Today borrowing power is determined by your credit rating. The better your credit rating, the better your chance of being able to get a loan at a good rate of interest, and the best deals. However, not everyone has a good credit rating so what if your credit rating is poor or bad. Is there such a thing as very bad credit loans for people with a poor credit rating?
There is no specific loan for people with bad credit. However, this does not necessarily mean just because your credit rating is bad you cannot get a loan. Anyone can apply for any loan regardless of what his or her credit rating is. However, some loans are easier to apply for and get approval for if you have a bad credit rating than others are.
It makes sense that lenders are not going to offer the best rates of interest and terms to people with a poor credit rating as they are taking a bigger risk on the borrower with a poor credit rating than one with a good score. On saying this, we work alongside lenders who do offer competitive rates even to people with poor credit ratings.
What Types of Loans Are There?
So what types of loans are there for people with a bad credit rating and which might be the easiest to apply for and receive approval for?
It is not possible to predict which loan might be the best to apply for, as this would depend on your circumstances. There is no one loan that suits all. Along with this, all lenders have different criteria, one lender might turn you down but another might approve a loan. The loans we are going to talk about here have different criteria, such as the amount that can be borrowed and the term the loan is paid back over. Therefore, the most suitable loan for anyone with bad credit would depend on the amount of money the person wanted to borrow and the term of repayment.
Loans that might be suitable for anyone with bad credit include:
- A payday loan;
- A short term loan;
- A guarantor loan.
Why might a Payday Loan Be Suitable?
The payday loan might be one of the easiest and quickest loans to apply for if you have a very bad credit rating. This is thanks to it being a loan that offers a very small amount of money, which is paid back within a month or two.
A payday loan is generally quick to apply for and comes with an instant decision due to the fact that only a relatively small sum is borrowed. The average payday loan is between £100 and £500, but some lenders may offer you the opportunity to borrow up to £1,000.
The amount of money borrowed with the payday loan is repaid back over a short term so while the APR on the loan may seem high, you don’t actually pay interest over the year. Lenders will want to know when your payday is or paydays, depending on the term you have chosen to take the loan over. The quicker you repay the payday loan the less interest you are going to pay.
A payday loan might be considered in any situation where pay day is still some time away but you need to get your hands on money fast in an emergency. For example, the final reminder for a utility bill might come through the letterbox or your car might break down and you need money to fix it.
Why might a Short Term Loan Be Suitable?
Another type of loan that lenders may be willing to offer those with bad credit is the short term loan.
This loan allows you to borrow more than what the payday loan offers and repay the loan over longer terms than with the payday loan. A short term loan might allow you to borrow between £500 and £1,000 or more, depending on the lender and other factors. Lenders may allow borrowers to repay the loan over a year or more. This is going to depend on the lender with some limiting the amount and others offering more.
A short term loan might be more beneficial than a payday loan if a larger sum of money is needed than what the payday loan offers. As with the payday loan, the interest rates on short term loans may seem high, but the loan is not taken out over the long term, as with a personal loan, so the interest will not accumulate.
Why A Guarantor Loan Might Be Suitable?
If you have an extremely bad credit rating you find it very difficult to be approved for a loan. If this is the case you might want to consider a guarantor loan.
The guarantor loan is something that needs to be given a great deal of thought. This is because you are not only risking your credit rating but that of the person who stands as the guarantor.
To be able to apply for a guarantor loan you first have to find someone who would be willing to stand as your guarantor. This means that they will become a party to say that they are willing to vouch for you and they will take over the repayments of the loan if you find you cannot manage them. A guarantor is generally going to be someone that is very close to you and this person has to be over the age of 18 and have a good credit rating. The guarantor cannot be your partner or spouse, but it can be another family member.
You may want to consider a guarantor loan if you need to get your hands on more money than what is offered with a payday or short-term loan and you have an extremely bad credit rating.
Is It Possible To Get Same Day Very Bad Credit Loans?
It is possible to get same day loans regardless of your credit stance. However, these types of loans are usually of small amounts, such as what the payday loan or short-term loan offers, and they are repaid back within one to three months.
This would vary depending on the lender of course, as what one lender sees as a very bad credit rating, another might consider it not so bad and offer you a loan.
Generally, with the short-term loan or payday loan, you will know straight away if you have been successful in your application. If you have been approved for a loan, the money may be paid into your bank on the same day or the next day.
How to Apply For a Loan with Bad Credit So It Doesn’t Affect Your Credit Rating
When you apply for loans with lenders, they will check your credit file to find your credit rating. This tells them how big a risk you are for repaying the loan. Lenders can take into account such as:
- Any CCJs;
- How much debt you owe;
- Whether you have been late with repayments;
- Whether you have missed repayments;
- How many accounts you have on your credit file;
- Whether you are on the electoral roll;
- How much of any credit limit available on cards you have used.
If you keep applying for and are turned down for loans, it will leave a mark on your credit file. This is seen as a warning to lenders. There is a way around making numerous applications and that is to apply for loans with our help.
You can make one single loan application and we search with our panel of lenders to match you up with a lender. This means you do not have to physically make many different applications with different lenders. This is good for your credit file and saves time and the stress of having to search around.
To apply for a loan you should be:
- 18 years old or above;
- Have a regular income coming into the home;
- Be the holder of a UK bank account in your name;
- Have a debit card in your name;
- Have a bank account where a direct debit can be set up to repay the loan.
Just fill in some details about your circumstances, such as the amount of income you have coming in each month and what your outgoings are. The lenders will then work out if you have enough money left over to be able to afford the loan and make a decision.
We work with a panel of lenders all of whom consider your current circumstances along with your credit rating. The lenders we work with offer competitive rates with numerous loan options for those looking for very bad credit loans. From just one application, we can help to match you up with a panel of lenders so there is no need to make multiple applications, which may adversely affect your credit file. A loan application is quick and easy and you will find out within minutes if you have been approved for a loan. If so, the money may be paid into your bank account within hours.