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5 solid tips to obtain poor credit loans in the UK
With a tough economy and an unstable market, it’s not at all difficult to suffer from bad credit in the UK. And when you are someone who has a problematic credit history, obtaining a loan seems like an impossible to succeed on. Luckily, there are poor credit loans in the country that can help you obtain the financing that you need despite your adverse credit rating.
Poor Credit Loans in the UK
Banks, credit unions, and other traditional financing institutions tend to shy away from borrowers who have poor credit histories. These are individuals whose credit cards have been closed because they failed to pay back their balances or those who have mismanaged debt in the past.
While the borrower certainly has the option to hide any in information pertaining to their past credit failures when they apply for a loan, banks and other lending companies will still be able to discover an applicant‘s credit history with ease They can go about this through a method known as credit check wherein they will uncover a person’s financial history through a simple click of the mouse. Once they realize that a certain applicant’s credit history is full of negative marks and red flags, a rejection is almost always automatic.
If you are someone who has a problematic credit history, you can follow these 5 proven tips to obtain poor credit loans in the UK.
1.) Offer collateral
The easiest and most effective way to obtain poor credit loans in the UK is through the use of collateral. All you need to do is show the lender legal documents that will prove your ownership of certain assets like a property or vehicle. The asset which will serve as security in your loan deal is known as collateral and its presence will help you access large amounts of credit for long repayment periods and competitively low interest rates even if you have an adverse credit rating.
Bear in mind however, that when you apply for poor credit loans that have collateral, you will need to pay back the loan according to the agreed terms and conditions. If you don’t, the lender has the legal power to size the collateral and sell it to recover the money that it lost.
The type of financing is the best way to mitigate a bad credit rating although it does have its own risk. It would be wise to opt with poor credit loans with collateral only if you are 100% sure that you have the financial capacity to pay back the money that you owe.
2.) Provide a guarantor
This is also an effective tip that you can use to obtain poor credit loans with adequate borrowing amounts and flexible borrowing terms. The process works with you, the primary borrower, finding a suitable guarantor who will co-sign the loan agreement for you. The guarantor must be someone who holds a solid credit rating and a reliable source of income and must not also be financially linked to you e.g. a spouse. This is because the guarantor will be the one to cover the loan’s repayments in the event that you are unable to.
Obviously, you will need to hold a close relationship with your guarantor so he or she will agree to carry its serious responsibilities. It also has the potential to damage the relationship that you share with the person if you fail to keep up with your payment duties.
3.) Deal with your past credit issues
If you can’t source out a guarantor or secure collateral to give you the best chances of obtaining poor credit loans in the UK, dealing with your past credit problems is the only way to enjoy a greater chance of getting approved for funding. There is simply no way around it.
You can consider asking your lender to construct a new payment term that would be suitable to your present needs and circumstances. This way, it would be easier for you to settle your past and existing debts. If you manage to resolve this, then obtaining poor credit loans and other financing options would be a whole lot easier in the future.
4.) Seek out online lenders
Banks, credit unions, and other traditional financing institutions might not be the ideal places to shop for poor credit loans. After all, conventional lenders are quite stringent when it comes to lending money to applicants and they will always favour those that have strong credit ratings.
With that being said, the best place to shop around for poor credit loans in the UK is through online lenders. These new, alternative lenders are willing and able to provide financing to people who have had credit issues in the past. In fact, there is almost every kind of financing option and solution that you can enjoy from online lenders regardless of your qualifications. Whether you are unemployed, have bad credit, or even both, there is always an online lender with its own loan package that will cater your need.
5.) Weigh your options carefully
If you scour the web for potential online lenders and poor credit loans, always focus your search on the ones that provide the best deals. Make sure that the kind of loan deal you are applying for provides:
The best available terms that is perfectly suited to your needs and present circumstances
The lowest APR so you can enjoy the least possible cost
Easy qualifications so it would be easier for you to get approved
Normally, poor credit loans tend to have higher interest rates than other forms of credit especially those offered by banks and credit unions. However, it may only be the financing options you can consider if you are someone who has bad credit.
Try to consider unemployed loans as a viable means for you to enjoy the kind of funding that you are looking for and an opportunity to rebuild your credit rating as well. So long as you manage to make the proper repayments on time, it will help you obtain a much more favourable credit standing that will allow you to access other loan financial products in the future.