Applying for a loan can be an intimidating and daunting process even when one has a considerably good credit score. So, the stakes are pretty high when your score is fairly bad or poor.
However, that does not mean that you are not eligible for a personal loan altogether. Loans are something one might be in need of any time of the year, at any point in life.
Having a poor credit score should not put a stop to it in any way. If you are able to tick off certain eligibility criteria, you should be getting a loan too. For example, some common factors for eligibility include being at least 18 years of age, being a resident of the UK, having a current account, and being able to show that you can repay the loan in the future despite your current poor credit standing.
These are just some basic requirements that every lender will have you fulfil. Depending on the agency you take a loan from, these requirements might differ. But here are some common steps that you can follow to ensure that you get your loan right away, irrespective of your credit standing.
1. Try to improve your credit score.
This condition is applicable only if you have enough time before you want to borrow. There are several ways in which you can significantly improve your credit score, that too in a matter of months.
One of the most common ways to increase your credit score is to start using your credit card more. This, however, is useful only if you can repay your bills on time. If not, it might end up hampering your credit standing even more and endanger your chances for getting Loans for poor credit.
Another way to improve your credit score is to avoid too many loan application. Each rejection makes its way to your credit score and hampers it. A few rejections are normal, but applying to places where you have very slim chances of getting your loan approved can be dangerous.
Think carefully and apply only in places where you think you might have a considerable chance. By following these steps, you might improve your credit score, and it will become even easier for you to obtain a personal loan.
2. Look for the correct provider.
With the development of financial institutions and the accessibility that they have for most people, you might find that there is an array of options available for you when it comes to selecting a loan provider. There might be different durations of repayment, different eligibilities and other conditions involved.
Some might specialise in a particular kind of loan like a personal loan or debt consolidation, or even education loans. By going through each plan separately, you can then round up on one loan provider that best suits your requirements.
Some people even consult their banks or other financial institutions before submitting their application. This is done mainly to know whether their loan has chances of being approved or not.
3. Check your eligibility
Apart from the requirements mentioned above to be eligible for a loan, there are other categories you need to consider before applying. These can be dependent on the amount you want to borrow. If the amount is considerably lower, you might be eligible despite an extremely poor rate.
But if the amount you are borrowing is higher than usual, then you might have to go through a more difficult route. There are options where you can choose to go for a high-interest loan, but these depend heavily on your income status and the ability you have to pay the money back. To be eligible for high-interest loans can be a tough thing, but it isn’t impossible since the main reason you are going for a high-interest loan is your bad credit.
4. Compare loans and interest rates
This is where loan websites and platforms come in. With the help of their easily comparable loans that do not just compare different types but also different companies, you can choose a loan that is best for you.
While choosing a loan, keep in mind the interest rates and duration. These are the most important categories that you have to consider while applying.
5. Apply online
While applying, you will have to fill out one or more than one forms that will require you to provide more details about your income, employment, your credit standing, the purpose of your application, etc.
It is critical to be thorough while filling this form and providing all the required documents in the correct manner. Any anomalies or discrepancy in your form can result in your loan application being denied. The repercussions for this can affect your credit rate, and in turn make it more difficult for you to obtain a loan.
However, you are at an advantage now as compared to a few years back. Now that all applications have become online, the whole process of applying for a loan has become very easy from the comfort of your home. Right from your personal details to employment history, ensure that everything is filled out properly, and you should be good to go.
Most people also choose to go for payday loans. These are of huge help when it comes to filling in the gaps between your short funds at the moment till the time you get your next salary.
They are unsecured and short term loans that can be paid off in a duration of 7-60 days. Even in terms of payday loans, it is important to consider the risks and interest rates before actually taking out the loan.
All in all, it is possible to borrow up to £50,000 without any collateral for a personal loan. You might have to go through a longer process and even end up paying high interest, but these types of loans are perfect to secure you during a rainy day.
As for the duration, you can take a loan for up to 15 years and repay it at a pre-determined interest rate. To apply, you can visit different websites to check which suits your requirement the best and then opt for a loan accordingly.