With bad credit score falls your credit worth. Financial institutions start to reject your loan application as they find you risky enough to lend the credit. And it becomes difficult to raise even the short-term loans with bad credit from the conventional sources.
There could be several reasons for bad credit score and it is possible to restore the score after mending those reasons. But in the meantime, when sudden financial or medical expenses emerge you would need immediate disbursal of loan. These are the times when you cannot wait to borrow.
If you too find yourself in such troubled times, you may consider contacting several financial institutions which provide bad credit loans in the UK. However, you should be careful about following five points when you want bad credit loans.
- Deal with legitimate lenders.
While searching for bad credit loans, it is important that you deal with only legitimate lenders. Contacting FCA registered brokers is one way to ensure a fair deal. You need to be aware of the presence of several loan sharks in the UK market. A lot of financial companies operating online offer easy loans for people with bad credit situation. But they charge a hefty fee for late repayment or refinancing of the loan. You need to be wary of them as without a proper plan you may hit your credit score even harder.
2. Go for bad credit Short term loans.
You can contact a broker and find out the available bad credit loans in the UK. The broker would help you find a customised deal according to your credit situation. Whether you seek an unsecured loan for a few weeks or the one for a few months, and that too without a guarantor or a co-signor, a broker can help you avail an affordable deal.
3. Fixed instalment loans vs Payday loans
Despite the urgency of cash, it is advisable to not go for a cash advance or payday loans. As swift is the loan disbursement in payday loans as is the repayment of the loans. The entire loan amount is required to be paid within next few days.
While with a fixed short-term loan, it is easier to plan repayment as loan amounts are divided into instalments. As the burden of repayment is shared, it gets easier to pay back the loans without a fail.
4. Have a repayment plan
The purpose of bad credit loan should never be to fill the cash crunch but to evade it from your life. Before you apply for a loan, it is important that you ensure that you have a strategy to pay back the loan. The loan should be an affordable one.
5. Improve score
Being a short-term loan, the stress of debt stays for a shorter period of time. As you repay the loan, the score jumps too and raises your credit worth.