Loans For People With Bad Credit
What is bad credit?
Bad credit generally refers to a history of breaches of credit contract payments. You may have bad credit because you owe money or have a history of late payment, for example. When applying for financing, a loan, or even a new mobile phone contract, companies review your credit situation to determine if you are likely to repay on time in the future.
There are several reasons why your credit rating may be low, including
- Payment defaults
- Too many “difficult” credit searches on your credit profile – a difficult credit check takes place when you apply for a loan, financing contract, or credit card and the lender reviews your credit history
- County Court Judgments
- An Individual Voluntary Arrangement (AVI), a Debt Management Plan (DMP), or a Debt Relief Order (ADO)
You may also have bad credit because you didn’t have the time or opportunity to build up a credit report. You may be too young, you have emigrated from another country or you have never had a credit card or opened a bank account before.
If you got bad credit, it will be challenging to borrow from moneylenders, get a credit card or ask for a mortgage, because moneylenders will presume you are at ” large risk.”
They may additionally consider that you are a bad investment because the possibility of your repayment is low.
How do I get a bad credit loan?
If you have a bad credit rating or just no credit rating, it can be difficult to get a loan. However, there are options available to you, such as a bad credit loan or a debt consolidation loan. Some lenders offer personal loans to people with bad credit, but at higher interest rates and with less attractive loan options.
While your options may be limited, we compare a range of providers that offer loans for people with a bad credit history. We’ll also show you the likelihood of being accepted without affecting your credit score.
What are the cons and pros of a bad credit loan?
If you don’t have a good credit record but need to take out a loan, it’s very important to evaluate all your options. First, weigh the pros and cons of bad credit before making a decision
- Quick access to money – some lenders will be able to quickly transfer funds to your account. This is perfect if you need quick access to cash.
- This can improve your credit rating – keeping abreast of your repayments can have a positive effect on your credit report. This will help you if you want to apply for more credit in the future, as you should benefit from better interest rates.
- Commitment to make monthly repayments – as with all loans, you will have to repay the amount borrowed in monthly installments. Keep in mind that if you don’t make these repayments, you may further damage your credit rating.
- High-interest rates – unfortunately, if you have bad credit, you can expect lenders to charge you a higher interest rate. This means that the total amount you pay back on a loan will cost you more.
- Additional charges – it is worth checking the terms of any penalty, such as late repayment fees and payment return fees
Applying for a bad credit loan
Understand your financial situation
Everyone’s financial situation is different, so it’s important to think about a few factors before applying for a loan:
- How enough you can manage to return back each month
- How much you need to borrow
- What is your credit score?
- Find out about interest rates and how much you will have to pay back.
- In some cases, the more you borrow, the lower the interest. Be aware not to obtain more than you can return.
- The repayment period also affects the interest rate. Longer loan terms can result in lower monthly repayments. But interest rates and the total cost of repayment may be higher.
What you’ll need to apply for a low-interest loan
- Before you start looking for a suitable loan, there are a few things you’ll need before you apply:
- Your current address in the UK
- An email address and contact number
- Your annual income
- Your general expenses
Why have I been denied credit in the past?
When applying for a loan, lenders consider a number of factors before deciding whether to accept your application. Here are some of the reasons why your application could be rejected:
A bad credit rating – this is probably the most common reason a lender rejects your application. A poor credit rating shows the lender that you may be in financial difficulty. While this is not your fault, it suggests to the lender that you may have trouble repaying the loan. Unfortunately, this can result in your loan application being rejected, which can further affect your credit rating.
Too many loans – if you have too many loans and are looking to apply for another, the lender may see this as a sign that you are going through a period of financial instability. This may indicate that you are not able to repay the loan.
Your work history – this is an important factor in credit scores. If you have had business interruptions or have changed jobs frequently, lenders may think that this shows that you are having financial difficulties.
Low income/irregular compensation – low or irregular incomes can affect your eligibility for a loan.
Your credit history – if you come from another country or if you are too young and have not had time to build up a credit report, this can, unfortunately, work against you.
Assets for a secured loan – if you have decided to apply for a secured loan but have not been able to offer enough collateral, such as your home or car, a lender could reject your application.
