Request Online for a Loan with Bad Credit
If your credit score has hindered your ability to receive traditional bank loans, then you might still get the chance to receive an online bad credit loan. Online loans advance your funds ahead of your next. In return, the borrower repays the loan in one lump sum when they receive their paycheque. However, beware that guaranteed loans for bad credit are not likely. Some lenders will be willing to work towards a flexible loan offer, but they cannot guarantee approval.
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Apply NowWhat Is A Bad Credit Score?
Credit scores are a form of measurement that lenders and traditional banks use to evaluate your financial history. Your financial activities influence your credit score. For example, failing to repay credit card debts can result in a lower score. There are a number of factors that may adversely affect your credit score.
The major credit bureaus measure credit scores in a range between 330 and 850. Scores below 580 are typically considered bad.
Factors Leading to Bad Credit
A few factors can have a negative impact on your credit score. From consistently missing payment deadlines to borrowing excessively, your credit score can take a negative turn and prevent you from applying for other loans in the future. If you currently have a bad credit score, it may be due to one or more of the following reasons:
- Failed to stick to a contractual agreement
- Didn’t make payments on time for previous loans
- Have shallow information on your public record, such as a court judgment
- Have too many hard credit checks in a short time period on your credit report
- Never borrowed money before
Bad credit scores may affect your chances of getting car loans, house mortgages, or any of the traditional financial products.
How Much Would You Like to Borrow?
Different Types of Bad Credit Loans
Emergencies can happen anytime, and people may need a fast loan even though they have a bad credit score. Although it can be difficult to get a loan from traditional lending institutions with poor credit, luckily, there are alternative options you could opt for.
Loans
These are usually custom-made short-term loans for bad credit holders. These lenders set low or no minimum credit score requirements but pay closer attention to your monthly income and other factors that check your solvency. If you aim for a bad credit loan, keep in mind that they usually have high-interest rates. The annual percentage rate (APR) can at times be twice or thrice the total borrowed amount.
Cash Advances
A cash advance is similar to a loan, where you receive a lump sum of money that you need to repay in equal installments over some months. Like loans, cash advances generally have higher interest rates than bank loans.
Secured Personal Loans
These loans are given against collateral, which can be any valuable property, from your house to your car. If you fail to repay the loan on time, the lender will repossess the item you declared as collateral. While these loans may put your belongings at some risk, they typically have lower interest rates than loans and cash advances.
Why Choose an Online Loan When You Have Bad Credit?
Online loans offer several distinct advantages compared to traditional loans. Some of the benefits of online loans for bad credit in the UK are:
Wider Access
Those who offer loans typically measure your credit strength when you apply. Your credit score may include past missteps and accidents. A lower score can hurt your chances of getting the loan. Direct lenders of online loans sometimes rely more on your steady monthly income and employment standing.
Fast Response
Traditional banks take their time evaluating loan requests. As a result, banks may sometimes take weeks to reach a credit decision. This can be unsuitable for many who are searching for fast cash during emergencies. Direct lenders can offer quick loan decisions.
Quick Funding
Online loan direct lenders try to conduct their businesses fast, including money transfers. Once approved for an online loan, the funds are quickly deposited into your bank account.
Easy Repayments
Typically, online loan terms and conditions are set beforehand without any surprises throughout your loan. For example, repayment schedules and fixed interest rates are established before signing off on your loan. Moreover, penalties for missed payments are also set in advance.
Convenient Online Request
Conducting business online may simplify the loan process. There is no need to visit your local bank branches and go through piles of paperwork. You may easily begin your online loan request through the comfort and leisure of your own home, and more importantly, on your own time.
Flexible Loan Amounts
Loan amounts may vary from one customer to the next. In some instances, online direct lenders may accept a loan request at the dollar amount requested. Although, they may offer a higher loan amount. Flexible loan amounts offer consumers the opportunity to get the fast cash they need.
Bad Credit Loans: FAQs
Will I Need Collateral for a Bad Credit Loan?
It depends on whether you apply for a secured or an unsecured loan. Secured loans for bad credit are given against collateral, which can be anything from real estate to a car. Collateral puts the lender in a less risky position as they can repossess your belongings if you fail to repay the loan.
What Is Considered a Bad Credit Score?
The major credit bureaus identify people with poor credit scores. Here are the major credit rating systems in the UK with their respective poor credit score limits:
- Experian (on a scale of 0 to 999) – a score lower than 720 is usually considered a bad credit score.
- Equifax (on a scale of 0 to 700) – a score lower than 379 is usually considered a bad credit score.
- TransUnion (on a scale of 0 to 710) – a score lower than 565 is usually considered a bad credit score.
Can a Loan Improve My Credit Score?
A credit score is calculated based, in part, on your payment history, amounts owed, and credit mix. A short-term personal loan may improve your credit score in the long term if you make payments on time. However, taking another loan can have a temporary negative effect on your credit score. This is because lenders conduct a hard credit check before approving the loan. This inquiry can temporarily drop your credit score.
Will Early Repayment Help My Credit Score?
Paying off a loan can certainly reduce your debt-to-equity ratio. However, many lenders charge prepayment penalties which can affect your credit score negatively. If prepayment penalties apply in your contract, paying off your loan early can worsen your credit score, so it is always advisable to check the terms directly with your lender.