Your financial health runs parallel to your social uprightness. Most people rate your mental acuteness with escalating credit worth. A declining credit score thus hurts your self-esteem and you ought to use some essential steps to improve your score. However, it is common to succumb to certain myths regarding bad credit loans and lose the will power to restore the credit condition.
Here goes a quick rundown on 5 common myths regarding bad credit loans.
Myth 1: Availing bad credit loans is entering a debt trap.
FACT: It would be thoroughly wrong to consider bad credit loans as a means to enter a debt trap. However when raised judiciously, short term loans for bad credit can improve your score. Lack of adequate cash flow is eminent with bad credit score. If you cease to raise a loan, soon you would find yourself failing to repay the pending instalments. Likewise, rolling over credit card balance would attract very high interest rate and remarkably multiply the burden of debt on your shoulders. Thus, by not arranging for required funds on time you would attract the debt trap.
Myth 2: You should opt for direct to lender deals as it saves you money.
FACT: With bad credit situation, availing a loan is more of a tricky job. When you go out to search for a direct to lender deal, there is high risk of dealing with loan sharks. There are several lenders who have stringent terms and conditions to recover their dues. Sometimes as swift is the loan disbursement, as risky are the terms of recovery. With bad credit health it is important that you raise the loan after considering all the aspects related to loan repayment. Herein if you choose to use an FCA registered broker’s advice, you could protect yourself from loan sharks. Besides FCA is a financial watchdog in the UK. With a registered broker by your side, you could be assured of availing the best deal available in your County and that too from the convenience of your home.
Myth 3: Repayment of debts is the only solution.
FACT: The statement is regressive and an over statement. While repayment of loan is one of the major factors that contribute to your credit score, it is not the only factor that can restore your credit health. It is indeed not even practical to arrange for whole of the debt amount to become debt free. As your credit situation worsens, you should look for affordable installment loans for bad credit in UK. With easy instalments you can repay the loan and build good history. Rather than subduing whole of the debts collectively, you should follow a planned approach and repay the most expensive loans first, followed by less expensive loans.
Myth 4: You should never opt for secured loan against your home.
FACT: Unsecured loans are always more expensive than secured loans. With bad credit situation, using home equity or some other collateral you can avail faster loans at better rates. While seeking bad loans, the focus should always be on availing an affordable loan on instalments so that you could successfully repay the loan. If you could repay diligently, there is no threat to your assets, whatsoever.
Myth 5: Close all credit cards to lower the spending.
FACT: You should never close all the cards as closing old cards with positive history can hurt your score. Close only high cost cards to improve your credit health.
Busting these myths, you can confidently apply for loans with your bad credit health and make a firm resolution to restore your credit score and become debt free soon.