Loans for Bad Credit
If your credit rating isn’t great and you’re searching for loans for bad credit, take a moment to remind yourself that you are more than your credit rating. Got it? Great. Now, let’s move onto the informative stuff.
The term ‘loans for bad credit’ usually applies to personal unsecured and secured loans taken out by people with a less than perfect credit history. If you know your rating could be better and you want to borrow some money, you’re probably wondering if one would do the job for you. Pinging off applications wildly in all directions will bring a bad aura to your credit file, so let us first examine the inner workings of the bad credit loan.
What is a Bad Credit Loan?
Although ‘bad credit’ loans do not exist as a specific product, a ‘bad credit’ loan is a term often used to describe loans that are available to those with credit ratings that, put simply, could use a bit of work. You might have been knocked back for other loans because you have no borrowing history. You may have had problems dealing with credit in the past, or could even have a county court judgement (CCJ). Ask yourself “how can I borrow money with bad credit?” and the answer is generally, at a higher cost.
Loans for bad credit can be any type of loan, but in general they are unsecured. They are normally more costly because they cater for people with damaged credit files or lack of credit history for and providers to refer to.
Technically, a ‘bad credit loan’ is just the same as any other loan, and can overlap various loan types. Different types of personal loan may come under the term ‘bad credit loan’. For example, a bad credit loan could also be a short term loan, a payday loan or a guarantor loan, or an unsecured loan to name a few.
Bad credit loans: a summary
- Usually for people with bad credit history
- Usually have higher interest rates
- May improve credit rating
Handled well, a bad credit loan could improve your credit rating and open up more attractive borrowing options in the future. However, if you fall behind with your payments, you do risk hurting your credit rating further. You’ll need a realistic outlook and a responsible attitude when you take out any form of loan, personal or unsecured.
Not sure a Bad Credit Loan is for you? View and compare Bad Credit Loans here.
Compare Personal Bad Credit Loans
We currently only compare personal loans for people with bad credit. If you have a low credit score, or impaired credit rating, you may qualify for personal loans with higher interest rates, i.e. bad credit personal loans.
Alternatively you may qualify for short term loans, which have higher interest rates than personal loans as they are intended to be used over a shorter period of time compared to personal loans.
If you’re still on board and wondering “where can I get a bad credit loan?” this is the section for you. There are many specialist providers offering loans for those with poor credit ratings, but not all options are equal. You’ll need to narrow the field to check what’s suitable for you. When you’re ready to search, our MoneyMatcher can give you a head start by searching for loans that match your requirements. Seek and you shall find…
Bad Credit Loans: what to look out for
As with any loan, check whether you’ll need to offer up security, such as your home or car. If this is the case, your loan will be secured against your assets. If not, your loan will be an unsecured one.
A secured loan can give you the chance of slightly lower interest rates, but come with their own unique risks, like losing your home if you fail to make payments. Speaking of interest rates, even though bad credit loans tend to come with high annual percentage rates (APRs) you’ll still want to check you’re getting the best deal you can.
Remember to check whether the rate is fixed or variable as this could impact your ability to budget and have a bearing on whether you can afford payments in the future. And when you’re browsing rates, don’t forget those representative figures aren’t given to everyone who applies. 51% of people accepted for a loan will get the rate advertised, but if you’re successful you could be offered a different rate.
Fees for Bad Credit Loans
Another must-check on your bad credit loan list is fees. Will your provider charge a fee for arranging your loan? Do they charge late payment fees? And if you’re in a position to overpay your loan or even settle early, can you do that free of charge or will it attract charges too? These are all key questions, which is why you can find details like this in the ‘more info’ tab of our MoneyMatcher tool.
Is a Bad Credit Loan Right for Me?
If you’ve had credit problems in the past or been knocked back for loans, your first port of call should always be your credit file. There are lots of ways you can view this for free, so take stock of the situation and correct any errors that could be holding you back.
For those who are having trouble getting credit because they have no borrowing history, there are other steps you can take to improve things such as getting on the electoral register or setting up bills in your name at your home address.
A personal bad credit loan could help you get out of a fix if handled correctly. Before you dive in, make sure you’ve considered other avenues such as an arranged overdraft or a credit card that may have a lower interest rate.
Whatever path you take, the smart option is to make sure you have a plan for how you’ll pay your borrowing back, and better your credit record for the future. See our tips to understand and how to improve your credit score.