If you are reading this, it probably means that you have been recognised as having a poor credit history, you need a loan and you are considering the choices of loans for bad credit UK.
On the other hand, you just might be looking for more information about bad credit loans in the UK. Whatever the reason that led you here, you will find all the information you need. We will look into:
- What is bad credit?
- What a credit score is;
- What bad credit loans are;
- Types of loans you might get approval for;
- Eligibility for a loan;
- Applying for a loan.
What Determines Bad Credit?
The first thing we want to put straight is what determines bad credit. It might be said that you have bad credit, but what exactly does this mean?
The term bad credit is used when there are black marks on your credit report, which is often called your credit score or credit rating.
These black marks can come around due to a number of reasons such as you being late with repayments in the past on another loan, having CCJs against you or even having too many credit accounts. If you have imperfect credit, some lenders may turn your loan application down.
What Is A Credit Score?
Your credit score determines whether you have good or bad credit. Your credit score is given to you by credit reference agencies and this may differ depending on the agency.
Lenders will generally take this score into account when you make a loan application as it goes towards determining whether they see you as a risk. Generally, the lower the number of your credit score the bigger the risk you are to lenders and the least likely you are to get approval for a loan.
You can also check your own credit score to find out what lenders see on your credit file and there are several ways to do so, including ClearScore and Equifax.
What Are Bad Credit Loans?
While you might have a low or poor credit score, it does not automatically mean that you will be turned down for a loan.
Some lenders are more lenient than others are when it comes to determining what a poor credit rating is and how big a risk you are. Some types of loans come with a higher approval rate than others if your credit score is poor.
Types of Loans for Bad Credit UK
Three types of loans that tend to have a higher approval rate are the payday loan, short-term loan and a guarantor loan.
People with a poor credit rating find they are accepted more for these types of loans due to the fact that they only offer a relatively small sum of money and the loan is repaid back quickly.
Depending on how poor your credit rating is you might have the opportunity to apply for and be approved for a personal loan.
Lenders we work with generally offer loans from £100 up to £5,000 and the loan repayments to be spread over one month to 36 months, depending on the type of loan and your circumstances.
What Is A Payday Loan?
The payday loan usually has a higher rate of success for approval for people with a poor credit rating due to the fact that it is a loan taken out for three months at the most and a small sum of money is involved. This means the lender is not risking many hundreds of pounds if you cannot repay the loan.
Borrow From As Little As £100, Pay It Back in One to Three Months
Payday or same day loans as they are also called will offer sums of money in the region of £100 to £500. The loan can be repaid in full the next time you are paid or it can be spread out over three paydays.
When considering a payday loan you do have to consider that the longer you take the loan over, the more it is going to cost you. You also need to realise that payday borrowing is usually more expensive than other loans and more so if you find you are unable to repay the loan.
Payday Loans Can Provide an Emergency Cash Sum
On the other hand, there are benefits to a payday loan with the biggest being it is the easiest type of loan to find approval for with a bad credit rating. Another is that the funds from a payday loan may be paid into your bank on the same day as you made the application. This is great news if you need money fast.
What Is A Short-term Loan?
A short-term loan is another loan that is repaid over the short-term. Just what a short-term is would depend on the lender offering the loan but usually, it would be no longer than a 12-month period.
Borrow Up To £1,000 and Spread Repayments over 12-Months
With the short term loan, you can borrow a little more than with the payday loan and spread out the cost of the repayments over slightly longer.
The typical short term loan is between £500 and £1,000 with lenders allowing you to spread out the cost of borrowing for up to a period of 12 months. This does give some flexibility if money is tight but the longer the loan period the more interest it will accumulate.
What Is A Guarantor Loan?
If you have a very bad credit rating lenders might not want to take a risk on you repaying a loan. In this case, they may offer you a guarantor loan.
Do You Have Someone You Can Ask to Guarantee You A Loan?
While the guarantor loan sounds a good idea, it is not for everyone. The biggest downside to this type of loan is you need someone to be a guarantor. A guarantor has to agree to take over the repayments of the loan if for one reason or another you cannot continue to meet them.
For all loans, whether your credit rating is good or poor, you do need to meet certain criteria.
- Have a regular income;
- You are 18 or over;
- Live in the UK;
- Have a bank account in the UK;
- Have a debit card;
- Direct debit ability so the lender can be repaid.
I Am On Benefits Am I Eligible For A Loan?
The panel of lenders we work with realise that you might not be in work but still might have a regular payment of money coming into the household each month and be able to afford a loan.
This means that depending on the type of benefit you are on and how much you have coming in and going out, even if you are on benefits you might still be able to get a loan.
Applying For a Loan Online
Applying for a loan has never been as fast or as easy as the entire application can now be made online.
The benefit to this is that there is no paperwork involved so you do not need to wait for it to be sent out for you to sign and return. This means that funds from an application can be made directly to your nominated bank account within hours.
If you apply for a loan with our help, we can help to find a lender from our panel of lenders who will offer you a loan based on your circumstances. Providing you meet the criteria and the lender believes the loan is affordable there is no reason why your application will be refused.
All you need to do to get your application started is to work out how much you can reasonably afford to borrow and when you can pay it back.
We will require some information from you and this generally includes your date of birth, age, income and outgoings and your bank details.
We can then try to match you with a lender from the panel we work with. If successful you can check the details of the loan, including the APR, amount of interest and fees you will be charged and further details before signing up.
Once you are happy to go ahead, the loan can be finalised and funding from the loan will be paid into your designated bank account.
It is not as difficult as it once was to find lenders willing to offer loans for bad credit UK, more so if you make your application with our help. All of the lenders we work with offer affordable loan options, numerous options and competitive rates on loans. Apply with us today and from your single application gain access to numerous lenders to better your chances of approval.