Bad Credit Loans compared
Your guide to all Personal loans
Personal loans are suitable for those with any type of credit rating and are useful in times when you need a debit card when you don't have a bank account.
Credit Crunch calls for No Credit Check Loans
With the tightening of credit during the recession, people are now more aware of their finances, and are turning to companies providing no credit check loans that don’t penalise them for their previous mistakes.
A recent study showed that 66% of adults polled said they are now better at managing their money than they were a year ago. It seems that the credit crunch has caused numerous people to be more aware of their finances. However, for a lot of us the mistakes have already been made during a period when credit was easily obtainable. This caused many of us to over-commit ourselves financially, leaving us unable to pay the bills when mortgage rates and other household bills increased, and leaving some with a poor credit history. For countless people it is a vicious circle; they can no longer obtain credit to help them out of any temporary financial difficulties, meaning that they are getting further behind with their bills.
So how do you obtain a loan if you have a poor payment history?
When you apply to a bank for a loan the bank will carry out a credit check on you. In order to do this they will contact a credit reference agency that keeps details of consumers’ credit ratings. Various factors can adversely affect your credit rating, such as, getting behind with previous loan payments, having County Court Judgements, or having frequent searches. Searches are carried out when you apply for credit. This basically means that the lender asks the credit reference agency to report on your credit status. As these searches are recorded by the credit reference agency; if there are a lot of searches on your credit records, this indicates the likelihood that you have applied for credit many times and been turned down.
However, increasing numbers of companies are now offering ‘No Credit Check Loans’ as a solution to people with a poor credit history. These are easier to obtain because the companies offering them do not carry out a credit check on you. They do carry a higher rate of interest but offer a number of options:
Secured Loans - These are when the lender requires some collateral, such as a house or car, to secure against the loan in case of default.
Unsecured Loans -These usually carry a higher rate of interest than secured loans because of the increased risk to the lender. Included amongst these are ‘Payday Loans’, a product developed in recent years, which allows you to borrow a small amount quickly and easily. In return you have to pay a one off, high interest charge, and you refund the total amount when your salary is credited to your bank account. To apply for a payday loan, you just need proof of your income and a post dated cheque, or your bank account details, so that the amount can be transferred to the lender when your salary is paid into your account.
As well as providing for unexpected circumstances, ‘No Credit Check Loans’ can also help you to rebuild your credit rating, as long as you do not default on your repayments.