Bad Credit Loans

It’s a bit like a school report but instead of showing how good you are at sitting still in geography lessons, it details how good you are at managing your money and credit. If you’ve never had a loan or credit card, then you might have a low credit score simply because there’s not enough information about your financial habits.

Most loans start at £1,000 and if you don’t need that much, then it could get you into more of a tangle, especially if you’re worried about paying back interest. If you’re just looking for a bit of extra cash for a one-off purchase like a new boiler or washing machine, then a credit card could be another option.

A 0% on new purchases credit card means that you can buy what you need and spread the cost without you spending any more than is necessary. But like with any credit agreement – there are some golden rules you’ll need to stick to – payments need to be made on time, otherwise you could be hit with hefty late fees and you’ll need to stay within your credit limit.

Bad credit doesn’t necessarily mean you can’t get a loan – it just means you’ll need to do a bit more homework about the options available to you.

If you don’t have any assets such as a house, then one option is a personal loan (sometimes known as an unsecured loan). With this, you can borrow money at a fixed interest rate and pay it back over an agreed period of time. You’ll usually be encouraged to take out some form of protection so that you’re covered if you can’t make the repayments for whatever reason e.g. illness so you can’t work.

With personal loans, the more money you borrow, the more attractive the interest rate – but be careful because it’s all well and good borrowing more than you need to get a lower interest rate overall, but remember – you still need to pay it all back its not free money.

If you do have assets, then a homeowner loan could give you credit using your home as a guarantee. These types of secured loans will usually give you the largest amount of cash but the stakes are high and if you don’t keep up with repayments, you could lose your house.

If your credit score is more brass plated than pure platinum, then a guarantor loan could be an alternative. This is when a relative or friend promises to pay back the loan if you can’t; it’s a tricky situation and it’s worth being absolutely confident about your ability to meet repayments unless you want a one-way ticket to alienation. 

Taking out a loan can be scary – phrases like ‘repayment penalties’ and abbreviations like APR just make it seem so complicated but don’t be put off – you just need the lowdown – and here it is:

All loans come with risk – whether you’ve got a bad credit history or not. If you don’t meet your repayments, then you’ll be hit with fines on top of everything else you owe leaving you in even more debt and you could lose your car or your home.

If you know your credit history isn’t great, then it’s really worth considering what you need the money for in the first place and whether the money is for necessities or niceties. And if you decide that a loan is absolutely what you need then it’s important to comparethemarket.com to find the best one for you and your needs.