Bad Credit Loans
Bad Credit Score Loans or Bad Credit Loans are the kinds of loans designed for people with poor scores and people with no credit history. They come with greater restrictions and higher interest rates, this is the step taken by lenders to minimize the risk of them not being paid back.
There can be many reasons for poor or no credit scores
- Delayed payments
- County Court Judgement (CCJ)
- Declaring bankruptcy
- A high number of hard searches
- Not having a bank account
- Not closing down of unused accounts can bring down credit scores
- Lacking time to build a credit score
The Application process for a bad score credit loan
The reason lenders and financial institutions charge high-interest rates because they perceive the people with poor credit scores to be a factor of high risk. Moreover, bad credit score loans are meant for people with poor or no credit history.
By choosing to apply for this loan, you are also agreeing to the terms and conditions that come along with it and you are also agreeing to make timely payments. Failure to do will result in heavy penalties. Though there are plenty of lenders and financial institutions that offer bad credit score loans but availing a loan depends on the individual’s credit history and score.
Most financial institutions typically, let people take a loan up to £2000, although there certain lenders who will allow up to £5000. The repayment tenure can be anywhere between three to thirty-six months and choosing a loan amount and a time period that is suitable for you is important.
It is important to conduct as many soft searches as possible, as it will let you know which lender may accept your loan application and conducting soft searches does not affect the credit scores.
Listed below are the requirements that have to be met to apply for a bad credit loan
- The applicant must be 18 years old or above
- The applicant cannot have any other active loans
- He/she must be a legal citizen of the UK
- Must have an active bank account
- Must show that they are capable of paying the loan back
One can search for websites that review and compare loans for people bad credit scores and fill up the respective forms. Once the application is filled the individual will discover a few money lenders based on their qualification of the loan amount and interest rates he/she needs. The individual can review and compare the listed lenders and send his/her application, after which it the application will be sent for approval. In case the loan gets approved the requested amount will be transferred to the applicant’s bank account. This usually happens within one day of the approval.
Though some lenders tend to be more lenient than others when it comes to bad credit scores. Usually, the borrower is charged with high-interest rates to cover the risk of the lender or the financial institution is taking. And once the loan has been approved and transferred, the individual is expected to pay the money back within the time frame that was agreed upon.
The most efficient approach for bad credit scores
Finding lenders and financial institutions for the loan may be easy but it is up to the borrower to be wise in his decision. It is important to prioritize getting a more affordable loan than just getting any loan approved. As this will be long term commitment, it is vital to strategize on how to go about it. Listed below are an efficient set of few steps that the individual with poor credit scores can take to get the best suitable loan approved
- Consulting a local bank or a credit union to know which is the best option when it comes to bad credit score loans
- Asking if the individual can take a co-signer with a good credit score along. If the co-signer has good credit scores then the individual can get better offers
- Send out applications to at least two credit unions
- Avoid hard check as they can damage the credit score even more
- Being thorough when reading the policies that come along with the loan is extremely important
- Compare and review to find the best-suited lender/financial institution
- Selecting the best from the list of lenders after checking which ones he/shes qualifies for
- Re-evaluate the need for the loan before taking it.
Alternatives to Bad Credit Loans
The best alternative for a bad credit score loans is improving their credit scores. Having good credit scores is always a good thing as it helps the individual avail better loans with better interest rates. There are a lot of ways to improve credit scores
- Paying you bills on time
- Closing off unused bank accounts
- Keeping a tab on the individual’s credit utilization rate
- Constant monitoring of credit scores and work on rectifying the errors
- Taking advantage of score-boosting programs
It is not old news that bad credit score loans exist but just because it does, it doesn’t mean it is beneficial for everybody. Bad credit score loans help people with low credit scores get a loan in their time of financial need but if the borrower doe not comply with the conditions that were agreed upon or delays the payment then he/she may have to face a hefty penalization, which can send things rolling backward. It is always important to choose a loan that you are capable of paying back and constantly working on improving credit scores is key to obtaining better loans with lower interest rates, in the future.