Top Tips for Getting a Loan With Bad Credit or a CCJ

| April 12, 2014

Millions of people in the UK alone have found themselves struggling with debts, bankruptcy and county court judgements over the last year. With economic times being tougher than ever, it seems as though bad credit is something that we can all expect at some point. However, there are times when we desperately need to borrow money for something and that bad credit is stopping us. If you’re finding it difficult to get a loan with bad credit or a CCJ then here are some top tips from the experts.

Pay back previous debts first

This is the one piece of advice that any financial expert will tell you, if you’re thinking about getting a loan with bad credit. If you don’t pay back your previous debts first then applying for a loan could be futile. It can also get you into further debt and therefore more trouble. Even if you make small payment arrangements with your lenders, you’ll find that your credit score can rise from this simple gesture. The fact that you are paying people back will look good on you and can increase your chances of getting a loan. If you’re using your loan to pay back the previous debts then still go ahead and set up payment arrangements with your creditors. It could be as little as ?1 a month if they understand you’re going to pay it all back off with a debt consolidation loan.

Guarantor loans

There’s a new popular loan type available which is perfect for those with bad credit or a county court judgement. Guarantor loans are not based on your credit history, they’re based on the credit of someone else. It could be a friend, a family member or even a work colleague; as long as they’re happy to vouch for your loan amount. They will have to sign loan documents saying that they trust you to pay back the loan and that they guarantee to pay it if you don’t. Companies such as Buddy Loans have their own guidelines as to what a guarantor must be able to provide, from being a homeowner to earning a certain amount per year. This is a useful option if you’re finding it difficult to get a loan for yourself, and have somebody who is willing to guarantee credit for you.

Other types of loans for bad credit

There are various other types of loans for bad credit; some better than others. When you search for these types of loans you’ll more than likely end up finding brokers and comparison sites over anything else. Loan comparison websites can be useful, but they’re not always entirely accurate in terms of your chances of acceptance. Brokers can be more accurate but they may charge fees in order to find you that perfect loan. A couple of other loan types for those with bad credit include:

  • Logbook loans – This is where a loan is secured against a vehicle that you own, for the amount that the lender says your car is worth. The amount they give you is normally a lot less than you expect your car to be worth, but this can be handy for a quick cash fix. Not paying back this loan can get your car towed, however, so be careful.
  • Doorstep loans – These loans rely on ‘agents’ who are able to lend the money and then visit your home in order to collect repayments. You can expect an interview with one of the agents first and they will decide whether or not you are eligible. The agent will then visit your home, at a time that suits you, in order to collect each repayment. Loans like this have extremely high interest rates, usually.

Whatever you’re considering a loan for, make sure you’ve fully understood the consequences of potentially getting into more debt. The last thing you want to do is make yourself bankrupt or worsen your credit score anymore! Always read the small print and make your payments on time, if you want to stay out of the red.

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Category: Loans

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