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Bad Credit Loans

If you have a bad credit history you have probably found it’s hard to get a loan, in fact the only type that you may be able to get is a bad credit loan. Whether it’s for a home, a car, a personal unsecured or secured loan, people with bad credit typically have a harder time finding a lender and end up paying higher interest rates.

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What Is A Credit History?

Your credit history is a record of all past financial commitments and your pattern of repayment, as well as an overall look at your total debt load. Credit reference agencies use this information to assess your credit worthiness and assign a credit score. Lenders then use the credit score as a factor in deciding whether or not to underwrite your loan.

How Did I Get A Bad Credit History?

  • Anytime you are late making a payment,
  • miss a payment,
  • default on a debt,
  • or fail to otherwise fulfil a financial contract or commitment, this information is reported to credit reference agencies.

The more of these reports the agencies receive, the lower your credit score and the harder it is to find a loan. Other information that can cause a red flag in your credit report includes frequent changes of job or address, or one or more County Court Judgements against you.

So Will I Be Able To Get A Loan?

The good news is that there are many lenders who specialise in working with people who have a bad credit history. You will likely pay a higher interest rate than someone with a good credit history, and the amount available for you to borrow will probably be lower. However, once you’ve secured a bad credit loan, over time you can improve your credit score by showing regular, responsible repayment of the loan for bad credit.

Loans For People With Bad Credit?

Bad credit loans will fall into one of two categories – secured or unsecured.

  • Secured loans involve using something of significant value as collateral for the loan, usually your house. The lender will determine the loan amount and interest rate based factors such as your credit score, the value of your home, and your overall debt load. Each lender weights these factors differently and some consider other factors as well, so it’s important check with each lender about their specific criteria.
  • Unsecured bad credit loans, however, are among the most difficult to get. They represent a very high level of risk for the lender, so they are naturally much more cautious about underwriting this type of loan. If you need an unsecured loan, though, don’t lose heart because while it is difficult to obtain one, it is possible. Look for lenders who specialize in this type of loan; they are sometimes referred to as sub-prime lenders.

How Do I Find The Bad Credit Loan That’s Right For Me?

Do some research before you submit any loan applications. Check out several lenders, ask about their interest rates and loan terms, find out more about their loan process and whther they offer loans for peope with bad credit. Be careful, though, not to submit a flurry of applications in a short period of time. Activity such as this can actually make your credit rating worse, so make sure you learn as much as possible about each lender’s program before deciding whether or not to complete an application. You can also work with an independent loan broker to help determine which lenders have programs that fit your individual circumstances.

Other Resources For Finding Bad Credit Loans

One of the most popular resources for researching bad credit loans is the internet. Almost all lenders have web sites that provide guidelines and information about their bad credit loan programs, and some even offer online application processes. As noted above, though, don’t fill out large numbers of applications or you may damage your credit rating further. One way to avoid this is to use an independent loans brokerage, such as ourselves, who will make applications on your behalf only where they know you are likely to be successful.

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