Can I Get A Loan With My Bad Credit History?

When it comes to applying for loans, bad credit history can affect not only whether a lender will actually be willing to let you borrow from them, but also the rates and terms of the loans that you might qualify for.

It’s probably fair to say that many people who have had debt problems in the past have a fairly disheartening experience when they try to borrow money.  Most high street lenders have quite inflexible lending criteria, and for a lot of people this means a straightforward decline decision — no discussion, no appeal, and no real attempt to try to provide an answer to the customer’s dilemma.

Think beyond the high street

If you’ve had previous credit problems and need to borrow money, it’s worth remembering that there are other options than just popping into your local Halifax or Nationwide and asking about a loan.  The financial industry as a whole has come to recognise that it needs to accommodate those who’ve had credit problems, and there are now hundreds of lenders who offer special loans bad credit, designed for those who might not be able to secure lending from a traditional bank or building society.

Many of these loan providers operate online, and offer their products either directly, or through third party brokers and financial advisers.  You can find such lenders and brokers by searching for terms such as ‘loans bad credit no fees’ or ‘loans bad credit rating’.

If you do decide to go through a broker, price comparison site or similar online service, it pays to do a little checking into the service you should expect.  Some brokers are fully independent, while some advisers might be tied to a particular lender.  Some offer ‘whole of market’ advice, while others might only sell loans from a small selection of providers.  The more independent the service, and the wider the range of products they have to choose from, the better.

Understanding your credit history

Each of us has a credit profile, though most people wouldn’t think to check theirs.  There are three main credit reference agencies in the UK — Equifax, Experian and Callcredit — and on their files will be details including your name and age, current and previous addresses, and details of your current and past credit commitments.

Credit commitments include obvious things like mortgages, loans and credit cards, but also things like store credit agreements, vehicle finance etc.  Your credit report shows whether your repayments to each of your creditors have been paid on time, or if you have any arrears, defaults or court judgements for non-payment.  Lenders use this information to decide whether to let you borrow money.

You can obtain a copy of your credit files by contacting the credit reference agencies directly, and paying a small statutory fee (currently £2.00).  When applying for loans bad credit history can count against you, and it can help to be prepared by understanding exactly what your credit record shows.

Once you know what your credit file contains, it’s then possible to look at your borrowing options.  By using a specialist lender or broker, you will be able to access a range of loans, bad credit may not be an issue.  Although you should expect to be charged a slightly higher interest rate, this could well be the ideal solution to your problems.