Everyone needs some extra financial help at times.
Whether you’re dealing with a sudden utility bill that you didn’t expect, or something’s gone wrong with your washing machine, and you need a new one – you won’t always have easy access to the cash you need.
In an ideal world, we’d all have plenty of money left in our emergency savings accounts that we could use when things don’t go according to plan. However, even the best budgeters today don’t always have enough cash to pay for solutions when disasters strike.
Unfortunately, it seems as though most of the help options out there for people who need money fast, are reserved for those with the best credit ratings. If you’re not one of the lucky consumers in the UK that happens to have a good credit score, it might feel as though it’s impossible to get the support you need.
The good news?
Small loans for bad credit exist to help get you back on track.
A small loan or short-term loan is a limited lending opportunity designed to tide you over until your next payday. Unlike traditional personal loans that allow you to borrow thousands of pounds over a period that can span a couple of years, these loans are for lower amounts and shorter terms.
Many direct lenders now provide small loans as an alternative to the credit card advances and expensive overdraft fees offered by banks. Usually, these loans can give you between £50 and £3,000, sent straight to your bank account after you complete a simple online form. As long as you have a source of regular income, and you’re willing to pay the money that you owe back fast, you should be eligible for a small loan.
Small loans are a good option for people who need to arrange money quickly and know that they’ll have enough cash to pay what they owe on their next payday. Although some providers allow for small loans to be paid back in instalments, you’ll need to double-check this before applying for your money.
“Bad credit” is the term used to refer to someone who doesn’t have the best financial history attached to them. Over the years, when you take out credit cards, same day loans, and other forms of financial assistance, your behaviour is monitored by a group of UK credit agencies. These agencies track how quickly you pay back your loans, whether you have any issues with repayments and more.
If you’re committed to making sure that you always pay your dues on time, then you’ll gradually earn points that add to your credit score, making you more attractive to future lenders. On the other hand, if you have any problems with your repayments, or even if you don’t take out any loans at all, you can end up with “bad credit.”
Ultimately, bad credit tells lenders that you’re more of a risk when you apply for loans. The worse your credit, the less of a chance you’ll have when it comes to being approved for payday loans, cash advances, and other lending options.
However, because everyone needs financial help sometimes – even people with a problematic credit history, some commercial companies started to create loans specifically designed to support people with bad credit. These loans come with lower borrowing amounts, shorter terms, and sometimes higher interest rates, but they offer a convenient way to borrow when you’re in a hurry.
If you have bad credit, applying for a loan with a specialist provider will improve your chances of being accepted for finance first time around. This means that you don’t have to worry about leaving numerous marks on your credit report by repeatedly applying for loans.
Bad credit providers believe that it’s essential to look at many different factors when deciding whether to give someone a small loan. Rather than just checking your credit history, they also conduct affordability checks, to see how much money you have coming into your bank and going out each month today.
To apply for a small loan with bad credit, you’ll need to fill out an online form with your chosen provider. Usually, this form will ask for basic information, such as your address, how long you’ve been a resident of the UK, and so on. You’ll also need to provide details on how much money you want to borrow, and what you want your term to look like. If you’re successful in your request for a loan, you should find out within 24 hours.
Small loans, bad credit, and good lending opportunities are rarely things that go together. However, as more UK citizens struggle to get the cash they need, bad credit providers are becoming increasingly appealing. These companies are willing to look beyond a borrower’s credit history and consider their full situation when deciding whether to give them money.
When you need cash fast, small loan providers who aren’t afraid of bad credit can be a lifeline. These organisations offer benefits like:
There’s even a chance that you can improve your credit score when you repay your loan on time. Although taking out a small loan in itself won’t improve your credit score, it gives you a great opportunity to begin improving your situation. If you choose to pay the money back all at once, then you won’t have to worry about something suddenly changing in your life that stops you from having enough money in your budget for monthly repayments.
The quicker you pay off your loan, the easier it is to show the credit agencies that you’re reliable.
One of the reasons why it’s possible for small loan providers to offer cash to people with bad credit is that they’re only offering a small amount of money for a short amount of time. This means that the amount of risk the lender takes on is much lower than it is with a traditional loan. However, that doesn’t mean that your lender can ignore FCA regulations.
The Financial Conduct Authority requires all loan providers to perform credit checks prior to approving a loan. This means that no matter how small or short your loan request might be, you’ll still need to sit through a credit check.
Anyone who offers to give you credit without looking at your history could be putting you and your finances at danger. If you want to make sure that your lending options are safe, it’s essential to make sure that you only use lenders that are approved by the FCA.
When you have bad credit, your loan provider will also look at a range of other factors to see how much of a risk you are to their operations. Usually, this means performing a basic affordability check. Affordability checks are surveys that ask you for information about your regular monthly income and your outgoing expenses.
If you already have a lot of payments that you’re committed to, including existing loans, then your provider may be less likely to approve you for your new cash advance. On the other hand, if you show that you can comfortably make the repayments for your new loan, then you shouldn’t have a problem getting approval.
You’ll also need to meet with some basic eligibility requirements. For instance, all loan applicants in the UK need to be at least 18 years old, and residents of the United Kingdom.
Having a poor credit history doesn’t have to mean that you should struggle every time you apply for a loan. However, you should approach getting finance differently. For instance, starting your search with lenders that specialise in bad credit is usually a good idea. Remember, every time you’re rejected from a loan, this leaves another mark on your credit history to ward off other lenders.
Applying with a bad credit provider improves your chances of being approved straight away. You’ll also find that some bad credit providers are willing to offer you an insight into your likelihood of being accepted by performing a “soft credit check” on your account first. This shows them the basics of your recent credit behaviour, without leaving a mark on your file.
If you’re looking for a small loan and you don’t have the best credit options, start comparing your options today. Remember, there are plenty of providers out there who are still happy to help people just like you – regardless of what your history looks like.