What are ‘bad credit loans’?
Bad credit loans are designed for people with a credit report that’s but spotless, or who have little to no credit history. These loans typically have higher interest rates and greater restrictions than other loans, as this helps lenders reduce the danger of you not paying them back. However, they will be useful if managed responsibly.
Importantly, you will not find companies advertising ‘bad credit loans’ – this is often just a standard, the unofficial name for them.
How am I able to get a loan for ‘bad’ credit?
Firstly, compute what you’ll comfortably afford to repay monthly. Then compare loans with different companies to seek out one that most closely fits your financial ability and wishes.
Try to only apply for loans that you’re likely to urge since each application will record a tough search on your report which will lower your score. It is often helpful to see your eligibility before you apply, to know your chances of approval. you’ll see your eligibility rating for private loans once you compare them with Experian – it’s free and it won’t affect your credit score.
What is ‘bad credit’ and do I even have it?
‘Bad credit’ means your credit history is viewed negatively by companies, so it will difficult to borrow money or access certain services. But remember that every company has different criteria when assessing your credit history – some may even see you more positively than others.
Click here to get bad credit loans online
How am I able to recover rates and better limits?
You could consider a loan with a higher risk
If you are not willing to pay high rates, otherwise you need an outsized amount, you’ll still be ready to find a loan that matches your needs – albeit you’ve got poor credit. But usually, the trade-off is that you’re going to need to accept higher levels of risk. For example:
Guarantor loans – where someone (usually a relative) promises to form your repayments if you cannot. Finding a guarantor with an honest credit history can assist you to get a loan with better rates or a better limit. But being a guarantor means potentially losing your own assets, like your home, if you struggle to stay up with the payments.
Secured loans – where you employ your home, car, or another asset as collateral, meaning you’ll break down if you fall behind on your repayments. However, collateral reduces the risk for the lender, in order that they may provide you with better rates or larger limits than you’d get otherwise.
Try and improve your credit score
Your credit score isn’t set in stone – it’s shaped by your financial behavior, so you’ve got the facility to influence it. There are several steps you’ll be ready to fancy improve your score and boost your chances of getting the loan you would like.
Managing your loan repayments
A ‘bad credit loan’ might accompany high-interest rates and low limits, but it is often a chance to enhance your credit history by showing that you are a reliable borrower. Over time, sticking to the loan repayment schedule should start to spice up your credit score, helping you recover credit deals within the future.
Here are our top three tips for once you have a loan:
Draw up a monthly budget and stick with it, so you never miss a loan repayment
Try to not increase your debt while paying off the loan, as this might damage your score and put pressure on your ability to form repayments
If you’re worried you will not be ready to make a payment, ask your lender as soon as possible to debate your options.