Bad credit loans: things you should know
There’s a lot to consider when searching for a bad credit loan, and it can be overwhelming. To help you through the process, here are some things that you should keep in mind when searching for a bad credit loan.
The term ‘bad credit’ is somewhat blurred and unclear, so we will help to clarify this for you. Normally when people talk about bad credit loans, they usually mean they are looking for a loan that is available to them, irrespective of their struggles with repayments in the past. Having bad credit does not always mean that your credit history is bad; instead, it might be that it’s less than perfect. You may find there are various doorstep lenders or Short-Term High-Cost Lenders who are happy to offer you loans even if you have a less than perfect credit history. However, it is important that you keep in mind that their interest rates are likely to be higher than the traditional high street lenders – this is also true for Oakam loans.
At Oakam, having a weak credit score does not necessarily mean we won’t lend to you – we do consider customers with poor credit history. We use different integrations, such as open banking, to get an idea of your financial position, as a whole, before deciding upon your loan application. If you’re looking for a bad credit loan, then a short-term loan from Oakam may be an alternative, subject to terms.
Why it is difficult to obtain a loan with bad credit?
Your credit score comprises of the information about you that is held by credit agencies, based on your credit history. A credit file shows records from the past six years of your financial life, including any missed payments or County Court Judgements (CCJ), which can harm your credit score. Most lenders are interested in your most recent financial situation as it will give them a clear picture of how safe it is to currently lend to you. It’s for this reason that a bad credit score can classify you as a riskier borrower, which consequently means that some lenders might choose not to accept your application.
How to check your credit score?
It is your right to have access to your full credit file – this can help you to spot what is affecting your credit score if you are looking for a bad credit loan. If you find any errors you can ask for them to be rectified, which in turn positively reflects on your credit file and will help to improve your credit score.
There are various credit agencies in the UK that offer credit score checks. Below are some platforms that we would suggest using:
The above agencies provide access to your credit score for free, but they may ask for a payment if you would like a detailed report of your credit file. However, there are a few agencies that provide your full credit file for free, including:
Can you get a loan with ‘bad credit’ from Oakam?
At Oakam you can apply for a shot term loan, which might suit some people looking for a bad credit loan. As a responsible lender we do run a credit check, however, a poor credit score does not necessarily mean you won’t be approved. Our decision is based on the information provided by you during the application; if you have been turned down by other lenders in the past due to poor credit, we might be able to help you.
What to consider before applying for a bad credit loan
How much is needed
Borrowing a higher amount can mean a lower interest rate, however, you might not be able to repay the amount, so be careful. Never bite off more than you can chew.
How long you want to borrow the money for
Evaluate what is important and how you will be repaying the loan. Long term loans may have lower repayments; however, you will end up paying more in interest over the repayment period.
Affordability to repay
This is very important to know, especially with a bad credit score, as you don’t want to damage your score further by not being able to repay the loan on time.
What are the advantages of a bad credit loan?
Bad credit loans are available when you cannot get help from elsewhere traditionally.
As many providers of bad credit loans conduct allow offline applications, they can be less intrusive, more efficient, and provide quicker decisions when compared to traditional or doorstep lenders. Applications can be speedy and more convenient, as they are completed online.
Quick access to money
There are various lenders that may be able to transfer the funds or get cash to you within 24 hours.
Improving your credit score
If you manage your loan properly, make sure to make your repayments in time, and use loans responsibly, it can help you build your credit score and provide access to better credit rates in the future.
Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk. To get debt advice information, we advise seeking independent advice from an impartial service like Citizens Advice or a qualified Financial Advisor.