What are Bad Credit Loans?
Bad credit loans are for people who are not eligible for personal loans from mainstream lenders due to a poor credit profile or very little credit history. The term bad credit loans covers a range of lending products including loans for unemployed people, unsecured bad credit loans, payday loans & guarantor loans.
These types of loans will come with comparatively high rates of interest which means that they are likely to more significantly more expensive than mainstream loans. However, they can be useful to help people build up a credit profile or for assistance with unexpected costs for people who have less than perfect credit profiles.
Before you take out a loan like this, you need to think carefully about whether you can afford the repayments. Not meeting your monthly repayments can cause serious financial difficulty.
You can check your eligibility prior to making a complete application to see what rates you are eligible for to assist you with your decision on how to proceed.
What is Bad Credit?
Bad Credit refers to your credit history and is viewed negatively by companies and therefore makes getting accepted for credit harder. To check your credit report you can use a service such as ClearScore or Experian.
You may have bad credit due to a number of reasons including: late payments, CCJs, bankruptcy, defaults on payments and by having too many hard searches in your credit report.
Another reason for having “bad credit” could simply be because you have very little by way of a credit history. This means that lenders do not have a lot of information to go on when deciding on your eligibility.
What types of bad credit loans are there?
Guarantor Loans: A guarantor is somebody that is responsible for any payments that you do not make on your loan. Having a guarantor in place gives the lender additional security that the loan will be repaid and can therefore improve your chances of being accepted for a loan.
Unsecured Bad Credit Loans: Unsecured loans are not protected by your property. This means that should you default on your loan your property will not be repossessed to cover outstanding costs.
Payday Loans: Payday loans are a short-term loan designed for people with unexpected costs, e.g. replacing a broken washing machine or fixing a car. They have extremely high rates of interest compared to other forms of lending and missing payments can lead to serious financial difficulty. They should only be used in emergencies and only taken out if you can afford to repay them from your very next pay cheque.
Will I be eligible for a bad credit loan?
Eligibility is dependent on a range of factors. An easy way to find out which loans you may be eligible for is to use Choose Wisely’s “get accepted” tool. We work with Choose Wisely who can indicate whether or not you may be accepted for a loan before you complete the full application. Their “get accepted” journey uses a soft search which will not affect your credit report.
Compare bad credit loans
See which loans you are eligible for and compare bad credit loan rates by clicking the compare button below.