‘Too many loans and too little to sustain’ is one of the direct outcomes of bad credit health. While on one hand, you face an incessant cash crunch, on the other hand, you seek more loans to repay the pending bills. This is a cache 22 situation and you need to break this debt trap or else you may soon perish and lose your assets to pay back dues.
With the advent of FinTech market in the UK, it has become a reality to borrow with poor credit score. However, before you decide to use the same you must be equipped with required knowledge and capacity to leverage it in your favour.
You need to have a well defined financial plan before you decide to pick up a new big-ticket loan. It is important to borrow loans for poor credit strictly according to your credit repayment capacity.
Let’s outline how to successfully leverage loans to stay afloat during financially bleak days.
- Evaluate your credit situation
Before you contact an FCA authorised loan broker or begin your online search for bad credit loans, pull out your credit report from any of the top credit bureaus. This can be done online without any cost and it would not make any footprint in your credit report. You can also consider seeking a professional loan broker’s advice to evaluate your report. They can help assess your credit repayment capacity. Make note of your total monthly liabilities and income sources. This basic information would help you make an informed decision.
2. Outline the Needs
After acknowledging your repayment burden, it is important to outline your credit needs. You must carefully calculate the cash gap you need to fulfil. Add your current debts with the additional requirement to figure out your new monthly repayment burden. You may require to narrow down your credit requirement to match with your repayment capacity.
3. Compare before you choose
It is recommended to use an FCA authorised loan broker’s customised advice before signing a deal. Brokers are loan introducers and would help you find out the available loans for you. Never surpass the step to compare and choose the deal.
4. Have a repayment plan
It is always rewarding to have a repayment plan before applying for a loan. You need to think
about at least two backup sources for loan repayment. For, successful repayment of a bad credit loan is a key to better health.
5. Focus on Credit Improvement
Although the additional loan is meant to fill the cash gap, you must also use it as a means to improving your credit rating. With the successful completion of this loan, your credit score would eventually improve and help you raise more funds in future.
The success of bad credit loan thus depends on your preparedness. From secured homeowner loans to personal loans, you can use any of the loans to stay afloat.