When you have bad credit, it can seem almost impossible to obtain finance from the majority of mainstream lenders, such as banks and building societies. It can be both difficult and distressing when you apply for credit and get turned down time after time, and you may not know where to turn when you desperately need help. Regardless of whether you need to borrow £100 or £1,000, there are options available for those with a bad credit history that can help them get on the road to financial freedom.
What exactly is a bad credit score?
While they use numerical values that determine whether you have a good or bad credit score will vary from company to company, they typically all point to the same outcome. In the United Kingdom, as soon as someone turns 18 years old they are given a credit score. The higher the number is, the more trustworthy you are seen as being, which ultimately makes it easier to obtain credit. The lower your score is, the less trustworthy you are seen as being and it can become more difficult to obtain credit when you need it.
If you have just turned 18 years old, then your new credit score will not have any indicator is available to lenders. This can make it difficult for you to obtain credit for the first time, and a payday loan can help demonstrate your ability to be able to pay back the amounts that you borrow. Other things that have a negative impact on your credit score include County Court judgements and individual voluntary arrangements, which both involve an amount of money being borrowed and not repaid.
What are my options for obtaining credit with a poor credit history?
While you may see loans being advertised as credit check free, there really is no such thing. Regulations in the United Kingdom mean that every provider of credit needs to perform at least a basic credit check to verify the identity of the applicant. You may be worrying about your credit score and feel the need to use a no credit check provider, but the simple fact of the matter is that having poor credit alone will not prevent you from getting access to a short-term loan or payday loan.
A credit report is exactly as the name suggests, a report on your previous credit agreements and your management of them. You may think that it's almost impossible to improve your credit score, but this is not true. You need to demonstrate that you are trustworthy when borrowing credit from providers and you can do this by taking out a payday loan and repaying it on time. Every time that you pay back your borrowed credit in full, you are demonstrating to other providers that you have the ability to do so.
This makes you more desirable as a customer and makes getting credit in the future easier. You could opt to take out a credit card design for those with bad credit. However, it is important to remember that a credit card is an ongoing obligation which can soon spiral out of control, especially if you cannot make your monthly payment period a payday loan or a short-term loan is often expected to be paid back within a maximum of 6 months. The amount of time that it takes to pay back a payday loan will depend on the time frame agreed during the application process. This means that you can pay back the full amount in the allotted time frame and the contract is closed.
When applying for a short-term loan or a payday loan, you have two options available to you. You can go direct to the lender, or you can use a broker, such as Sure Money UK. For those with a poor credit history, a broker is normally the best option as they are able to quickly compare the options available to you and match you with a lender who is prepared to give you credit. Some of these lenders work exclusively with brokers to provide credit to those with a poor credit history which means that you are more likely to be approved than with a direct lender.