August 5, 2023
Be it missing your credit card bill deadline or failing to surprise someone on a special day, both hit hard. The prime reason for that is different from the lender’s application disapproval. The inability to get cash due to CCJs’ missed payments or defaults in credit profiles is frustrating.
Simultaneously, not meeting the criteria does not have to be disappointing every time. If you are facing monetary crunches due to an awful credit report, bad credit loans can help. Get up to £25000 for any need like rent, debt consolidation, or renovation with repayment in 12-36 months and can split them into months or weeks. Remember, the application does not hurt your credit score. Isn’t it great?
What do bad credit loans imply?
A bad credit loan is a personal loan dedicated to individuals with low or no credit scores. It works like another loan where one takes out a loan amount and later pays it in instalment. It is for those facing constant rejection from mainstream lenders for not meeting the credit score criteria.
If loans for bad credit are availed from direct lenders, they have competitive interest rates. These are still more affordable than a traditional loan for borrowers with negative credit history.
Other features include:
- Interest rates on these loans generally stay fixed, which implies one can budget for monthly repayments early;
- One may qualify with stable finances and regular income proof despite a low credit score.
| ELIGIBILITY CRITERIA | |
| Age | 18 years and above |
| Nationality | permanent UK citizen |
| Income | £1000 and above |
| Bank account | UK bank account with the direct debit facility |
What do you mean by a bad credit score?
You have a bad credit score if your credit score is lower than 520. The lower your credit score, the lower the possibility of qualifying. It may impact your chances for new credit cards, mortgages, car loans, and renting.
Credit agencies provide one and report the same to lenders. Usually, less-than-ideal credit history reveals mismanaged finances and lower chances of paying the loan timely. At the same time, a credit score does not stay the same forever. It falls or improves according to your financial moves.
What impacts your credit score?
Though numerous factors may affect the credit score, here are some common ones:
What can you use loans for bad credit for?
One can use low-credit loans for any individual or business purpose. You can use it to repair your car or clear the payroll. Here are other ways to use it:
Loans for bad credit history to tap for unique purposes
As the requirements differ from person to person, not every loan may be apt for you. You can get different loans with low credit scores. Whether you need to counter immediate cash needs or finance a big-ticket purchase, meet your needs with the right loan:
1) Car loans
You may get a vehicle loan if you want to buy a car or a motorbike for your purposes. Individuals with good incomes may get better rates despite committing past credit mistakes.
2) No guarantor loans
If you need urgent financial cash help without inviting someone else as a guarantee, no guarantor loans from the direct lender can help. You only need stable finances and income proof.
3) Loans for the unemployed
Unemployed individuals seeking short and medium-term purposes can benefit from repayment flexibility despite low credit. They can get approval for their part-time income.
What to do before applying for low-credit loans?
If applying for the first time or not, you must check a few things before taking bad credit loans. Even a small mistake can lead to immediate loan rejection. Here are other things to do:
1) Identify the pending bills/ loan payments
Pay any due bills or pending debt payments for the month. It would help improve your credit score and qualify for better rates. First, begin with the high-interest ones, like credit card bills, payday loans, etc.
2) Get your name on the electoral roll
It is imperative for someone with no or low credit history. First-time applicants may get the loan if they provide relevant proof as a regular citizen. Electoral roll covers address, your name and your right as a voting citizen. It also proves your age (18+), which makes you eligible for the loan.
3) Ensure a regular/part-time income
To qualify, you need some source of income. It reveals your potential to cover the loan cost. Keep the proof ready if you have a regular or part-time income. If not, check for some part-time or full-time job options before applying.
4) Keep the documents ready
You need the below documents to get the low credit loans immediately:
- ID proof- passport/student ID/ Voter card
- Income/ revenue proof- benefits/part-time/ regular
- Bank statements for the past 60 days
- Existing loans and credit card statements
Note: The document requirements may vary according to your loan purpose and financial situation. For example- if you need a car loan, you have to share supported documents like a driving license. If availing one with a guarantor, you need his/her credit and financial details too.
What mistakes to avoid while applying for bad credit loans?
While applying for low-credit loans, be mindful of certain things. However, these loans work just like other loans. You apply for the loan; the lender analyses your requirement, aligns your finances with eligibility criteria and provides the loan amount after receiving income proof. Despite the simple process, individuals face rejections even after providing documents.
Here is how to avoid the mistakes.
1. Avoid lying about income and expenses
Refrain from providing wrong details about income and expenses. You may lose the loan opportunity. Lenders demand proof and tally. Thus, presenting fake job profile evidence may not work.
2. Explore the best option before applying
Explore the APR, Interest rates, prepayment costs, and loan fees before choosing a lender. Check whether the arrangement meets your finances or not. Some lenders provide bad credit loans with no fee for the initial application. Spot lenders like these to get an affordable deal.
3. Review the application before submission
Check spelling while filing address, Name, email address and other details. A mere discrepancy in these may lead to loan rejection.
4. Borrow only the amount you require
Applying for an amount beyond your repayment capability may lead to ultimate rejection. Thus, identify your existing requirement, budget, income and liabilities.
For example- if you earn £25000 with monthly liabilities matching to £16000, you cannot borrow over £9000 here. You may have to provide additional income proof if your requirements exceed the number.
To Conclude:
Bad credit loans are ideal for individuals with poor credit histories and low incomes. If you have urgent or lifestyle goals to meet, these loans can help. With these loans, you can spot more affordable interest rates and loan costs than with traditional ones.
Ellie Brown is a proud resident of the UK and love to be a content writer and editor for the last 9 years. Writing blogs and articles is her passion that one can explore at the top blogging platforms. Ellie holds a key position at Florafinance as the Senior Content Editor and Chief Loan Consultant, leading a team of more than 70 professionals. Ellie Brown covers the major aspects of the UK’s lending industry in her blogs and guides loan seekers who come at Florafinance to apply for a loan. She possesses the Post-Graduate degree in Finance and Investment.