If you have a bad credit score you probably already know how difficult it can be to get a loan of any kind, despite how dire your situation may seem it is possible to get a loan even with very bad credit. Bad credit loans can help those in need consolidate debt and fund major purchases.
In the UK there are three major credit reference agencies from which your credit score is accessed; the three agencies are: TransUnion, Equifax, and Experian they all use slightly different scales, however, your overall rating should be very similar across the three of them.
Bad credit for the purposes of clarifying can be considered anything lower than 560 on Experian and TransUnion reports or below 279 on the Equifax report.
Getting approved for a bad credit loan can be difficult but is certainly not impossible. A few steps that you should take prior to applying for a loan include:
Checking your credit score to see your standing, if possible improving that credit score is the best way to go. Look into lenders that offer “soft search” which is where a lender will provide you with your likelihood of being approved along with a personalized quote, it is important to note that any “soft search” should not affect your credit score and will likely remain hidden from potential lenders in the future.
Looking into specifics, you have several different loan type options even with bad credit, some of the more common bad credit loans include Specialist bad credit loans, payday/short term loans, secured personal loans, and guarantor personal loans among others.
Specialist bad credit loans are loans provided by niche lenders who specifically cater to those with bad credit history.
Payday loans have a bit of a poor reputation due to the potential for possible scams as well as the entrapment that can occur to some who continue to borrow from Payday lenders even after they can’t make the original payment, this usually results in catastrophic levels of debt.
Payday loans are great however for quick cash and many lenders do not view credit history like the more traditional lenders due, should you properly vet the payday lenders in your area this might not be a terrible route to go.
Guarantor Personal loans are loans backed by someone you know (a close friend or relative usually).
There are some important criteria that most reputable lenders will require for a guarantor loan. Criteria include: Guarantor must be a UK resident and hold a bank account in the UK, between the ages of 21-75, and have a strong credit history coinciding with a measurable income, the criteria will differ between lenders however those listed above are pretty consistent standards.
When considering a guarantor personal loan it is important to look at the lender’s interest rates (typically fixed), the total payable (loan amount + interest + additional fees).
By using this guide and doing thorough research on potential lenders you can be on your way to a bad credit loan, quickly.