If you have a credit history that’s been covered in black spots by missed payments or late repayments, then you’re not alone. Many people throughout the UK find themselves struggling with credit based problems, simply because it seems as though there’s never enough cash to pay for all the bills that come with day to day life.
Even if you’re incredibly careful with the way you manage your money, there’s always a chance that something unexpected could come along and ruin your hard-earned savings, forcing you to turn to a credit card or loan for help. Unfortunately, if you have bad credit, the chances are that you’ll struggle to get a loan from your average high-street lender. At least, if you do find a loan, you might also find that you need to pay a significant amount in terms of APR or interest rates.
What Counts as Bad Credit?
You might have a general idea of what your credit rating looks like, but you’re not sure whether your number is “bad” or just slightly below average. If you are considered to have a significantly poor credit rating – one that’s going to hinder your ability to borrow money in the future – then the chances are that you missed repayments in the past. Some people end up with bad credit after they have had a bankruptcy or CCJ against their name. There’s a huge difference between no credit, and bad credit.
No credit is when you haven’t ever taken on any kind of credit card or loan, so you haven’t had a chance to build any kind of history into how you spend and repay money. This can be as problematic as having bad credit in some cases, as many lenders want to feel more comfortable about their ability to trust you with their money. However, if you have no credit, that doesn’t mean that your lenders aren’t going to consider you, but it does mean that you’ll struggle more to find a good deal. Both people with no credit and bad credit will find that their options for borrowing money are limited, and that they will be subject to higher interest payments than they would have been with clearer credit ratings.
Can I Fix my Credit?
The good news for people with bad credit is that there are plenty of simple ways to fix their credit score. This can include making sure that your name is on the electoral roll when your authority sends details to your door. If you’re not on the electoral roll then you’ll struggle to build up any kind of positive credit history.
It’s also very important to spread out the applications that you make for credit, as every time you ask a lender for money, you’ll be dealing with a footprint on your file that could be easily rejected by any other lender. At the end of the day, nobody wants to work with someone who has already been rejected by a range of other companies, so avoid covering your history report in smudges.
Perhaps the best way to go about fixing your credit rating is to make sure that you are cautious with the way you make repayments when you are finally given a loan. A tarnished credit rating will only get worse if you don’t pay back the money that you borrowed on time or fail to stick to the agreements that you made with your bank or lending company.
What are Bad Credit Loans
When you have bad credit, you won’t be able to apply for the best available loans, so that means that you’re going to have to struggle and look elsewhere for a lender who’s willing to consider you despite your poor history. In most circumstances, this means giving up on the most attractive rates and terms. Instead, you’ll need to consider the benefits and negatives of taking out a bad credit loan.
Bad credit loans are given to people who are considered by the bank or lending society to be a riskier option. Usually, they come with lower limits, which means that you can’t borrow as much, as well as higher interest rates. The more of a threat your lender considers you to be, the higher your interest rates will grow, until you are dealing with very high APRs.
With that in mind, it’s also worth noting that your lender will want to consider other factors besides your credit history when deciding whether or not to give you a loan. For instance, some people will want to consider your stability, salary, and various other assets such as property too.
While you’ll probably have to deal with very high interest charges if you take out a bad credit loan, there are some benefits to consider too. For example, by having A loan you will have the perfect opportunity to start making positive changes to your credit history – so that you struggle less to apply for cash in the future.