In fact, that's probably how some lenders prefer it. After all, that means they get to charge you more since they are taking on more risk. They probably relish the small nicks to your credit. It's a fine line of course, as most things in life are. How much on a credit report is just a mistake and how much shows irresponsibility with money?
We ended up paying an extra 1% in interest on our last house just because the bank could do that. My ex completely and utterly destroyed my credit to what some would say was nearly beyond repair. But my current wife and I set about repairing it and the lender was quite surprised to see just how much we had repaired it. All our payments were on time, errors had been taken off my report, and a fraud watch put on because it appeared that for a while my ex continued to include my name and social for credit applications.
Still, when it came time to tell us what our interest rate would be, it went something like this. "Here's the current interest rate. See this on your report, we are adding a quarter percent. And this too. This one here is going to cost you half a percent. So your final interest rate is 1% higher."
Now, understand that they were going to give us the loan. And understand that it meant they thought we were going to pay it back. And understand that, in fact, they thought we could pay more than the asking price because a higher interest rate means a higher payment.
They knew we were going to pay and the charged us for being a "higher risk" just because they could.
This loan officer was very nice, saying nice things and using KY while he bent us over, but we promised to never be in that position ever again if there was any way around it.
Tomorrow, I'll tie this back to Prosper.com.