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Borrowing loans for bad credit

A bad credit rating can make it hard for you to borrow money. If your credit score is lower than average, lenders may be reluctant to offer you competitive rates. Plus, individual hard credit enquiries may cause additional damage to your credit score.

Such situations usually lead people to resort to ‘no credit check’ loans. Is it possible for a lender to lend money without checking your credit history? Read on to find out more. This article also provides information on how to apply for a personal loan online without a credit check.

Short term loans: loans for bad credit

With a low credit score, finding a decent loan offer can be challenging. If you have a low credit score, you may have to pay higher interest rates. It is still possible to obtain a loan from a bank, building society, or credit union with a poor credit score. Plus, Credit Unions have nominal interest rates on loans reaching as low as 3%. However, Credit Unions require savings accounts from their members to join.

There are several financial institutions where you can find both online and offline loans for bad credit:

  • High-street banks
  • Building societies
  • Credit unions
  •  Online lenders
  • Loan broking platforms such as Loan Broker
  • Dedicated lenders
  • Secured loan providers
  • Grants or schemes from the government

Prior to granting you credit, every lender will conduct an extensive credit check. Once your loan application has been processed, the decision to lend is up to them.

Loans for bad credit: Should I borrow personal loans with no credit check?

You can certainly apply for no credit check loans; however, there’s a myth surrounding this financial solution which we have already debunked. Regardless of the lender’s claims, every FCA-approved lender is bound to perform a hard credit enquiry on your credit file. Thus, your credit score may not affect the lender’s decision to lend, but your credit history certainly will.

In general, loans to individuals are more expensive than loans to businesses. Although, you will be charged higher interest rates if you have a low credit score. If you have a subpar credit history, you may not be able to qualify for a low-interest personal loan.

Where can I borrow loans for bad credit?

Loan Broker, an FCA-approved credit broker in the UK, has certified lenders that provide loans to people with bad credit scores. Compare different loans for bad credit with Loan Broker to find your ideal personal loan.

How to apply for online loans for bad credit?

  • Work out a loan amount: Step one involves establishing the borrowing process. Evaluate your income, expenses, and affordability to determine how much you can borrow. Stay within your income and borrowing limits – you don’t need to borrow more than your income can cover.
  • Self-assess your credit score: When you check your credit score beforehand, you can get a general idea of the offers your credit profile would receive. Maintaining a regular check on your credit score will also allow you to address any discrepancies. Disputing an erroneous record can boost your credit score by a few points.
  • Apply online: Applications submitted online are usually quicker and easier. Just make sure that you fill out your application accurately. In addition, you must provide details about the loan amount and repayment term. 
  • Compare loan offers: Your lender will provide you with pre-approval offers once you submit your details. A hard inquiry may be required after you select a suitable offer. Loan Broker offers a variety of personalised lending products, depending on your credit rating.
  • Complete your agreement: Following the approval of your loan, you need to complete the contract formalities. Make sure you read your contract and fine print carefully. Is there a fee for early repayment? Do you have to pay any additional fees if you miss a payment? Avoid hidden fees by carefully reading the contract before signing.
  • Wait for disbursal: The lender will deposit the money in your bank account when you sign the loan contract. Depending on your bank account provider, you may have to wait a couple of hours or even days to complete the transaction. After you have the money, it is up to you to choose how to spend it. However, it would be best if you spent it judiciously.
  • Ensure timely repayments: Short-term personal loans can help you boost your credit score if you use them responsibly and pay your debts on time; your credit score increases. Using automatic monthly payments, you can make sure you repay your debt on time. Stay on track with your payment strategy until you have repaid the loan. 

Conclusion 

Using an online loan application is convenient, fast, and straightforward. Some websites use clever marketing techniques to market their products. No credit check loans are one example of such a gimmick.

However, it’s important to understand that a lender who’s FCA approved will always look into your credit history. Nevertheless, some lenders can be more receptive to bad credit borrowers.

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