You may or may not know that you have a bad credit rating, but you will surely find out if you ever try to apply for a loan. Having bad credit means that lenders may not be as willing to offer you a loan, as they might be if you had a perfect credit score. This is not to say that all lenders think the same and you can apply online for loans for bad credit without guarantor.
How You Get a Bad Credit Score
You get a bad credit score due to numerous factors, sometimes not your fault. It has been known for loans that you have paid off to remain on your credit rating by mistake or for lenders to make mistakes and believe you missed a payment. In these cases, it is not your fault, but you can make contact with lenders and ask that they remove the default on your credit rating.
Reasons that go against your credit rating include:
- Making late repayments;
- Having CCJs against you;
- IVAs, DROs (debt relief order) or DMPs (debt management plan) on your credit file;
- You have a bankruptcy on your credit file.
While it may seem strange, your credit rating can be affected if you have not borrowed in the past and you really do not have any credit rating. This is generally because you are young or have perhaps moved to the United Kingdom recently.
Things to Take Into Account When Applying for Loans for Bad Credit without Guarantor
Before rushing into applying for a loan if you have bad credit, you should take into account that the APR on loans is going to be relatively higher than on a loan for someone with a good credit rating. With this in mind, make sure that you know exactly how much the loan is going to cost in total and you can afford the monthly repayments once interest and fees have been calculated into the loan.
A guarantor loan does reduce the risk the lender is taking so the chances of approval are higher. However, if you are against asking someone to stand as a guarantor you might want to consider a short-term loan, payday loan or personal loan. There is also the secured loan with means you have to secure something of value against the sum borrowed. In this instance, if you were to find yourself unable to repay the loan, you stand to lose your home.
You should also look at your credit rating yourself to find out your score and see what lenders see when they look at it. If there is anything in the file that should not be there, ask lenders to remove the error. Also, make sure credit accounts that you no longer use have been removed as this can have a negative effect on your credit file.
Small Loans for People with a Very Poor Credit Rating
If your credit rating is very poor and you do not want to ask someone to stand as guarantor then you might want to consider the short term loan or the payday loan.
Both of these types of loan are taken out and repaid in the short term. With the payday loan, you would borrow a small sum of money and repay it on your next payday or over three paydays, which equate to three months. This can be a great way to gain back the trust of lenders, providing you repay the loan as agreed on time. The amount of money is small, usually between £100 and £500 but this depends on the lender.
The payday loan is a great way of getting hold of a small cash sum in emergencies to pay something that has come up unexpected that cannot wait until you are paid again. Borrowing with a payday loan and repaying on time will have a positive effect on your credit file and is a step in the right direction. If you ever want to borrow again, the lender will be more inclined to offer you a loan and you may be able to borrow a higher amount.
The short-term loan is another type of loan where you borrow in the short term and repay back quickly. In this case, you might be able to borrow between £500 and £1,000 and pay the loan over a period of up to one year. This allows you some flexibility to ensure the loan repayments are affordable, but also bear in mind that the longer the loan the more you will pay in interest.
Short-term loans can be taken out to cover any reason where a payday loan would not provide sufficient funds or in cases where you want to repay the loan over longer than three months. Most short term loans do not have an early repayment fee so if you can repay the loan earlier it would save you interest. However, this is something that you do have to check.
Personal loans that are unsecured may be a viable option for borrowing if your credit rating is not too bad. If your credit rating is bad, the lender might offer you a secured loan. In this instance, you have to put something up against the loan, which is usually your home and you stand to lose it if you cannot repay the loan.
As with the short term loan, check the APR on the loan to make sure that it is affordable. The APR can differ from lender to lender so if you have a choice it may be in your best interest to go for the loan with the lowest APR.
Making an Application Online
One of the easiest and quickest ways to apply for a loan is online. Within minutes, you will know if you have been approved or not as the process is undertaken entirely online. If you are approved you could have money from the loan paid into the bank on the same day.
To be eligible to apply you have to give your date of birth, you have to be at least 18 years of age, your address, you have to live in the UK, and your bank details. This includes the debit card number attached to your bank account. The lender will also want information about your income and what you pay out each month. This is so they can make an informed decision on your ability to repay the loan.
If you make an application for loans for bad credit without guarantor with our help, you can search with multiple lenders, which boost your chances of finding a loan and means you only have to make one application.