It is easy to panic when you check your credit rating and see that you do not have what is considered a good score. Having a good credit rating is important for getting approved for credit whether you are taking out a loan, buying a car or even buying a home, but you should not panic if you have a bad credit score as there is a good solution in the form of bad credit loans.
Bad Credit Loans
As the name suggests, a bad credit loan is a loan that is for someone that does not have a good credit rating. Many people have a bad credit rating whether this is because of no credit history, defaulting on payments, having declared bankruptcy or CCJs, but bad credit loan providers will instead listen to your personal circumstances and use different criteria to enable you to get access to credit when you need it.
In order to get approved for a bad credit loan, the key criteria are usually:
- Being at least 18 years old
- Having a current account
- Being a legal resident of the UK
- Being able to show that you will be able to afford repayments
Often with bad credit loans, these will be secured against an asset or you will use a guarantor in case you default on payments. As you are deemed to be a less reliable borrow than someone with a good credit rating, the interest rates are higher with these loans so typically they are used for short-term lending.
Build Your Score Up
A bad credit loan is not only helpful for those that do not have what is deemed to be a good credit score for one reason or another by providing them easy access to credit, but it can actually be helpful in terms of rebuilding your score. If you are able to make the regular payments in full and on time, it will gradually help to rebuild your score. There are also other steps to take to improve your credit rating, which means that the next time that you need credit you may be able to get approved and at a more favourable rate.
You need to work out exactly how much you need to borrow before applying for a bad credit loan as it can impact whether or not you get approved obviously along with how much you end up paying back. It is vital that you know what you are able to afford each month too as even one missed payment could damage your score further and make it harder the next time to get approved.
Bad credit loans are a fantastic solution for those that have a bad credit rating wheat this is because of bankruptcy, struggling to keep up with bills previously, CCJs or anything else, but it is important that you take your time and make the right decision for your needs.