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Are you looking for a loan? Found that the usual sources of finance such as banks and building societies have turned you down?
This may be because you are classed as having a bad credit history. However, hope isn’t lost and you may still be able to take out a loan with your poor credit history. This is thanks to providers who have a wider lending criteria and are willing to consider people with less than perfect credit scores. We take a look at these bad credit loans and poor credit loan providers and how you can access credit whatever your credit history.
What Is “Bad Credit”?
If you’re looking for a loan but have been told that you have “bad credit”, it can be a frustrating experience as unsecured loans with bad credit are difficult to get, but we may be able to help, you can apply here or click on one of the big Apply Now buttons on our site. If you’re unsure just what bad credit is then it all stems from your credit file. Everyone over the age of eighteen who has taken out some form of credit or has even just applied for credit in the UK has a credit file or credit profile. Credit agencies look after these credit files, the three main ones being Experian, Equifax and CallCredit. Over time, your credit profile records your borrowing and repayment history and it is this that potential lenders will look at to assess whether you are suitable for a loan.
For example, if you have taken out loans or credit cards in the past but have repaid them regularly and on-time, this represents a positive signal to potential lenders as past actions are a good indicator of future actions. It is likely therefore that you will do the same if they lend you money. Thus, your likelihood of being accepted for a loan and getting a good rate is increased.
However, if you have a history of taking out loans, credit cards or other forms of credit and haven’t repaid them regularly, have defaulted on payments or failed to pay them altogether, then these are obviously negative signals to potential lenders. Therefore, it is more difficult to get credit and it may be impossible from mainstream lenders such as banks and building societies.
Factors That Contribute To Bad Credit
- ● Bankruptcy - If you have been made bankrupt in the past, this stays on your credit file for six years.
- ● IVA - If you have been subject to an Individual Voluntary Agreement, this stays on your credit file for six years from the date it began.
- ● Administration Order - If you have been subject to an administration order, this stays on your credit file for six years from the date it began, even if it has been paid in full.
- ● County Court Judgements - CCJs stay on your credit file for six years from the date of judgment
- ● Defaults - Payment defaults stay on your credit file for six years from the date of default.
- ● Searches By Lenders - Too many searches by lenders can also be a bad signal and searches stay on your credit file for between one and two years.
- ● Maxed Out Credit - If your current credit cards are all maxed out to the limit, this can be a negative signal to potential lenders.
- ● Not Being On The Electoral Roll - Being on your local council’s electoral roll is positive signal to potential lenders
However, if you do find yourself with bad credit, thankfully it doesn’t automatically mean that you are unable to access credit. There are such things as ‘bad credit loans’ and ‘bad credit payday loans’ that may be available to give credit for people with poor credit histories.
What Are Bad Credit Loans?
Bad credit loans are simply loans from payday and other non-standard credit providers that are made available to people who do not have a great credit record. Unlike lenders such as bank and building societies who have very rigid lending criteria, bad credit loan providers have a more pragmatic approach and offer small loans to people with poor credit over short periods of time because it presents a manageable risk to them. Bad credit loan direct lenders are now authorised and regulated by the Financial Conduct Authority so you can have the peace of mind that you are dealing with ethical and responsible companies.
How Do Payday Loans For People With Bad Credit Work?
To apply for a loan when you have poor credit history is really easy and can be done online. You’ll be asked a series of basic questions about yourself. This will include details such as your name and address, date of birth, telephone number, email address and number of dependents. You will also be asked how much money you want to borrow and how long you want to pay it back over. These are the questions you will almost always be asked but different lenders may have different questions as part of their application process.
Who Can Apply For These Types of Poor Credit Payday Loans?
Bad credit payday loan applications can be made by anyone who is over 18 and is a resident of the UK or has the right to reside in the UK. To get paid the money you borrow, you will need to have a bank account too.
Will My Loan Cost More?
Although all lenders are different, you will find that there are not usually any extra fees or charges to pay for a loan suitable. You will find that interest rates will vary and you may suspect, you will generally have to pay a higher interest rate than someone who has a good credit score.
Bad Credit Payday Loans Can Actually Help IMPROVE Your Credit Score
Don’t worry that taking out a loan designed for people with poor credit scores will harm your chances of getting credit in the future. If you fully comply with the conditions of your loan and ensure that you pay back the money in full and on-time, a bad credit payday loan can actually help to improve your credit score and help you eventually access more standard credit products in the future.