Bad Credit Loans - UK-Money.com

If you have a poor credit history you can still take out a bad credit loan

By the time you have read this article a further £1 million will have been loaned to British consumers. Britain’s personal debt is growing by £1 million every four minutes! According to Datamonitor we are addicted to plastic, with more credit cards than people in the U.K. We take out loans when we can’t afford to buy luxury items. We take out store cards whenever the mood takes our fancy. With so many temptations it’s no wonder that six million families in the U.K are struggling to keep up with credit commitments. Before long, many of us will find ourselves defaulting on loans or skipping credit card repayments, not realising that this has an adverse affect on our credit score and credit history.

If this has happened to you, this means that you are likely to be rejected from many standard forms of credit and may have to turn to a bad credit loan for help. Bad credit loans are available for people who have a poor or non-existent credit history, CCJ’s, have been bankrupt or been refused credit in the past.

The low down on bad credit loans to keep you in the know:
There are two main types of bad credit loans. These are bad credit unsecured loans and bad credit secured loans. As long as you keep up the monthly repayments on such a loan it will help to improve your credit rating.

Bad credit unsecured loans

1. There are fewer lenders willing to lend unsecured money to people with bad credit histories.

2. As the lender is taking a big risk in giving someone with adverse credit a loan that is not secured against anything, the interest rates will be much higher than a standard personal loan.

3. The lender may set fixed or variable interest rates so you need to check! It may be wise to stick to a fixed rate so you know just how much you will have to pay every month. The last thing you want is for the loan to have another detrimental effect on your credit score.

Bad credit secured loans

1. If you are a homeowner you are far more likely to qualify for a bad credit loan that can be secured against an asset – your home. You must think long and hard before taking out the loan as you are putting it at risk of repossession if you cannot keep up the repayments.

2. If you do not have any equity in your home, this means the value of your house minus any mortgages or other loans you have secured against it; you will not qualify for this loan.

3. The interest rate for a bad credit secured loan is likely to be far more competitive than an unsecured loan, making it cheaper for you to borrow money.

4. You can borrow up to £500,000, depending on your financial status and equity available.

What other terms can a bad credit loan be known as?

1. Bad credit home loan.

2. Bad credit personal loan.

3. Poor credit loan.

4. Adverse credit loan.

Where can you obtain a bad credit loan from?

As it is estimated that 1 in 4 people in the UK have some form of bad credit history, many lenders are realising this and have developed a range of secured and unsecured loans for people with adverse credit histories.

For a bad credit unsecured loan you cannot rely solely on high street lenders as many of them will not accept people with less than perfect credit histories. It is wise to investigate if there are any that do. Also look online at the raft of sub prime or non status lenders; these are companies that specialise in providing bad credit loans.

For a secured bad credit loan there is a raft of willing lenders out there. Check with your current mortgage company for starters. You should investigate which high street lenders such as banks and building societies may be able to help and talk to sub prime lenders to which can offer the best deal for you.