Father of lights, with whom is no variableness, neither shadow of turning.” Now that a person knows where wealth comes from, it is always helpful to know where one’s money is going! Keep a record for about two weeks of every incident in which money is spent. This will give a sense of where excess ‘leaks’ may be happening. Set at least a general budget for the week’s expenditures. This may be fine-tuned as time goes on, but this budget gives one a starting place from which to work. Needless to say, getting used to using cash for any purchases instead of a card is a wise decision. Most people spend less when they are actually seeing the money exchange hands. Also, set aside some portion of the income for savings. Even small contributions add up, and eliminate the need for a high risk credit loan in the future.

Determine to set aside as much as possible to pay off any debts. Try to pay more than the minimum payment which is due, as this will radically change the amount of interest that will be paid on a high risk credit loan. As one account is paid off, use the same payment which used to be put toward that debt toward other debts. In this way, the payment process will continue to accelerate until all debts are paid. Once debts are paid and credit is becoming re-established, keep debt at less than 25% of your limit. This can prevent future woes and also helps improve the credit score, for lenders view this as an indication of self-control and responsible use of credit.

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When the start up plan is logical and accounts for all problems associated with entrepreneurship, the borrower will not be viewed as a high risk business loan applicant. Careful preparation and thorough research should be done before attempting to qualify from any lending institution. Those that cannot write their start up plan to eliminate the need for an expensive interest financing program should have some type of collateral to secure a portion of the funding. Ideally, 10%-20% of a down payment, in the form of collateral, will be needed for approval of most programs. Without any collateral, the borrower will most definitely be denied. The biggest factor that differentiates high risk business loans from standard financing is the interest rate. Lenders feel that if they charge an expensive interest rate, the financing is somehow worth the possibility of default.

If the borrower has bad credit, they will most assuredly be charged the most expensive interest rate possible. When an entrepreneur is aware that their company will require a high risk business loan, they should first enlist the help of family and friends. The family members or friends can offer the borrower a one-time gift up to $10,000. “Therefore take no thought, saying, what shall we eat? Or What shall we drink?, or, Wherewithal shall we be clothed?…for your heavenly Father knoweth that ye have need of all these things.” (Matthew 6:31-32). Whether or not this is borrowed and requires payback is between the borrower and their family member or friend. The lender will allow this gift because high risk business loans usually require a large down payment. If the company start up plans included the purchase of a building or land, the lender may approve the financing based on the value of the land and building alone. The financing can also be approved for an amount much less than requested. It is in the decision making process of the loan officers where a future business ownership dream can be met or broken.

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