Managing your loan repayment
Once you have your loan, it’s important to know how to manage it. As a borrower, it is your responsibility to ensure that repayments are made on time, each month until the loan is repaid.
When you take out a loan, you agree with the lender on the duration of the repayment period. This period is usually 1 to 5 years. You will receive the loan amount in one go and you will normally have to pay it back gradually, each month, until you have repaid it.
The final amount you will repay will not only be the amount borrowed from the lender. The total amount you will repay will generally include interest and will depend on a number of factors, including
- The amount of your loan
- How long did you agree to repay the loan?
- The interest rate
- If the loan is fixed or variable
Make sure you know the refund date for each month. If you suffer from bad credit, missing payments may require you to pay additional fees and may also give more negative ratings to your credit report.
Loan repayments will be deducted from your account each month. The most common payment methods are:
- Direct debit – it is set up by the lender using your account number and sorting code. This is usually a fixed agreement that must only be amended on the date agreed by the loan company.
- Continuous Payment Authorization (CPA) or recurrent payments – the lender can take the money you owe at its discretion.
- A standing order – you establish it. You pay the lender a fixed amount taken from your account at agreed intervals, for example, once a month. You can change or cancel a standing order at any time.
Of the three, the direct debit may be the best option as it allows the lender to take payment regularly. Don’t forget to make sure you have enough money in your account each month to make the monthly payments. With a direct debit, you’re more likely to make payments, so you won’t have black spots on your credit report.
Does comparing loans affect my credit score?
If you are refused a loan, it may adversely affect your credit information. This is because when you apply, the loan company performs a hard credit search to get a complete view of your credit history. This survey will help you see if you are a suitable investment destination to lend to and if you have a credit history to back up your repayments.
The good news is that there are other ways you can get credit that doesn’t involve having a loan rejection mark on your record. Comparing the .com loan through a comparison site like Confed means you can see all the options available. All you have to do is enter some details and we will do what is called a soft search.
This soft search does not affect your credit score. If you choose a provider and have a better idea of whether you will be accepted for a loan, we will only do a hard search. This is a smart way to avoid having a lot of loan rejection applications on your report that can further damage your credit score.
Understanding credit checks
To understand credit checks, you first need to know what a credit report is. Credit reports are created by agencies such as Equifax and Experian to collect information such as your credit history, past loans, and credit applications. Once the report is complete, you can view it so that financial companies know your financial history and behavior. This will give them an insight into not only whether you are likely to repay the loan on time, but also whether you are a reliable candidate for financing.
Do you have a good financial history? If so, you are more likely to be approved. Don’t you have a rough credit repayment history? You may have to take advantage of loans that are difficult to borrow and have higher interest rates. Fortunately, together with our loan partner Monevo, we can deliver you a variety of renders to give you the best loan deals.
Improving your credit score can have a positive impact on your credit report. With this handy tip in hand, why not start your score-up today?
What is the difference between a soft credit check and a hard credit check?
Soft Credit Check
Soft credit checking means that brokers and money lenders first look (check) your credit reports without fully researching them. These types of checks on your credit report are not marked against you in your credit history so only you can see. Companies can’t see them, so you can perform as many soft credit checks as you like on your report.
Hard Credit Check
Hard credit checks happen when companies need a full check of your credit history. These searches are recorded in your report so that you and the company can see them. By looking at the hard credit checks recorded in your report, companies can know how many times you have applied for credit in the past.
If you compare bad credit loans between us and Monevo, your report won’t leave a soft credit check. Please note that a hard credit check is required to successfully apply for a loan. This is done after you select a loan from our list of providers and click to visit that site.
Why use Monevo.com loans for bad credit?
We partner with Monevo, an expert in personal loans, to offer you the best possible loans. Monevo’s services
- Free service that you are not obligated to apply for if the rate is decided
- Eligibility check that doesn’t affect your credit score – The lending partner will soft-search your credit file, but it won’t affect your score.
If you are thinking of applying for a secured loan, Think carefully before collateral other debts to your home. If you don’t pay off your mortgage and other debts secured on it, your home could be foregone.
If you are thinking of consolidating existing borrowings. You need to be aware that you may extend the terms of the debt and increase the total amount you pay.