Bad Credit Loans
Your financial history can considerably affect your chances of being approved for a personal loan. A poor credit rating could be due to a number of reasons, from missed repayments to a CCJ (County Court Judgement) held against you. Even if you have never taken out a credit card or loan, you may have a low credit score. A bad credit loan is an option to consider if you have found yourself struggling to borrow from other lenders because of your credit rating.
What is a bad credit loan?
Bad credit loans are loans specifically designed for people who have a bad credit history and might have been unable to secure a deal elsewhere.
Bad credit loans interest rates tend to be higher than other types of finance as they can be perceived as a higher risk for the lender. Taking out a bad credit loan, however, can help to improve your credit rating and increase your chances of securing a better interest rate next time you borrow.
The greatest advantage of a bad credit loan is that you are able to borrow money that you otherwise would not be able to due to your poor credit history.
Types of loans for bad credit customers
As with any personal loan, bad credit loans can either be secured or unsecured.
Secured loans, also known as ‘second charge mortgages’, work by using an owned asset – usually your home – as the security for your debt. Secured loans can be a good option for people with a bad credit history as it can give them an opportunity to borrow a large sum of money when they otherwise might not be able to.
Unsecured loans, also known as ‘personal loans’, typically have a higher interest rate and don’t allow you to borrow as much compared to a secured loan.
Before taking out any loan you should ensure that you can realistically afford to pay back the monthly repayments, only taking out what you know you can afford.
Your property may be repossessed if you do not keep up repayments on a mortgage, loan or any other debt secured on it.