Credit Options Available for People with Bad Credit
Bad credit can sometimes mean big problems when you’re looking into borrowing any amount of money. Although your credit score may be on the rough side you will be pleased to know you’re not out of options completely. You are not alone, over 30% of the population in the UK have negative credit scores. If you fall into this category then all is not lost and looking into sensible borrowing could reflect positively on your credit score and improve it rapidly.
Categorising Bad Credit Scores
It’s not as simple as falling into set categories; it all depends on the company doing the lending and their criteria. If your credit score is on the lower side then you definitely fall into the bad credit category automatically. Bad credit can occur for many reasons, something as simple as paying something late automatically reflects negatively on your score, missing payments altogether or occurring a CCJ. They can also be affected by wrong or missing information you may be connected to someone such as an ex partner whose negative credit file will reflect badly on yours. There are many options when it comes to lending and borrowing the options available to you simply depend on the company.
Lending Options For People With Bad Credit
Guarantor Loans
Specifically designed for anyone with bad credit. A third party must stand in as a guarantor on your loan meaning if you fail to miss payments then the person who signed as your guarantor will be automatically responsible for the repayments. Your guarantor must usually have an excellent credit score, own their own home, have a professional position and be over the age of 18. This depends on the sum of money you are looking to borrow.
Secured Loans
If you own your own home and have a bad credit score secured loans are the most available. You can secure a loan against your home and the growing value of the property. The downside is if you do not make repayments your home could be repossessed to pay back any money that you owe.
Logbook Loans
This is also a loan secured by property you own your car, terms and conditions do apply but it’s important to remember missed or late payments will ultimately lead to the repossession of your car.
Payday Loans
Payday loans are a short term fix but can often lead to huge debts if you do not pay them back or occur late payment fees. Payday loans are often small amounts paid back in a short period of time often offered to people with bad credit ratings as long as your income can cover the repayment you’re almost guaranteed to be approved.
Obviously there are more options available for people after all money makes the world go round, below are a few other things you could consider.
Doorstep Loans Credit Cards for Bad Credit – A credit card with a small credit limit means less risk to lenders but helps you rebuild your bad credit score.
Installment Loans – Borrow up to £2000 and pay it back in regular affordable monthly installments taking into consideration interest rates could be high.
Car Finance – If you’re looking to buy a car most dealers offer affordable car finance.
Personal Loans – Securing a personal loan with bad credit can be difficult but some lenders offer personal bad credit loans especially if you are a homeowner.
Before taking out any type of loan or credit finance option, you should ensure you can afford to pay it back for the length of time you’re looking to pay it over. Failure to repay a loan or bad credit finance, could result in further negative impact on your credit score.
