If you have a poor credit rating and are looking to take out a loan, you might be asking the question how easy is it to get loans for poor credit. It used to be that it was extremely difficult to obtain a loan with a less than perfect credit score when the only option was banks on the high street. Today times have changed. Now more lenders are online and they are willing to offer credit to people with poor credit ratings.
Do Lenders Check Credit Ratings
Yes, all lenders will check the credit ratings of anyone applying for a loan in the UK. On saying this, even if you have a poor credit rating you should not worry too much as lenders do consider other things. For instance:
- The lenders we work with will consider your current circumstances as they know things might have changed;
- Lenders will make an affordability check. This is to check what money you have coming in each month and what money you pay out;
- Providing they think you have enough disposable income left over, there is a good chance your loan might be approved.
Small Loans may be Your Best Option?
There are many types of loans on the market, but some are more suitable to apply for if you do have a poor credit rating. It is not that they are loans specific to people with a poor credit rating, it is that they may be easier to find approval. The loans we are talking about are loans offering just a small sum of money and you offer to repay the loan back quickly. The two most common loans of this nature are the payday loan and short-term loan.
Another loan that is most commonly applied for by those with poor credit ratings is a guarantor loan. This type of loan allows you to apply to borrow a larger sum of money and spread the repayments for up to 36 months.
Is There Any Criteria for Loans for Poor Credit?
The criteria when applying for loans with a poor credit rating is the same criteria that everyone has to meet before they can apply for a loan, whether their credit rating is good or bad.
Typically, you have to:
- Have a regular income coming in each month from work or benefits;
- You are at least 18 years old;
- Live at a UK address;
- Have a bank account in your own name;
- Have a debit card and your account accepts direct debits.
Even if you have a poor credit rating and you are on benefits it may still be possible to find approval for a loan as lenders do consider certain benefits as regular income.
These are the most basic criterion you need to meet in order to apply for any loan in the UK.
How Much Can I Expect To Borrow?
How much you can borrow is going to depend on how much disposable income you have each month and whether the lender thinks it is affordable. All UK lenders will want to make sure that any loan they give you is not going to leave you struggling. This applies to payday loans, short term loans and guarantor loans.
Payday Loans Offer a Small Sum
If you apply for a payday loan, you might expect to borrow between £100 and £500. Payday loans can be suitable loans for poor credit to meet any unexpected outlay and money is tight until next payday.
Payday loans are typically repaid in one to three months. If you decide to repay the loan over three paydays, it can make the loan more affordable but in the end you would pay more for the loan overall.
Payday lending was once believed to be an expensive way to borrow as the APR was often in the thousands of percent. However, this has to be weighed up against the fact that it provides money fast directly into your bank account and loans of this nature are most likely to approved for people with a poor credit rating.
Payday loans are popular when met with an unexpected outlay and you do not have the money to cover it until your next payday, such as:
- Finding yourself in an unauthorised overdraft and the fees are crippling;
- Your vehicle breaks down and you rely on it for work;
- Your cooker or freezer breaks down and needs repairing;
- A large final demand bill has dropped through the letterbox and needs paying before your next payday.
Short term Loans Can be Spread Out For up to 12-Months
If you need to access more money than what a payday loan might offer or you need to spread the cost over a longer period you might wish to give some thought to a short term loan.
With the short term loan, it may be possible for you to borrow a sum of money between £500 and £1,000. Not only does a short term loan give you the possibility of borrowing more money, it also allows you to repay over a longer term. This is usually up to 12-months.
This gives you the best of both worlds, as the loan can be more affordable if you spread it out over longer but you are not committing yourself to a loan over countless years.
You do however have to consider the fact that borrowing becomes more expensive the longer you take the loan over. Therefore, try to find that fine line between the loan being affordable each month but not spreading it over a longer term than you need to. You might also consider repaying the loan earlier than anticipated if you find yourself with the money to do so, but check to find out if an early repayment fee will be added on.
Borrowing Larger Sums with Poor Credit
You might find the need to borrow a larger sum of money and have a poor credit rating but, there are still choices of loans. If you want to borrow up to £15,000, you might consider a guarantor loan. You could get your hands on the same amount of cash with a personal loan but with a bad credit rating, this may be more difficult.
With the guarantor loan, you have to ask someone close to you, a good friend or relative, to stand as your guarantor. This is the downside as you might not have someone or not feel comfortable enough to talk to somebody about your finances. The interest rate is generally high on a guarantor loan, which is another downside.
You also have to take into account the fact that if you fail to repay the loan for any reason; the repayments are going to fall back onto the person who stood as your guarantor.
A personal loan on the other hand would not a guarantor but with a bad credit rating, it may be harder to find approval, but not impossible.
Fast Online Application with a Panel of Lenders
Applying for a loan has never been easier as the whole process can now be undertaken online. This means that there is no paperwork, which makes it possible in some circumstances to apply for the loan and get money paid into the bank on the same day.
If you enable us to match you with a lender from our panel of lenders, you just have to fill in your details once to be able to search with numerous UK lenders. One of the biggest advantages to this is that you access multiple lenders without the need to keep making separate applications and have them noted on your credit file.
To begin your loan application, just tell us how much money you would like to borrow and when you can repay it. Give us your details, including your name, age, address, your bank account and debit card number. Within minutes, you get a decision and if we can match you with one of the lenders on our panel, you can check out the details of the loan to make sure they are right for you.
Finding a lender willing to offer you a loan if you have bad credit, is even easier thanks to the quick online loan application process. You get an instant decision and you can search for a loan with a panel of lenders. There are many choices of loans for poor credit and lenders we work alongside consider current circumstances along with your credit rating. You can search for a loan with lenders who offer some of the most competitive rates and affordable loans, with numerous loan options.