There are a lot of companies that make their money offering loans for people with bad credit. These companies charge high interest rates, and make their money back on that interest rate – knowing that even if a few customers default (which they will, since they have poor credit histories and are looking for short term emergency funds), they will still get their money back on the others.
Loans for people with bad credit customers are aimed at those who are desperate – people who have no savings and who need a cash injection. The cost of such borrowing is high and some people consider that unethical – after all, the people who need a loan the most are those who are least likely to be able to afford to pay back a loan in the short term, especially with a lot of interest tacked on. Yet, even so they are given the chance to borrow.
The lenders claim that the high interest rates are to cover their costs, and that they are offering a valuable service. This is true to an extent, after all, if someone with a poor credit rating finds that their car breaks down, they will likely want to borrow to repair it, and shouldn’t they have that chance?
Whatever your opinion, there is no doubt that it is sometimes useful to have the option to take out a loan, but only if you know for sure that you will be able to pay it back. Missing a payment will make your credit rating even worse, and ruin your chances of being able to take out a loan with a mainstream lender in the future. If you want to get a mortgage one day, then you need to take care of your credit rating.