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When your credit is low or your credit history is less than perfect, getting approved for a loan is sometimes difficult. Lenders will generally look at you as less trustworthy. They’ll get the impression that you might not be reliable enough to pay off a loan if they will lend you money.
For situations like these, it would help your case immensely to present security when taking out the loan. Secured loans have been helping many low credit borrowers to get access to funds since the presence of an asset will make them less risky to lenders. Not only that, a secured loan offers the opportunity for a good loan rate and a significantly higher loan amount as well.
Secured Loans No Guarantor
However, one needs to understand that while a secured loan comes as less of a risk to lenders, it does involve more risk for you. Technically, the asset you are presenting is going to be at the mercy of the lenders while the loan is still going on. This could mean that if you ever come to a point where you are unable to pay the loan, the lenders pretty much have the right to seize the asset in order to recover their losses.
Reasons for getting a secured loan
Interest rates are generally lower when a loan is secured since it will be viewed as less risky by lenders. They feel more assured of getting paid back because there is an actual asset, a valuable collateral for the loan.
Expect that the loan amounts will be larger too and the borrowing terms will be generally better. Lenders tend to be more lenient on its terms and borrowing rates when there is less risk for them, as is the case with loans that have collateral.
More importantly, this can be a great opportunity for borrowers to build their credit. Follow the payment schedule religiously when paying back the loan and you’ll be rewarded with a better credit score and better borrowing terms in the future even when you decide to take out an unsecured loan.
Some of us don’t like to be judged, but when it comes to credit scores, it can’t be avoided as it one of the main things that lenders look out for when you’re applying for a loan.
Applying for Loans While Having A Bad Credit
Having a bad credit score will likely make it very difficult for you to get a loan; especially ones that offer better options or ones that specifically meets your needs. For a long time, lenders have used the credit score to evaluate an applicant whether they are high-risk or not. And on top of that, lenders usually don’t have a value set on credit scores when evaluating your application which makes knowing how likely you are to get approved very hard. But worry not as there are still a ton of options for you to choose even while having a bad credit.
So how do you get a loan with bad credit in the UK. Here are the things that you can do in order to increase your chances of getting a loan while having bad credit.
Check your credit score. You are offered a free credit report every year, use that to see if there are errors made which can affect your rating. Correct that as soon as you can, contact the lender and dispute it if you have to. Doing this will increase your credit score and will improve your chances of getting approved.
Find out the best lender for you. There are many lenders that are suited to catering to different applicants. That is why it’s best to know where you stand on your credit score before looking for one. It’s also important to ask lenders on what they require in order to apply as to avoid wasting time. Generally, when you have a bad credit, interests are usually higher, so it’s one more thing to consider when choosing a lender.
What You Need To Do
Find out how much you need and if you are more than capable of repaying it. Besides your credit score, lenders usually check out your monthly income to see if you have the means of paying what you borrowed. How much you can borrow will depend on your income.
When you finally decide to apply, you’ll need to have the requirements. It varies from lender to lender but here are the most common ones.
You need to be employed and is receiving a steady pay-check.
Must be 18 years of age.
Must be a UK citizen.
Have a proper address.
An old bank account