If you’re thinking of applying for a loan, it’s essential to know how your credit history stands. A bad credit history can render you ineligible for many cheap loans and faced with high-APR alternatives because you’re considered a risky borrower by loan providers. However, there are loan options available to those who currently
If you have bad credit, this means that you have failed in the past to keep up with repayments on loans or credit cards in a timely fashion. It can also mean that you’ve filed for bankruptcy or had your home or vehicle repossessed. It usually means that your history is littered with these kind of occurrences, rather than it happening a single time. A poor credit history will mean that lenders will be cautious about allowing you to borrow money, because you’ve previously proved that you’re not reliable when it comes to paying the loan back. Loan companies are committed to protecting their financial interests and this means that they will often shun risky borrowers. This can affect many areas of your life, as it influences your insurance rate and has an effect on the deposit you may be charged by landlords, mobile phone companies and utility providers.
Guarantor loans are offered by many trusted lenders, including 1st Stop, and allow those with bad credit to borrow money without putting up physical collateral in the form of a property. They are usually offered for between one and five years and you can borrow amounts between £1,000 and £7,500. To be eligible for a guarantor loan, you’ll need someone to act as the aforementioned guarantor. They must be over 21 years old, a UK home owner and have a good credit history and it’s important to remember that they cannot be financially linked to you. It’s common for guarantors to be friends, family members (excluding spouses) or work colleagues.
A secured loan is a loan held against your property, and if you fail to keep up with repayments this can result in your home being repossessed. However, secured loans provide an opportunity for those with poor credit histories to improve their scores and be seen as less risky borrowers for future loans. If you have a number of different debts including high-interest credit card debt, a secured loan would allow you to consolidate your finances and simplify the repayment amount each month. Secured loans are also favoured by those who want to purchase by-to-let properties or invest in a new business enterprise. This is because you can borrow significantly more money when it’s secured against your property, although this also means that the amount of time you’ll spend repaying is generally longer.