Borrowing decisions with bad credit score are not easy. There could be a number of reasons which can affect your credit ratings such as inconsistent loans and bills repayments; high debt to income ratio; too many unsecured loans or loan queries for the same; besides crossing credit limit every month.
Whether you are full time employed or part-time employed, with poor credit score high street lenders are more likely to maintain distance from your profile. However, there are times when you need urgent loans due to personal or social reason. As long as you can afford the loan, you may find a loan partner to fund your loan application.
However, it is a norm to extend bad credit loans at very high interest rates. So, let’s discuss how to search the most affordable loans despite poor credit score. To share practical advice for borrowers with low credit score, I would not consider the profile of high street lenders. Instead, I will focus on FinTech industry comprising private loan lenders.
There are thousands of loan advisers working legally in the UK who specialise in offering tailored loans. You simply need to contact them online and they will help you find the best offers around you with least paperwork. You can compare and choose the best match without any obligation.
A Guide for Bad Credit Borrowers: Things to Consider
Short term loans vs long-term loans
With poor credit, it is recommended to opt for small loans. You should not borrow more than what you need. Irrespective of the loan availability, always limit borrowing for urgent needs only. For example, if you need funds to particularly buy a sofa on finance or to replace a boiler or to change the bathroom faucets, you must apply for short term bad credit loans for the purpose. It is not advisable to extend the costs by borrowing for other associated home repairs. For, home improvements could be unlimited and borrow long-term loans could be difficult to manage with already challenged credit history.
It is also suggested to use a loan broker’s advice for the same. They can help you assess your loan repayment capacity and you can make a more informed decision with their help.
Personal vs secured loans
Likewise, personal loans come at high cost. They are signature loans and thus the rate of interest entirely depends on your credit rating. If you are a resident of the UK and own home equity why pay the additional interest rate for your everyday needs. You can always use short-term homeowner loans to meet your temporary cash hassles.
There are certain benefits to choosing homeowner loans:
- Your credit rating improves when you involve home equity and lenders find you more trustworthy.
- You get low-interest loans.
- The borrowing process becomes rapid and less hassle-free.
With an ease of repayment (because of smaller instalments), it is more convenient to repay your loans on time and improve your credit rating. As your credit rating improves you can avail more loans at a better rate in future.