Can I still get an unsecured loan if I have a poor credit history?

Yes you can still get an unsecured loan even if you have a poor credit history. A poor credit history may be due to a failure to keep up repayments, or having a Count Court Judgement (CCJ) against you.  Even a lack of credit can work against you, so if you have never had a loan or credit card before, there is no evidence that the lenders can use to see how effective and efficient you are at managing borrowing.

In todays’ financial climate, it is virtually impossible to borrow from any high street bank or building society if you have anything less than perfect credit.  However there are now more alternatives than ever before.

The biggest advantage of a poor credit loan is that you are still able to borrow the money, which perhaps you have been unable to do in the past due to your credit history.  This can of course provide a real financial boost to those that desperately need it, whilst at the same time it can help to repair your credit status. Of course repayments have to be met on time to prove that you can manage money effectively and this will help improve your credit rating.

The biggest disadvantage is that this kind of loan normally carries a higher interest rate, relative to how much ‘risk; the lender thinks you are.  As applicants for bad credit loans have usually had financial problems in the past, they represent a much higher risk to lenders, and therefore the rates they are offered are much higher than they would be for someone with a higher credit score.

There are two types of loans available, unsecured and secured. Unsecured loans are more difficult to obtain, for the simple fact that they are not supported by anything other the individuals creditworthiness. Whereas secured loans are secured against something of value, usually a house and your home could be at risk if you can’t keep up with the repayments.

It is also worth considering how long you want to repay your loan, because the longer the term in years, the more interest you will pay. Lenders also tend to tier interest rates depending on the total amount borrowed.  Thus it may be worth borrowing slightly more to obtain a lower interest rate, but again don’t borrow more than you can afford to repay.

 

 




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