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Borrow £500 for 4 Months, Four Monthly Repayments of £215.81 Total repayment £863.24 Interest Rate PA (fixed) 270.10% Representative APR 997%
Your helpful guide about poor credit loans UK
So how can I borrow money with bad credit? Before we answer this crucial question, there are things that you should understand first and foremost. For one, keep in mind that your credit score has the power to make or break your application for a loan. In fact, that puzzling number TransUnion, Equifax and Experian inputs in your personal credit report is the single biggest factor in obtaining a loan in the UK.
If you have a poor credit history, then you will struggle mightily to get approved for funding especially from banks and other traditional credit sources. But the same can be said if you have a none-existent credit history as well. Now if you want to know how to secure loans for poor credit, then stick around because this guide will surely be of great help!
Loans for poor credit: What it means if you have bad credit
If your credit score is bad, this only means one thing and that is a problematic history of using credit and managing debts. Basically, you used some type of credit like a personal loan or payday loan that you were unable to pay back int the past. For this reason, lenders will see you as a risk as there is a real chance that you will repeat the same behavior you exhibited before if they agree to lend you money again this time around.
If you don’t have any credit, this simply means that you haven’t had the opportunity to use any type of credit product in your lifetime. While this doesn’t necessarily mean that you have a disposition to run away from your debt obligations, a blank credit history can be an uncomfortable sign for lenders as they don’t have any way of telling for sure if you can be trusted for loan.
In the end, the two types of credit rating can be a major hurdle in securing a loan. Overall however, a none-existent credit score is more favourable to you as a borrower than a bad credit score. Bad credit is an automatic red flag to most lenders and this alone can be the primary reason for getting rejected. While a none existent credit history can also be an eyesore to lenders, it’s not as adverse compared to a bad credit rating as the risk involved in your application lies only in your unpredictability.
Top loans for poor credit in the UK
Now if you have bad credit or no credit, getting a loan can often appear like an impossible task to succeed on. Nevertheless, there are still loans for poor credit that you can look into to satisfy your need for funding even if banks and other mainstream credit providers won’t. They include:
1. Guarantor Loans
2. Log book Loans
3. Unsecured Bad credit loans
4. Secured Loans
5. Bad Credit Loans Online
6. Different types of Online Loans
7. Payday Loans
8. Doorstep Loans
9. Installment Loans for Bad Credit
10. Family and Friends
Getting rejected for Loans for poor credit from a direct lender
There’s a chance that you will experience a rejection once you make an application for a loan from a direct lender even if its designed for poor credit borrowers. If such is the case, then don’t get discouraged just yet. There are many reasons why your application may have been denied and your bad credit might not actually be the primary factor behind it. It may have been because:
The amount you are borrowing is more than what you currently need and can afford. Lenders will only grant your funding request if they can see that it is suitable to your monthly earnings and outgoings. With that being said, you can consider lowering your borrowing amount or extending the length of your repayment to suite your present budget.
The lender can’t verify your income level. Again, your financial capacity to repay the loan is of utmost important here so be sure that lenders see this clearly so they can have the confidence they need to approve your loan application. Presenting an endorsement letter from your employer or landlord can help you state your case and the same goes for tax returns, list of all your assets (property, vehicle, etc.), your employment record, and bank statements.
How loans for poor credit with no credit check can actually help you rebuild your credit
Although unsecured personal loans bad credit and the like can help you enjoy extra funding that you may direly need for the moment, it still won’t change the reality that you have a problematic credit history. Fortunately for you, loans for poor credit can be an opportunity to rebuild your credit rating back to favorable levels. So you can maximize the loan’s potential to repair your credit rating, here are things that you should consider:
1. Maintain a low credit balance. This will not only help you manage your debt better but also signal to lenders that you are taking the necessary steps to better your finances. As a good rule of thumb, make sure that your entire credit balance doesn’t exceed 20% of your monthly income.
2. Be on time with your repayments. Every successful payment that you make on time and on the agreed terms and conditions will paint a positive picture in your credit history. If you can manage to clear off your debt without being late on every repayment, this will surely be a positive driving force to your credit rating.
3. Be wise and disciplined in using your loans. And most importantly, practice patience and prudence when it comes to using loans for poor credit. All the years that you painstakingly spent to ensure that your debt will be paid off on the agreed deadline will continue to add up. It’s a slow and gradual process but it will inevitably come to a point where your past credit mistakes will be completely overshadowed by your recent track record of proper debt management.
Every time you take out a loan for poor credit, always ensure that you have these three aspects in mind. Again patience is key! Rome wasn’t built in a day and the same goes for your credit rating. It will take plenty of time and discipline in your part to rectify your past credit mistakes but all your effort and sacrifice will surely be worthwhile in the end once you see your credit rating back in favourable standings!
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Brilliant service. The application process was a doddle, the Shawbrook representative who called me was polite, understanding and cheerful. The whole thing (from starting the application process to receiving the money) took around 3 or 4 hours. Very quick and efficient and no long or silly forms to fill out. Just what was necessary. Am very pleased I chose Shawbrook.
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Representative 277.5% APR
Representative Example: Borrow £700 and pay £111.27 per month for 12 months at an interest rate of 140% per annum (fixed).
The total charge for credit is £635.24 The total amount repayable is £1335.24. Representative 277.5% APR (variable). Your APR rate will be based on your circumstances
Non-payment could have a negative impact on your credit rating and have increased charges and interest rates.