What are your options?
Are you worried that having a bad credit history will affect your potential to claim a loan? We aren’t going to lie to you, but having a couple of dents in your credit history will indeed make it difficult to obtain one, but don’t give up hope, there are ways around claiming loans for people with bad credit.
Damage
If you have ever signed up for credit in the past, you will have a credit history. In fact, everyone has a credit history within their lifetime. It’s how you manage your credit that can make a huge impact on your future. Your credit history is in simple terms, a record of your borrowing agreements and activity over the past six-plus years.
Anything you have taken out such as your car insurance and phone bills all count against your credit history. Your previous addresses and the details of anyone who you’ve shared finances with will also be documented within your credit history to help keep track of how you manage your borrowing and finances.
Tip: Paying off your payments early will be noted and will help to improve your overall credit score!
On the downside, any payments you have been late to pay or owe will also be noted and will decrease your credit score.
The lender you go to will use your credit history to judge whether it is beneficial to them to give you the money you require. The worse off your credit score, the less likely you will be able to receive a loan.
Is Your Credit Score Bad? What Happens Next?
As previously stated, if you are unlucky enough to have a poor credit score, the process involved for you to obtain a loan won’t be a smooth one. There is still a chance that you can be accepted but the process will be slightly trickier. You may likely be charged higher than that of which you saw advertised. This is mainly due to the fact that the lender wants to reduce the risk of them losing money. This would be the case if you cannot, for some reason, afford to pay back any of the money borrowed. In the end, you may have to pay more to borrow if you have bad credit.
Can You Get a Loan?
As previously mentioned, yes, you can. It might be a little trickier due to your bad credit history but it is possible. When it comes down to it, there are two types of loans – homeowner and personal loans.
Homeowner loans are loans that are secured to your property. This gives the lender more security and will often mean that you can borrow more money, for a longer term and with a lower interest rate than that of bad credit loans.
Bad credit loans do not use any of your personal belongings as a form of security. Instead, the lender may ask you to pay back a higher rate of interest to make them feel more secure. This style of loan is usually borrowed for a shorter term than that of a homeowner loan.
In the end, you may find that the homeowner loan suits you best due to the lender feeling more secure. They will more than likely allow you to borrow for longer at a more reasonable price even if you have bad credit.
Conclusion
In the long run, making sure you look after your credit history should be your number one priority. Especially if you are to give yourself better chances to borrow any money in the future. Being accepted onto a loan may help to improve your bad credit. However, on the other hand, being rejected from a loan can have a negative impact on your credit score.
Keep paying your bills and other credit contracts on time and slowly but surely. You’ll see your credit score shooting up.
If you’d like more information on loans for people with bad credit, then please visit this page.
