Dealing with a poor credit rating
If you have a poor credit rating, then you may feel that getting a loan at an attractive rate - or even getting a loan at all - is an impossible task. A few years ago this might have been the case, but getting a loan with a questionable credit record is relatively easy in today’s economic climate.
Because you have a poor credit rating, the interest rate on the loan is likely to be higher, due to the higher risk involved for the lender. Despite this, there are still great deals to be had, without paying over the odds for a loan.
To find the loan that you want at a good price, consider the following:
- Look out for specialists loan companies that are emerging increasingly, catering solely for people with poor credit histories. These companies are the most likely source for your loan and have the expertise to help. However, due to their specialist field and the potential risk involved, they can afford to charge higher rates or often demand collateral.
- If you have collateral that you can use to secure a loan, a bad credit history becomes less of a problem. If you can put your home or its equity up as collateral, then the lender knows that if you default they will still get the money. Although this means you will get the loan, remember that if you miss payments you are likely to lose your home. Other forms of collateral you can use are cars or high value electrical products.
- Unsecured loans are far harder to come by if you have poor credit, but if the bad credit is due to events in the past that were out of your control, such as business collapse or illness, then a lender may be able to help you. If you can prove that you are currently able to pay back the loan, you are more likely to be successful with your application.
- The quickest and easiest way to find a good loan deal is to look online. Technology has made comparing loan prices much easier and there are many sites that cater specifically for people with bad credit. But do not be fooled by the offers loan companies will make, as there are usually hidden charges involved. You need to get the right balance between good rates and clear terms to ensure you spend as little as you can.
So take the following steps to minimise your outlay:
- Closely examine what the deal you are being offered involves.
- Be honest with yourself about why you need the loan and what you can afford to repay - especially if you are using collateral to secure the loan.
This will give you the best chance of finding a loan to match your requirements, even if your credit history is poor.
get free advice about saving money