Bad Credit Loans Information Library

BAD CREDIT LOANS

Don't be put off by its name – this loan type is worth finding out about!

What is a Bad Credit Loan?

A bad credit loan is a loan created for people who have problems getting credit from the 'mainstream' route (i.e. from the local bank or building society). Sometimes known as loans for people with bad credit or bad credit history loans, they offer a flexible variety of loan terms, amounts and periods.

So, if one or more of the following apply to you:

• Bad credit rating
• Frequently get refused for credit
• CCJs
• Arrears and defaults
• Small income
• Tenant OR homeowner

...then you could be eligible for a bad credit loan!

How can I get a Bad Credit Loan?

If you are sure that your applications for regular unsecured and secured loans and credit cards are not approved then you can set about getting a bad credit loan.

There are many companies more than happy to take on customers who have been turned away elsewhere – the easiest way to find one is by going through a specialised broker. They take your requirements, a few details and then take that information to have a look around the loan market to find willing lenders.

Because they are already familiar with the market, the search doesn't take long, and soon they will return with an offer. If you are happy with it you can go ahead and take the loan.

Criteria vary broadly according to company and loan type, but in general you will need to:

• Be at least 18 years old
• Be employed or self employed
• Be a UK resident

It is tricky to be more detailed than this because of the many lenders available. Some might ask that you are in full time employment and others may state that they will require 'sensitive information' from you in order to proceed your application.

What about my Credit Rating?

As with any loan product, you are wise to ask whether your credit rating will be affected or whether it will be used as a deciding factor for your eligibility when you apply for a bad credit loan.

Your credit rating will be affected according to your 'performance' on this loan – this is always the case when take a loan, no matter what type it is. Therefore it is important to think about whether you can afford to borrow and how you will manage the repayments.

Bad credit loans are offered to people who have poor credit ratings, but that doesn't mean you won't be subject to a credit check. Some companies will use your credit status to decide how much they can lend you and at what rate. In other words, a bad credit rating won't stop you from getting this loan type but it might affect the type of loan you receive.

Many bad credit loans carry excellent additional features such as the 'credit builder'. This is a special facility which allows you to repair your credit rating based on your repayments on this loan. Pay back on time and in full and you might improve your status and chances of finding cheap loans in the future!

What are the Benefits of Bad Credit Loans?

Bad credit loans are great for people who have difficulty being accepted for credit cards and loans. They are also a welcome alternative to other 'low credit' products like payday loans because they are much more flexible – you can borrow more money and for longer periods. There is a lot of choice and your personal circumstances can include many scenarios – so you could be a tenant or homeowner.

Here are the main benefits listed out:

• Easy to apply for
• Many people accepted
• Flexible terms
• Borrow more than other low credit products

Are there any Disadvantages?

Getting a bad credit loan is not something which should be done in a hurry. Before you take any type of loan, make sure you have thought about all of the aspects – will you be able to pay it back?

Will repayments be big and get in the way? How long will you be repaying the loan for? Will your credit rating be badly affected?

Here are some disadvantages:

• So many products: hard to find the right one
• Interest rates might be high
• Credit rating could be damaged

Make sure you seek independent financial guidance if you are unsure about your suitability for bad credit loans (or any financial product for that matter)!