It can be hard to get a loan or any other kind of money. If you have bad credit and want to buy a house or get a secured loan, you will usually have to do even more work to find a lender who will give you the money. You will also have to pay a higher interest rate than someone with a good credit history.
What is a credit history?
Before you try to get a loan, you need to know more about your credit history. This is a list of all the money you have promised to pay back and how likely you are to do so. It also shows how much debt you have in total.
Lenders look at this record to figure out if they should give you credit. Usually, they do this by giving you a credit score. Lenders are less likely to give you a loan if your credit score is low.
How did things go wrong with your credit?
Your credit history is an ongoing record of information about you and your finances. If you don't pay a bill on time, that information is added to your file. This is the same if you've ever stopped paying a debt or broken a financial agreement.
This record keeps track of everything, including missed mortgage payments, repossession, bankruptcy, CCJs, IVAs, credit card defaults, and so on.
Credit reference agencies also keep track of other things about you, like when you change jobs or where you live. If your credit history shows that you do this a lot, it will also hurt your credit score.
Will you ever be good enough to get a loan?
Most of the time, you will still be able to get a secured loan or mortgage, but you might have to follow certain rules. Because of the way people think about debt today, there are more and more lenders who focus on giving loans to people with bad credit. Just remember that you might have to pay a higher interest rate and get a smaller loan amount.
The good news is that once you get the loan, you can start fixing your bad credit history by making regular, on-time payments. It will take some time, but your credit history will get better.
What Kinds Of Loans Are There?
You can choose between a secured loan and an unsecured loan. Because you don't have to put up anything as security for an unsecured loan, it is harder to get one. Since this is risky for the lender, you can expect them to ask for stricter loan terms.
Secured loans, on the other hand, require you to put up some kind of asset as collateral. Most of the time, this means that your house will be used to back the loan. Your credit history, the total amount of debt you have, and the value of your home all affect how much money you can borrow and how much interest you will have to pay.
Different lenders weigh these things in different ways, so be sure to talk to more than one to find one with a product that fits your needs.
Where do you look for a loan if you have bad credit?
Before you ask for a loan, you should look into several different lenders and brokers. Find out what their interest rates are, if they have any special loan terms, and any other details about how they handle loans.
You can do as much research as you want, but don't send out too many loan inquiries in a short amount of time. This kind of behaviour can hurt your credit history even more.
Most of the time, if you have bad credit, the best way to get a good loan is to work with an independent broker. Make sure they are not tied to just one lender and can choose from a wide range of options. Find out what fees they will charge and why.
There are a lot of secured and unsecured loan brokers in the UK. Not all of them are honest, so make sure you talk to as many as you can.
