Looking for loans for people with bad credit? We have options that are specially designed for many people. You might be eligible even if you have a less-than-perfect credit rating. Even if you’ve been rejected by other lenders, don’t despair! You could be eligible for a loan with Loans institution even if you think you have a bad credit rating.
What are loans with bad credit?
Bad credit loans are loans for people with bad or poor credit. Bad credit loans are designed for people with a credit report that’s less than spotless, or who have little to no credit history.
These are some of the reasons why you might be considered as having bad or poor credit:
- Had difficulties with your finances in the past? Not making the payments due, on time, on any of your credit agreements such as mobile phones, utility bills and credit cards will impact your credit score.
- If you’ve had other financial difficulties which have ended up in defaults, county court judgments or if you have even become bankrupt, then these things will also show up on your credit file.
- Not had any credit before?
loans for people with bad credit uses
Bad credit loans can be used for just about anything that a personal loan can. Typically, however, they’re not suitable for debt consolidation given their higher cost. You may use a bad credit loan to purchase a car which will usually be used as security.
Get approved for loans with bad credit
If you have bad credit, a lender will base its lending decision on two factors; affordability and the availability of security. To increase your chances of approval you should make use of a specialised bad credit lender like Loans Institution.
Bad credit loan security
For bad credit loans guaranteed approval, you need to place an asset as security. In this way, if you default on the loan, the lender will have the right to repossess the asset as compensation for the default.
Since the risk for the lender is lower when collateral is available, you’ll stand higher chances of approval. You may even be able to secure a lower interest rate. This option is risky, but it can be quite helpful as long as you’re able to pay back the loan.
How do you apply for a loan for poor credit with Loans Institution?
We understand that many people can have poor credit and still be financially responsible. Instead of proposing a bad credit loan that puts you into a bigger hole, we offer credit to help you.
- Speedy -We pride ourselves on offering a quick and easy poor credit loan alternative. You could get cash into your bank in under 90 seconds, once approved . No need for a long and anxious wait.
- Borrow what you need – You can apply for up to €/£85,000 and use what you need from your approved credit line. Unlike a loan for bad credit, you’re always in control.
- Borrow £/€5,000 – £/€85,000
- Repay over 12 – 72 months
- Instant approval
- UP to 3,5%
Representative example: Amount of credit £5,000 for 36 months. Interest rate: 3.5% pa (fixed). 36 scheduled monthly payments of £149.64.
If you do take out a loan with us, your credit agreement will show up on your credit history. Making all of your monthly repayments on time demonstrates good repayment behaviour. That could help to improve your credit score in the long run.
Requirements to apply for a bad credit loans
In order to assess your eligibility as a loan applicant, the lender will check your credit file. Each lender has its own criteria so you may be able to qualify even if your credit file is not completely blemish-free.
You should definitely go over your credit file before you make a loan application. You can request a free credit check once every year from the following credit agencies; Experian or Equifax. You should watch out for errors. If you find any, have them fixed right away.
Since the eligibility requirements of lenders vary, you’ll benefit from making use of a loan comparison service or a broker. If you make multiple applications to various providers your credit score will suffer considerably.
To qualify for a bad credit loan you must:
- Be 18 years of age or older
- Have a steady stream of income
- You must have been employed for the full 6 months preceding the application (or 12 months if self-employed)
- Be able to prove affordability
- For some loans, you’ll need to provide sufficient security
Supporting documents required for bad credit loans
- An acceptable form of ID
- Proof of income in the form of recent payslips
- 2-months worth of bank statements
- Proof of address (a utility bill)
- Various documents related to your specific form of security
What is ‘bad credit’?
Having ‘bad credit‘ means your credit history is viewed negatively by companies.
There are a few things that can be perceived as bad or poor credit. The term “bad credit” doesn’t necessarily mean that your credit history is poor.
If you’ve ever been rejected by a bank or direct lender due to “bad credit”, it might just be that your credit history does not meet their lending criteria. Perhaps you missed a credit repayment at some point. This could have lowered your credit score, which could make it more difficult for you to get approval for a loan or new line of credit.
If you’ve only missed an odd payment or two, you might not be judged as high-risk by most lenders. But if you’ve missed lots of payments, been referred to a debt collection agency, filed for bankruptcy or maxed out on your credit cards, new creditors might view you as a high-risk customer, which may make it difficult to get credit at the lowest APR rates.
A number of direct lenders offer alternative bad credit loan solutions, including loans for bad or poor credit and for those with a less than perfect credit history.
What is a ‘credit score’?
We’ve talked about ‘bad credit’ but what’s a credit score and how does that dictate whether you’re classed as having bad credit? Your credit score is a number that is calculated from the information held in your credit report. Lenders will typically use this score (along with other information) to evaluate your ability to pay back a loan or line of credit. A higher score indicates a greater propensity to repay. In other words — as the creditor sees it — a higher credit score makes it less risky to loan to you.
There are three main credit reference agencies – Experian, TransUnion and Equifax which all use unique score systems and algorithms to calculate your credit score. Therefore, a ‘good’ score interpretation and a ‘poor’ score interpretation may vary widely, depending on which credit bureau you view your score on. As such, it’s important to read their unique explanations of what your credit score means.
Advantages of Bad Credit Loans
- Being able to access cash when in dire need is a huge relief for most people. Particularly for an individual with a poor credit score, getting approved for a loan application to pay for emergency financial needs can be beneficial.
- Although some lenders carry out checks on credit history, these are not usually hard checks that further impact your credit score.
- Most personal loan providers allow you to apply for online payday loans for bad credit. This process is quick and easily accessible. Also, lenders do no go through lengthy processes like traditional banks and financial institutions, neither do they request bulky documentation for bad credit loan applications.
Disadvantages of Bad Credit Loans
- The interest rate attached to bad credit loans is usually high. Loan providers charge lending fees for bad credit loans. These high-interest rates account for the high risk of giving out a loan to individuals with a poor credit score.
- These types of loans should be explored only if necessary. You should be in a position to pay back the money with any interest. The penalty fees for defaulting on bad credit loans such as payday loans are high.
- If taken out of proportion, bad credit loans may lead you into a cycle of debt. It is recommended to explore other cheaper options of accessing cash, either from friends and family or through a credit card.