Bad Credit Loans
Life can be unpredictable. Things happen and we can sometimes make mistakes.
Having a tricky credit history doesn’t mean that you can’t get the finance you need. With our expertise and our access to specialist lenders, we can find a loan that’s right for you, whatever your circumstances.
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A bad credit rating is when a persons credit file shows negative credit behaviour, this is usually in the form of missed, or late payments. Your credit file shows as a score, which is based on the amount of credit you borrow, your payment history and current financial situation.
I’ve got really bad credit – arrears, defaults, County Court Judgements (CCJs) – can I still get a loan?
We work with specialist lenders who understand that these things can happen and have products that can match most credit profiles. We’ve found loans for customers who’ve had outstanding CCJs, defaults, arrears, and missed loan and credit card payments.
The interest rates are often higher because the lenders see these loans as a higher risk for them, but we’ll always make sure that the monthly payments are affordable for you. As these loans can often help to repair your credit profile, once your profile has improved, you may be able to refinance onto a loan with a better interest rate.
Lenders will almost always want you to pay off outstanding CCJs or council tax and utility company arrears. This can be a good thing – it gets rid of the debt and any worries that come with it and paying it off can be the first step towards repairing your credit profile.
This depends on what you need the bad credit loan for, the borrowing amount and the term of time. As a homeowner, you’re more likely to get accepted for a larger amount and over a longer period of time, with a better rate of interest than a personal loan.
Taking a secured loan may also help your credit rating, if you settle any outstanding bad credit. You can check your credit profile at CheckMyFile. You can sign up for a free two week trial and check all your data from the four main credit referencing agencies in the UK.
It can – but you shouldn’t think that just taking out a loan will automatically improve your credit score, and it won’t happen overnight. Loans can help to “build credit” but only if you make your payments on time and in full and pay off the loan by the end of the term. Doing this will show lenders and credit reference agencies that you are a responsible borrower, and as a result, your credit score should improve over time.
You could also avoid damaging your credit file further, by using the loan to pay off debts that you are struggling with, before they become unmanageable and you start missing payments, default on the debts, or worse, get a County Court Judgement (CCJ).
I have a clean credit file, but my spouse/partner has bad credit. Would I be better off applying for a regular mortgage in my name only?
Applying as a single applicant when you’re married is possible, but being approved for a loan will depend on whether it is affordable on your income alone, as lenders will not count the income your spouse/partner earns when assessing the affordability of the loan. So, although you might think you’ll be able to get a more favourable rate by leaving your spouse/partner off the application, you might not get approved, as you’ll be leaving their income off the application, too.
You’ll also be reducing the number of lenders available, as many lenders would prefer you to do a joint mortgage.
Also, a lot of people over-estimate the impact of bad credit, thinking that they will be automatically declined or that the rates will make the loan too expensive. In reality, having a spouse/partner with bad credit won’t automatically stop you from getting a loan or make it unaffordable. Most specialist lenders will look at your application on a case by case basis, and there are lots of very good deals available for people with bad credit.
Representative example: Borrowing of £40,000, plus £595 lender fee, plus £3,000 broker fee, totalling £43,595, over 192 months on a 5-year fixed product with an initial borrowing rate of 9.2%, following a variable rate of 9.6%. There would be 60 monthly instalments of £434.49, following 132 monthly instalments of £442.52. Total amount payable £84,577.09, made up of: Mortgage amount £40,000, Interest £40,887.09, Lender fee £595, Broker fee £3,000, Exit fee £95. Overall cost for comparison purposes 11.4% APRC.