If you have found yourself in financial difficulties in the past, it may have negatively affected your credit rating, especially if the period of financial difficulties was prolonged or particularly difficult. Once the initial issues have past, there eventually comes a time when you need to start rebuilding your credit rating, but this in itself can become an issue if your credit score is extremely low and you’re being refused even the smallest loan. In this article, we take a closer look at how very bad credit loans no guarantor work.
What Affects My Chances Of Getting A Loan?
When lenders give people a loan, they are taking a gamble that the person will continue to pay them back for the duration of the loan. To find out if the person applying is likely to do so, they look at their credit score and their credit history. We’ll look at these things in greater detail in a minute, but, in a nutshell, your credit score is a numerical value that calculates the risk factor – the lower the number, the higher the risk. Your credit history is simply that – the history of you paying bills and debts. These two things allow lenders to make an informed decision as to whether you are likely to pay off any loan they offer you. If your score and history are both positive, you will get offered a larger loan with a lower interest rate than if you have negative credit score and history, because lenders are confident that they will get their money, and the interest they charge, paid back to them without issues.
What Is My Credit History?
If you have ever taken out a loan, credit card, or mobile phone contract in the UK in the past six years, then you have a credit history.
Your credit history is a record of you bill and credit payments, so, if you have missed a credit card payment, or if you have paid your mobile phone bill late, it shows up on your credit history. If you have a poor credit history, your credit score is reduced, and lenders are less likely to offer you a loan without a guarantor.
What Is My Credit Score?
As mentioned before, your credit score is the numerical value that is placed on your credit file. Your credit file is made up of various pieces of information, such as whether or not you are on the electoral register, if you have a UK bank account, and paying your utility bills on time. It also looks at previous credit applications, and whether these have been successful or not. When this is combined with your credit history, it gives lenders a overview of your financial responsibility.
How Can This Help Me?
Knowing why your having trouble finding a lender that is willing to give you a loan gives you the opportunity to make the changes necessary to bring your credit rating up. Before you apply for a loan you must make sure that you have done everything you can to increase your credit score, including:
- Get on the electoral register
- Open a UK bank account
- Take out a mobile phone contract (these are easier to get than loans)
- Manage your household bills
Your credit score is updated monthly, so it is important that you give your score at least one month to improve once you have done all of the above.
One other thing that can help you improve your credit score is taking out a small loan or credit card. As long as you keep up with repayments, a small loan will show lenders that you are able to manage your finances responsibly.
How Can I Get Very Bad Credit Loans No Guarantor?
It is easy to say that getting a small loan can help you rebuild your credit score, but how can you get a loan in the first place, especially one without the need for a guarantor?
Bonsai Finance can help you get the loan you need. We work with a wide network of lenders who are willing to work with people who are trying to increase their credit score, and who are able to offer very bad credit loans no guarantor to those with less-than-perfect credit scores. We also use a soft search facility to find you lenders who are able to offer you a loan in minutes, and, what is better, is that this search does not affect your credit score so you can feel safe knowing that your financial future is in good hands.