If you are currently looking for a loan, you need to know what your credit score is, and whether lenders would view you as needing bad credit loans.
Bad credit means having a poor credit score. Your credit score is a three digit number that indicates how reliable you are at handling money. It is given to you by one of three Credit Reporting Agencies (CRAs) in the UK – Experian, TransUnion or Equifax – and is based on current and past financial information about you. Your credit score is used by lenders when they are deciding whether or not to lend to you.
If you have a poor credit score, a lender may decide not to lend to you, unless they specifically offer bad credit loans.
Your credit score can be affected if you have missed payments on bills such as mortgage, domestic bills, loans or credit cards or paid them late. Or if you have recently applied for a lot of credit in a short space of time, or have had applications rejected, this will also impact your credit score.
However, some lenders do offer personal loans for bad credit. From a borrower’s point of view, the most important thing when considering bad credit loans is to ensure that you can comfortably afford the repayments. Otherwise, you could damage your credit score further. However, an advantage of loans for bad credit is that if you manage your loan well, and keep up with your repayments, this will be visible to the CRAs and your credit score will gradually start to improve.
So if you have poor credit and are looking for a loan, be wise and get the best deal possible, to ensure that the loan makes your financial situation better rather than worse.
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