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Bad credit is tough to shake. Having negative listings on your credit report can seriously hinder your ability to access loans, but if you’re on the “credit fringe” there are still a variety of options you can consider. Find out what’s available to you in this guide and give your application for credit the best chances of success.
How can I be approved for a loan with bad credit?
There is no trick to being approved. However, there are a few things you can do to make sure you get the best chance.
Lenders are also wary of lending to people without much in the way of credit history – unfortunately borrowers are effectively guilty until proven innocent. This might include 18-year olds or newly-arrived migrants. If you’re in this situation there are a few things you could do to help your case:
Register on the electoral roll.
Visit your local council’s website to register.
Open a UK current account.
Showing lenders that you can keep up direct debits and utility payments will help show that you are likely to keep up repayments on a loan. Making regular deposits into savings could bolster your case further.
- Start small. By borrowing just a small amount, for example using a credit builder credit card, you can demonstrate that you pay back loans responsibly.
What are your personal loan options with bad credit?
There are various credit options for people with a bad credit rating. Here are some of the main ones:
Tappily line of credit up to £2,500 as and when you need it
- Tappily uses read-only access to your current account to provide a flexible line of credit.
- Avoid unauthorised overdraft fees by setting account balance triggers.
- Once approved, transfer money into your account within 15 minutes.
Representative example: Borrow £1,200 for up to 75 days at a rate of 124% p.a. (variable). Representative APR 49.7%.
Don’t forget: talking to lenders is also a great idea – you may be surprised at how flexible they can be. Ultimately, lenders do want to lend money – they have to do so responsibly, but it’s in their interests to work with borrowers to find a sustainable credit solution.
What about a broker?
As long as you bear in mind that it’s unlikely to check the whole market, but instead subsection of lenders with whom it has an arrangement, then a broker can take the strain out of finding a competitive personal loan deal. Brokers find the best rate available to you from their panel of lenders, taking into account your individual circumstances. Normally this service is free, because the broker will earn a referral fee from the lender.
Some brokers or “matching services” can now run soft searches with a range of lenders in seconds, meaning that without any impact on your credit score you’ll be able to get realistic rate quotes for loans you’re likely to be approved for. This can be a smart way to avoid disappointment, protect your credit score and focus on lenders likely to approve you.
What is APR?If you’re comparing any credit-based products, it won’t be long before you’ll come across the Annual Percentage Rate (APR).
This figure is designed to provide an annual summary of the cost of a loan and takes into account both interest and any mandatory charges to be paid (for example an arrangement fee) over the duration of a loan.
All lenders must calculate the APR of their products in the same way, and must tell you the APR before you sign an agreement, so for consumers it can be a handy tool for comparison.
If you’re looking at bad credit personal loans, expect higher APRs than those you’ll see comparing standard products. This means borrowing will be more expensive but also that it’s easier to be approved if you don’t have a great credit score.
Bear in mind, however, that lenders are only obliged to award this rate to 51% of those who take out the loan – the other 49% could pay more. That’s why it’s often referred to as the representative APR. Depending on your circumstances, you may be offer a better or a worse rate than the advertised APR.
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