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While nobody likes being judged, you are definitely going to be when you take out a loan. Creditors will look closely into your credit history and decide whether you are worth the risk lending money to or not. This is why if you have a credit score that is less favourable, there is a high chance that lenders will outright reject you. Not all though. Below are ways on how you can get a loan with bad credit.

Why Bad Credit Loans?

There are loans that people with less than ideal credit reports can take advantage of. Also referred to as bad credit loans, they are also ideal for those with little to no credit history. Typically, loans like these come with greater restrictions and even higher interest rates. But lenders had to put these safeguards in order to reduce the risks of borrowers not paying them back.

Reasons why your credit is bad

Having a bad credit means companies are viewing your credit history negatively. As a result, it becomes difficult for you to access certain services or borrow money. There are a number of things that can have a negative influence on your credit score such as defaults, late payments, bankruptcies little to no credit history, you’ve never opened an account before or you’ve never taken credit in the past. Still, different companies have different criteria when assessing credit history and others may see you in a more positive light than others.

Building your credit With Unemployed loans 

While you can still get a loan even when you have a bad credit, it will likely cost you more in terms of fees and other charges. Just because you have a low credit score now does not mean that it will remain that way forever. Some of the things you can do to build it is to ensure that you pay your bills on a timely manner, keep your lines of credit open, avoid using more than 30% of your credit limit, pay off your debt, or consider debt consolidation.

Refer to personal instalment lenders

When there are emergencies and you have no time to build your credit, you’ll need the funds as soon as possible. Personal instalment lenders can be a good alternative as they do not just look into your credit score but several other factors when deciding whether you should be granted a loan or not.

Consider a short term Unemployed loan

Another way for borrowers with bad credit to be more appealing when taking out a loan is to go for a secured one. This is where a borrower presents an asset such as a car or a property to guarantee the loan. Lenders are likely to approve this loan since the collateral can help cover the losses in the event that you will default. however, the loan amount will be dependent on the value of the security.

From time to time, you may need to borrow cash, especially during those moments when funds are tight. However, getting credit is not always easy especially with bad credit. Getting a personal loan when your credit score is not looking too impressive can get difficult. Banks are becoming more particular about their borrowers. They wouldn’t want bad credits to affect their bottom line.

A bad credit is often the result of a number of things that happened to you in the past. For instance, you may have missed repayments. You may also have a bankruptcy against your name. It should be differentiated from no credit though as this means that you have never taken out any loan before so you have no credit history.

Just because your credit score is muddied, however, does not mean that lender doors are going to be closed on you instantly. Many will still be able to offer you something although your options are going to be significantly limited. Your interest payments are likely going to be higher too since you will generally be considered a higher risk.

Bad credit loans for the Unemployed

You will find lenders these days that specialise in offering loans to borrowers with bad credit. However, these loans do come with lower borrowing limits and higher interest rates. The greater a risk you are perceived to be, the more the restrictions and the higher the rates are. Of course, your credit history is not going to be the sole deciding factor on whether you will get approved for a loan or not. Your stability, job, salary, and even your assets are going to be taken into account too.

Different lenders will have different criteria on what they need borrowers to meet first before they are considered for a bad credit loan. You need to be at least 18 years old and a UK resident to qualify.  Also, you need to be employed or can show proof that you are getting a stable income coming in regularly every month.

Bad Credit Loans Application Process

Typically, bad credit loan applications get a decision within the day. How long it would take for the money to be reflected on your account depends on how thorough and lengthy the approval process of the lender is. This would also depend on the length of time it takes for your bank to get your payments processed. Some lenders can even get the funds out in a matter of minutes. Typically, you can borrow as much as £50,000, but this usually varies from lender to lender.

While bad credit loans do come with high interest rates, this can be a good opportunity to build your credit score too. So, paying it off on time will help you get more competitive loan rates next time.

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