No one wants to end up with a poor credit score, but of course, life happens – you might miss a few payments in relation to a particular financial obligation you have, or you may have undergone certain financial difficulties many years ago that are still keeping your credit score low now.
Warning: High-interest rates on bad credit loans can lead to significant financial strain if not managed responsibly.
So, if you do have bad credit, does that mean you can wave goodbye to any prospect of being approved for a loan? The short answer is “no, not necessarily”. Contrary to certain long-held perceptions, there isn’t any credit “blacklist”.
What a bad credit score will almost certainly do, though, is make it harder for you to get approved for a loan. And if you are granted a loan, the terms probably won’t be as favorable as what someone with a good credit score would be able to obtain.
Remember, even if you have a poor credit score, it's important to consider your ability to repay a loan before committing to one. For help, go to MoneyHelper.
There Isn’t Officially Such Thing as ‘Bad Credit Loans’
Yes, you read that correctly; the term “bad credit loan” doesn’t have any formal, legal, or official status. It is simply used to refer to loans that people with bad credit are able to get approved for.
So, how exactly do bad credit loans vary from the loans that are typically available to people with better credit scores? One obvious difference is that they tend to have higher interest rates, as well as other restrictions. After all, a loan applicant who has a poor credit score will be seen as representing a higher risk to prospective lenders, so those lenders will not wish to be left out of pocket, whatever happens.
All of this, in turn, means that if you are someone with a bad credit score who is seeking out such a loan, you will need to take extreme care. In particular, you will need to ensure you only borrow an amount that you can genuinely afford to pay back, plus the associated interest.
Bad Credit Loans Can Be Useful But Require Responsibility
Bad credit loans can be useful for people who would otherwise struggle to obtain a loan for any of an exceedingly wide range of purposes, such as car repairs, home improvements, or even a holiday. But you will need to be very responsible in how you handle it, and make sure you do complete all the expected repayments in a timely manner.
If you can accomplish that, there is a bonus benefit for you: it will help you to improve your credit score, so that when you next consider applying for a loan, you will be able to do so on much more favorable terms.
How Does Obtaining a Bad Credit Loan Through CashCompare Work?
One thing we must emphasize at this point is that we are not a lender ourselves; in other words, we do not directly make available bad credit loans. We are, instead, a credit broker, which means we maintain relationships with a variety of lenders, some of which may even specialize in providing loans for people with less-than-immaculate credit scores.
A significant potential benefit of going through CashCompare for a short-term loan is that you won’t need to approach a lot of different lenders, one by one. Instead, you can simply fill in and submit a short online loan request form, and we will then draw upon our panel of lenders to find you the best possible solution.
It won’t cost you a thing to use our service, and nor will you be under any obligation to accept any loan that you are presented with via this process. We won’t even carry out a credit check, although our lenders will perform an initial “soft” credit check to assess your eligibility and creditworthiness. Only after you accept a lender’s offer, will you be subject to a “hard” credit check.
So, when you’re looking to obtain a loan for bad credit that won’t harm your credit score further in the process of simply trying to get approved for it, you can count on CashCompare as your go-to source of the right short-term loan for your requirements.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. If you are considering a loan, especially with a poor credit history, it is recommended to seek independent financial advice.
"Warning: Late repayment can cause you serious money problems. Always consider if borrowing is the right option for you and ensure you can repay your loan." For help, go to moneyhelper.org.uk.