Bad Credit Options
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If you have been refused loans by high street banks and other lenders you may believe that your financial situation is impossible. But don't panic - financial help is at hand.
We specialise in helping people like yourself. Explore a wide range of bad credit loans. Use our FREE broking service today. One or more loans could suit you. To learn about loan options use these Quick Links:
Look at the borrowing "map" below to help you compare & narrow down your options.
There are a range of loans that can accommodate people with some form of impaired credit rating. There's no single "bad credit loan". Typically these loans for bad credit have higher costs or need some form of security or guarantor. See below for a comparison of poor credit finance. Your specific borrowing options will depend on your personal circumstances and your credit status. If you don't know your credit rating you can find out by using a credit monitoring service.
Everything stems from your credit file. You don't have one until you turn 18 and can start to borrow - things like credit cards, loans, mortgages, etc. So, everyone starts by having no finance history at all.
Having no credit history can itself be a problem as lenders can't judge how reliable a borrower you will be, but while this is a problem it is not a majoe problem. In this case a credit card company might offer you a card but with a low limit to begin with.
Over time you accumulate a borrowing/repayment history in your file. Lenders will record your borrowing behaviour with one or more of the UK's three main reference agencies (Experian, Equifax and Callcredit). The files will show whether you pay on time, whether you get into arrears or miss payments, and whether you default on debts completely. You might also get court judgements against you (so-called CCJs). So, there are degrees of "bad creditworthiness". Some people's files contain more adverse events or adverse events of a more severe nature.
When you apply for any form of borrowing the lender will use the data in your file to judge the risk of providing you with it - in other words they will score you. If your score is not high enough they will refuse your application.
Be aware, as well, that the act of applying for credit will be recorded in your file (unless the lender does a "soft search"). If you make applications too frequently this fact will have a further adverse impact on your rating.
You have certain rights if a company decides it won't lend to you:
If the decision is reviewed by a lender then may still turn your application down. Since not all lenders use the same credit reference agencies and because they may/will use different scoring techniques while one lender may refuse your application another may accept it. But be cautious about applying too frequently as this act itself may affect your score!
Guarantor loans are one type of unsecured loan that could help you get finance when your borrowing history is less than perfect. Guarantor loans require you to provide someone to back you in your application and to stand behind your debt and repayments should you fail to do so.
They work on the principle that if you can find someone who trusts you to pay off the debt then your credit score (i.e. the measure of risk of lending to you based on your historic behaviour) is much less relevant.
In addition to getting you the borrowing you need they offer you the chance to improve/rebuild your credit rating. Each time you make a monthly repayment on time and in full this good news is added to your file so helping to dilute the bad news that is already on there.
As you can see from the comparison of borrowing options above there is no single type of product - just a number of alternatives that may suit people who have issues in their borrowing file. So, whether a loan is "safe" or not depends on the type of product in question.
So, what would be the worst case consequences of not keeping up your repayments:
In the case of any type of finance you should never borrow more than you can afford to repay. Lenders are required to conduct affordability tests prior to lending any money. But as a borrower you are obliged to repay on the terms agreed. If you fail to there are always going to be some consequences. At the very least your borrowing rating will be downgraded making borrowing harder in the future.
Your borrowing history and your file is an aggregation of all your interactions with finance companies and other businesses who let you borrow (e.g. utility companies and phone companies). If you have experienced money problems and this has led to you missing loan repayments or being late paying some bills then your file will be tarnished for a while.
If you were to need to borrow more in this situation then it may be more difficult to. So, a lender who is more tolerant or a financing product that is more tolerant of a poor borrowing history is likely to be a solution. All the loans on this page are tolerant of a less than perfect history. The loans may be more expensive than you are used to but this will be the case while you are seen as a higher risk. However, if you pay off any new borrowing on time and in full your credit history will be improved and rates you pay in the future are likely to be lower.
The key advantage is that just when you think you can't get finance you can - all the finance products above are built with borrowing issues in mind. You don't need perfect credit to get what you need.
Without these sorts of loan available people who have an adverse histories would never be able to borrow again and they would never be able to prove that they could manage their finances. The reality is that credit issues can hit anyone at any time due to a change of circumstances (e.g. moving house, changing job, becoming unemployed, etc).
The phrase "bad credit" is bandied about a lot. But at the heart of this phrase is the reality that someone has had a problem managing the borrowing they have previously been allowed. It could be a few missed payments or something more serious like a default notice or a CCJ. For a new lender deciding whether to lend they will see people with bad credit histories as more risky.
A lender could choose not to lend or they could choose to do so at an interest rate that is higher than normal to help offset the higher risk. It is this higher interest charge or APR that is perhaps the major disadvantage. But in addition a borrower could be requested to offer a guarantor or an asset as security.
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