Debt is part of pretty much everyone’s life – unless you happen to be living mortgage free, only use credit cards if you can pay off the entire balance every single month, and don’t have things like car loans then you have debt.
It’s almost impossible to escape it, and to be fair there are often good reasons not to; after all, one day the mortgaged property will be yours, as will the car you got a great low interest deal on – oh and the sofa that qualified for interest free credit.
Decent deals on loans can help when you face emergencies, such as white goods needing replacing, or with large leisure purchases like the latest TV, a caravan, or even a holiday, but it isn’t always easy to secure a loan – whatever you may want the cash for.
Anyone with a bad credit history will have a harder time than average finding a mainstream lender willing to offer a loan. Things like unpaid debts reported to debt collectors, CCJs (County Court Judgements), even a record of having missed a couple of payments at some time all contribute to a low credit score. Lenders then see you as a high risk borrower, and the options for finding credit are cut drastically.
Don’t give up though – it is not impossible. Here we look at the key things anyone can do to help secure a loan when they have bad credit.
#1 – Do your homework
Accept from the start that you won’t qualify for the lowest interest rates, but that doesn’t mean you need to panic and rush straight into an agreement with a loan shark, or apply for a payday loan with eye watering interest charges. Instead make the effort to look around for more reasonable providers of bad credit loans, find out what they are looking for in potential borrowers, and work on providing them with the information you need.
#2 – Be organized
Bad credit doesn’t have to be a huge problem if you can prove you are now stable and have a comprehensive understanding of your finances. A decent loan company may care more about where you are now over what you did in the past. Ways to get organized:
- Create and stick to a budget
- Collect clear evidence of all incomings and outgoings
- Make sure you are on the electoral roll as this improves your credit score
#3 Prove yourself
The final hurdle is to show lenders you are capable of repaying the debt responsibly
- Show how you could realistically earmark cash from your income to make the repayments on a loan
- Be open to setting up a standing order for payments to be made directly
- Look at cutting back on non-essential monthly expenses such as additional TV channels
It may not be as easy to get a loan when you have a poor credit history but it’s not impossible, and do remember, with some effort on your side you don’t have to be at the mercy of the higher than high interest rates which some lenders charge.