Representative Example: Rates from 49.9% APR to max 1333% APR. Minimum Loan Length is 1 month. Maximum Loan Length is 36 months. Representative Example: £250 borrowed for 30 days. Total amount repayable is £310.00. Interest charged is £60.00, annual interest rate of 292% (fixed). Representative 669.35% APR (variable).
Credit is one of the biggest headaches that we have to deal with in our financial lives. Applying for credit might be easy but proving that you deserve extra cash when you need it most isn’t always simple, particularly when you’ve had a bad history with repayments in the past.
In the world of loans, a credit score basically refers to the level of trust every potential lender is willing to give you based on your history with borrowing money. Depending on your background, you could fall on multiple places on the scale, from having no credit at all, to having outstanding credit, which means that banks and other companies will chase you around, begging you to borrow with them.
The chances are that you won’t have devastating credit or amazing credit – you’ll fall somewhere in between those two extremes. Here’s what you need to know about getting a £4,000 loan with bad credit, and how you can get the money you need easily online.
Representative Example: Rates from 49.9% APR to max 1333% APR. Minimum Loan Length is 1 month. Maximum Loan Length is 36 months. Representative Example: £250 borrowed for 30 days. Total amount repayable is £310.00. Interest charged is £60.00, annual interest rate of 292% (fixed). Representative 669.35% APR (variable).
Let’s start with the basics:
At a basic level, bad credit is usually the term used to describe a person who has a record of failures in attempting to keep up with payments. If you struggled to pay back your credit card loans on time, or you’ve defaulted on a borrowing period in the past, then you might have bad credit. The worse your credit is, the harder it will be for you to get approved for future forms of lending – whether you’re trying to get a mortgage or apply for a personal loan.
We all have a credit rating – whether we like it or not, even people who have never taken out a loan before in their lives. In fact, if you have no credit, then your situation might be just as complicated as someone with bad credit. That’s because your credit companies will want to see that you have a history of paying back money on time.
Credit ratings are recorded and managed by credit bureaus, or reporting agencies, which collect information on each person all throughout the UK. Every time you use your credit card, make a payment on direct debit, or pay off a portion of your loan, the credit bureaus know about it. Importantly, there are multiple credit agencies out there, and each have their own unique record of credit scores – as it’s often easy to make mistakes based on omitted information.
The more you learn about credit, the more you’ll discover other new terms that might be important to your future lending options. Each credit bureau, for instance, calculates something called a “FICO” score for customers based on the credit information that they collected. The score is based on an algorithm that’s intended to show credit companies how trustworthy you are as a lender.
Different companies, including mortgage lenders, credit card companies, and even car companies that offer finance, will check your FICO score when deciding what kind of rates you should get for your loan. If your credit score is good, or in the region of 670 or above out of 850, then your credit agencies will usually be willing to give you the best deal that they can offer. The further your score goes beneath 670, the harder it becomes to get a good interest rate.
If your FICO score is particularly low, because of late payments, defaulted loans and other financial problems, then some companies might refuse to give you credit altogether. Obviously, this makes life a lot more difficult for people who need to borrow money fast for an emergency, like a problem with their car, or an issue that needs to be fixed at home.
So are online loans for bad credit impossible to access?
The simple answer is no. In fact, bad credit ratings have become so common throughout the UK that lenders have started to adapt their product portfolio accordingly. You can find a number of leading lenders around the country today that are willing to offer loans specifically to people with poor credit histories. In fact, when you work with a broker like Boutell, we can help you to track down loan providers that specialise in bad credit, so you know that you’re more likely to be approved.
Bad credit loans usually come in the form of short-term loans that are only intended to give people who want to get cash now for an emergency. For instance, if you find that you need some extra money because your washing machine breaks, and you’re not going to have enough cash to pay for it until your next payday, then a payday loan can help.
The important thing to remember about short term loans is that although the lender will still take your credit rating into account, they’ll also be able to look at other factors to decide whether you’re suitable for lending. For instance, many bad credit loan providers examine:
There are a few significant difference between bad credit loans and regular loans. First of all, a bad credit loan is specifically designed to support someone who hasn’t been able to get the money they need from a traditional lender. If you’re limited in your options for borrowing cash, then a bad credit provider might be able to give you the assistance that you need.
Additionally, bad credit loans come in very specific forms. You probably won’t be able to get a mortgage through a bad credit provider, but you can get a short-term loan that you pay off on your next payday. The amount of money that you can borrow, and the terms of your repayment will depend on the company that you apply for your loan with.
Another major factor that separates online bad credit loans from other lending options, is that it’s possible to quickly and easily apply for the money that you need online, without having to speak to anyone in person. Unlike with traditional bank loans and other conventional lending options, you don’t have to arrange an appointment with an expert to discuss your credit history or why you need to borrow money. The application process is usually as simple as answering a few basic questions online and getting an approval sent straight to your inbox.
While online loans for people with poor credit are still a relatively new solution in the lending world, they’re quickly growing in popularity for a number of reasons. The digital landscape has given lenders from all backgrounds an easy way to access the money they need fast. There’s no complicated conversation, and no-one to judge you over the phone. Instead, you can fill out a form and get approved almost instantly!
Additionally, because these loans are offered by banks that are hosted and run entirely online, you can get some serious savings on interest rates and other fees too. Most online banks don’t have to pay as much to keep themselves up and running. There’s no brick and mortar location to support or ATMs to run. Everything happens online, which keeps the operating costs low. Online banks therefore have the option to pass their savings onto the end customer – that’s you.
Since a lot of online lenders also work with brokers to make sure that they can streamline the lending process, when you search for the loan that you need through a company like Boutell, you can also make sure that you’re going to have access to an affordable loan, from a company that you can trust. You don’t have to worry about searching high and low for a nearby bank or going through a complicated application process just to be rejected for your loan at the last hurdle.
If you don’t have the best credit, there are always steps you can take to improve your score, like adjusting your payment strategies over time or joining the electoral roll. However, building your credit score up from scratch can be an exhausting and complicated process. You might not have the score that you need the next time you want to apply for a loan.
The good news is that with bad credit lenders, you can rest assured that there will always be an option out there when you need money quickly and you can’t afford to wait. Your credit score doesn’t have to hold you back anymore.
