If you have a bad credit score, it can be a nightmare obtaining a loan. Some lenders will run a mile while others will offer you a loan. The problem with this is finding lenders willing to offer you a loan based on your poor credit score. There are loans for bad credit score available and there are several choices open to you depending on the amount you wish to borrow, and how you want to repay.
So what are the choices for borrowing if you have adverse credit? Well, there is a small loan, commonly known as a payday loan. There is a:
- Payday loan;
- Short-term loan;
- A guarantor loan.
Which would be best to apply for would depend on your needs. So let’s break these loans down and find out which type might be more suited to your needs.
Situations Where a Payday Loan Might Help
If you only need a small cash sum to tide you over until your next payday then a payday loan might be suitable. Lenders may offer you between £100 and up to £500 that you can repay between one and three paydays or months.
There are many situations where this type of loan might be suitable. You could find yourself having to pay out for repairs that are unexpected, have to take your car into the garage to have a fault fixed or run into an unauthorized overdraft and the daily charges are crippling.
Payday loans are one of the easiest types of loans to be approved for if your credit rating is bad as the loan is only for a small amount and it is repaid back fast. The APR on these types of loans looks high but bear in mind that the loan is not spread out over the year, only one to three months.
Situations Where You Might Take a Short-term Loan
You might find yourself needing to get your hands on up to £1,000 or more. If so, you might be better off applying for a short-term loan and repay the loan back for up to a year. Some lenders may allow you to borrow more and repay over a longer term.
A short-term loan is ideal in any situation where a payday loan would not offer enough and you want to spread the repayments over longer than three months but no longer than a year. Bear in mind, the longer you take the loan over the more you are going to pay in interest, so choose the term wisely. It needs to be affordable.
Guarantor Loans for Bad Credit Score
Depending on just how bad your credit score is and how much you want to borrow, a guarantor loan might be the better choice.
The guarantor loan is generally easier to get approval for, as someone will stand as your guarantor. This means the lender has someone to fall back onto to recover the repayments in the event you find you cannot repay the loan.
The downside is you have to find someone willing to stand as a guarantor and possibly take over the loan repayments in the event you cannot manage them. A guarantor must have a satisfactory credit rating, be over 18, live in the UK and have a debit card attached to a bank account. This criterion is also applicable to anyone applying for a loan.
The three above types of loans for bad credit score are the most popular loans applied for by people with a bad credit rating. We work with lenders who will take your income into account along with your credit rating, to determine if you can afford the loan. Lenders offer affordable loans with the most competitive rates and we can help to match you up with a lender by you making one single loan application.