How to get a loan when you have bad credit

Life can be tough when you have a bad credit rating. The world of loans and extra financial help can prove to be inaccessible, and if you’re in need of cash, this can be bad news. If you don’t have a credit card or a bank overdraft facility, don’t despair, you can still access a loan.

Loans are a necessary part of life

The UK government operates our national budget on a system of loans. If the government couldn’t borrow, the country would be bankrupt. The same applies to the vast majority of the population. Loans and credit are what encourage the commercial wheels of commerce to keep on turning. Governments are lent money, dependent on their credit rating; the same applies to the individual. If you have a bad credit rating you can still borrow money though.

Payday loans are one option, and so are logbook loans. How they work is pretty straightforward; in terms of a logbook loan, you offer a company your car’s logbook in exchange for ready cash, and as long as your car is secure, you’ll have access to instant funds, and this doesn’t depend on your credit status. Payday loans can prove to be more expensive, and many demand a lump sum repayment, which can prove difficult for some borrowers.

What is a credit rating?

Credit ratings dominate contemporary life. They aren’t always accurate, and they can be difficult to amend. You may have seen the wonderful pastiche in the TV programme Little Britain, where the lazy travel sales assistant repeats the phrase, ‘computer says no.’ A bad credit rating can lead to an application for funds also being denied. Always check your credit rating and follow the advice of the This is Money website: make sure that your registered address is correct, if you are having financial problems, arrange a payment plan with your lender, and most importantly, don’t bury your head in the sand.

Remember that credit ratings are adjusted mechanically. A computer will only produce credit scores on the information to hand, so if the information is wrong, your credit rating will be judged accordingly. It’s up to you to ensure that your credit rating is correct.

Credit unions can rebuild your credit rating

Another alternative, if you’re hard up and in need of some extra cash, is to use the services of a credit union. According to Martin Lewis of the financial website, Money Saving Expert, credit unions ‘aren’t just an oasis for those struggling to qualify for high street borrowing. As community co-operatives, they can also appeal to those who want to benefit the neighbours.’

As long as you start to save with your credit union you’ll be able to access loans, and because credit unions don’t have to answer to third party shareholders, you will find that you may well get a loan, where you may have been denied a loan from high street banks. The good news is that a bad credit rating won’t stop your access to emergency funds.

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