Getting a loan,credit or any other type of finance approved can be very difficult with bad credit. Banks,credit providers and other financial providers have very strict criteria when it comes to approval and one of the most important is a credit check.
Of course,a good credit score will smooth the process and most likely result in approval. The following scores are considered to be good at the three major credit unions in the UK:
Experian – 830- 999
Transunion – 4 – 5
Equifax – 420 – 700
If a credit score drops below the minimums,it is going to much harder to get credit. If a credit score falls in the lowest bracket,it will be nearly impossible,especially if court judgements are on record.
Fortunately,there are a few ways to access finance or loans even with a bad credit record:
1. Family And Friends
Turning to family and friends for a loan is a quick and simple solution and often comes with no fees or interest charged. However,this type of financial arrangement can irreparably damage a relationship. So draw up a contract that is legally binding and that both parties agree to in order to avoid future disagreements that could last a lifetime.
2. Bad Credit Unsecured Loans
These loans are basically designed to provide cash in emergencies. There are lots of benefits to these loans as well as a few pitfalls. The benefits are that they are easily accessible and there are very few requirements to be met to qualify for the loan – including that dreaded credit check. On the downside,the loans only provide small amounts of money over a short term so they are unlikely to be sufficient to finance big purchases like a house or car. They also have very high annual percentage rates and additional fees and charges. The shorter the term,the more affordable the loan. It is essential to ensure that the repayments are affordable including the interest rate and that it can be repaid in full and on time you can find a wide range of online sites that provide loans for bad credit such as https://moneytrumpet.co.uk/bad-credit-loans/
3. Secured Loans
Loan providers are often more willing to provide loans when they receive some type of security that they will be able to recover their funds. There are a variety of different types of security. The most common is collateral where an asset such a property or a car stand as security for the loan. If the loan goes into default,the secured item will be seized and sold to recover the funds. Another form of security is to find a person who is in good financial standing to cosign the loan. It the loan goes into default,this cosignee will become responsible for paying the monthly installments or repaying the debt in full. A cash amount in the bank or an investment such as stocks and bonds can also stand as security depending on the type of financial provider.
Of course the best solution is to repair a bad credit record as soon as possible. Get free advice from a credit counselor or agency to provide assistance in improving a credit score.