What Is a B/C Loan?

A B/C loan is a loan to low credit quality borrowers and borrowers with minimal credit history. This type of financing, which includes personal consumer loans and mortgages, is typically issued by alternative lenders charging high-interest rates and fees. They offer a second tier of loan eligibility to subprime or thin file borrowers, the sort of applicant who would not qualify for an A-labeled loan, which follows more conventional standards and is issued by traditional financial institutions.

B/C Loans do not meet the credit requirements of Fannie Mae and Freddie Mac. They are known as B, C and D paper loans. Loan applicants typically have a sub-par credit history, have filed for bankruptcy, or have had a property in foreclosure.

B/C Loans are often issued as temporary loans until the applicant can restore credit and qualify for conforming “A” loans. Interest rates on B/C Loans are generally higher than for conforming “A” loans.

What You Should Know. . .

B/C loans are provided to either a low credit quality borrower or a borrower with little to no credit history. While the rates and fees on B/C loans are typically higher than their conventional counterparts, there are a variety of reasons that these loans can be used to help offer borrowers an alternative funding option while they build or rebuild their credit. The higher rates help the lender to account for the risk levels presented by the financial situation of a borrower.

B/C loans are less favorable than A-labeled loans but better than D-labeled loans. With the right team behind your funding, a B/C loan can be used to secure initial funding with tht e opprotunity to refinance to a more favorable loan program in the future.

Provident Lending Group’s Difference

When working with the Senior Loan Officers at Provident Lending Group, We walk you through your loan program options to assess the best course of action to fit your borrowing needs and future financial goals. The plans you make today are designed to set you up for financial success  tomorrow. Whether you have had a rocky credit history or you are starting to build your financial history as a new homeowner, our team is dedicated to guiding you through the lending process. Contact us today to lean more about your opportunities!

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