A bad credit loan is for anyone who finds themselves with a less than perfect credit score or has been refused credit elsewhere.
So, you’ve found yourself in the bad credit category, doomed to a life of struggling to obtain any type of loan. Well fear not, you still have a few options to get your credit score back up where it needs to be.
A bad credit loan is catered to the needs of anyone who finds themselves in a position where their credit rating is less than perfect. It can sometimes feel like a never-ending spiral when you find yourself with poor credit. How else do they expect you to demonstrate that you are now capable of having your finances in order and being able to pay back accordingly? It could have been a mistake you made years ago, from failing to make repayments on a previous credit agreement to having a county court judgement against you. However, lenders are finding that many people who find themselves with a bad credit rating are actually capable of being responsible borrowers in the long run. So good news if you’re one of those people.
There are many bad credit loan options available, such as a Guarantor Loan. This type of loan requires a family member or friend with good credit to guarantee the repayments, if you default.
Bad credit loans tend to be used as an emergency cash option. So unexpected housing repairs, a medical bill or to consolidate your debts. It definitely shouldn’t be used for non-emergency purchases or situations. By using it irresponsibly, it will just further you into your bad credit score. Something you definitely don’t want to do.
A bad credit loan can give someone in need a lifeline. It can be so frustrating when you’re in need of a loan but have no chance of improving your credit score. It can actually give you a chance to show that you are capable of keeping up with repayments. It may take you a while but it’s also a great way to improve your credit score steadily, making it easier for you to obtain a personal loan in the future.
As you can imagine, a lot of lenders won’t lend to people with bad credit. It’s a bigger risk for them as usually, people with less than perfect credit, are more likely to default on their payments. Therefore, lenders who are willing to offer bad credit loans will have a much higher interest rate than your normal traditional loan for someone with a good credit score. When used properly, they can really help someone out if repayments are made on time and you can show that you’ve adopted a healthy attitude to your finances.
Taking out a bad credit loan isn’t an impulse decision. You really need to look at all your finances, make a plan and strategise how the loan is going to help you in the long run. It’s always good to write down all of your financial commitments, how much money you’ll have to pay off all your bills and how much you’ll need to borrow.
It always helps to see it written down in front of you so you can break it down into a simple plan. Then you need to make sure that you can afford to pay off the repayments with interest. It can be really daunting at first, but tackle the problem head-on and find out as much information as you can. There is a light at the end of the tunnel if you start to really make an effort with your finances.
So, do your research and find a responsible lender who offers bad credit loans. If you’re unsure of the authenticity of your lender, you can quickly check if they are regulated by the FCA by checking on the Financial Services Register. By law, all lenders need to be regulated and to inform you of places you can go if you find yourself with serious money problems. Once you’ve got all the information you need, it’s a case of applying for a loan and always making sure that you can comfortably make the repayments.
If you are having financial difficulties or need to speak to someone regarding your financial situation before applying for a loan you can get free and confidential advice from The Money Advice Service, National Debtline or debt charity StepChange.
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Representative 97% APR (fixed)
Representative example: Borrow £1000 for 24 months at 24 equal instalments of £77.48. Total amount to repay £1,859.52. Interest £859.52. Annual interest rate 70% (fixed). APR rates range from 45.3% APR. to 1575% Max APR. Your APR rate will be based on your circumstances.
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