If you have a poor credit record then you may worry that you will only be able to get bad credit loans and will not be able to get any standard loans. This may or may not be the case and it will very much depend on the lender and your credit record.
How a
credit record works
In the UK a credit record is just a list of items.
It is not a score and there is no ranking system. This means that it is up to
lender to take a look at the information and make up their own mind about how
risky they think you are to lend to. The credit record will show things like
regular payments that you make such as utility bills, rent or mortgage and
phone contracts. It will also show any missed payments and loans that you have.
It will also show your income and if you are employed or self employed. The lender
will use this information to work out how much of a risk they think that you
are. Some lenders reportedly like to take on borrowers who have missed some
repayments in the past as they do not mind them doing this as it means they
will get more money due to the fees associated with missed repayments. However,
this is not a good excuse for missing a repayment as not all lenders would
agree with this and it could cost you a lot of money if you do this. It is also
worth knowing that if you apply for a loan and get turned down this will show
up on your credit record. This can put off other lenders especially if you have
applied for a lot of loans as it can look like you are desperate for money.
How lenders use them
So a lender such as PaydayLoansOnline.com will look at a credit record to decide whether they will lend you money. They will calculate how much of a risk they think you are. If you have no utility bills in your name, pay no rent and have no mobile phone contracts then they may be reluctant to lend to you. This is because there is no evidence that you are able to make regular payments. If you have had a loan in the past and paid it off when required then this could go in your favour as it will show that you are capable of repaying a loan. If you have unpaid debt, records show you have missed debt repayments or bill payments or have any CCJ’s then this will generally go against you.
Each lender will use a slightly different method to calculate your risk and will use different factors to calculate it and therefore this will mean that it is difficult for you to know what you might be able to do to change your credit record. However, you will definitely improve your record if you make sure that you have no outstanding debt. You also need to make sure that there are no mistakes on your credit record as this could cause you to be turned down for loan that you would otherwise have been accepted for.
What
loans are available
As lenders look at different things when they are
checking your credit record then it means that you may be able to get a
standard loan even if you do not think that you have a very good credit record.
You may not be able to easily predict what they are looking for and so this
could mean that you could be more likely to be accepted than you think. There
could be all sorts of loans available to you. The best thing to do is to
approach lenders via their customer service department and ask them what
chances you have of being accepted for a loan. This is better than applying for
the loan right away as if they turn you down it will not look good on your
credit record. They may be able to let you know what the chances of them
accepting you are before you apply. It is worth being aware that if a lender
sees you as a higher risk; because of your credit record, then they might offer
you less favourable terms. It is likely that they will charge you more interest
than the advertised rate so that they get more money to cover their losses if
you default on a repayment.
You may find that it will be easier to borrow small amount of money rather than larger ones as the lender has less to lose so is willing to take on more risk. You may also find that if you have some collateral to put against the loan, such as a house or vehicle that this will help you.