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What is a Bad Credit Loan?

Bad credit loans are there to help those with a poor credit score. They can also help you build up your credit history if you pay back early or on time as well as be the only option if you have been refused credit in the past. With My Payday Loan Broker, you can look to borrow up to £2000, over a few months to two years. You can usually choose to make repayments weekly, fortnightly, four-weekly or monthly. As almost all applications are online, the process is simple, and you could receive the funds within an hour of approval from a direct lender.

When it comes to bad credit loans, if you're not sure what your credit score is like, you can check for free through companies like Credit Karma. The higher your score, the better your credit rating.

You can also look at your credit file through the three UK credit reference agencies: TransUnion, Equifax, and Experian. It will cost you a few pounds to do this per report, but you'll be able to see the last six years of your credit history. Each report may vary slightly, but the basic information will remain the same. Your credit file also includes your personal information, such as your full name, date of birth and your current and previous addresses. Lenders can match the information you supply in your application form with the information on your credit file, to ensure that they are viewing the correct report.

Fraud occurring on a person's credit file is becoming alarmingly common. If you think that someone has used your details to take out credit, or there is false data on your credit file, you can find more information about fraud here.

Once you have confirmed that the information on your credit file is correct, you can look to strengthen your credit score. This typically involves taking out credit and demonstrating that you are able to make the agreed repayments. Taking out a short-term loan with the help of My Payday Loan Broker can help you improve your credit rating, as long as the payments are made on time or early. Most short-term lenders won't charge you for making early payments, unlike a number of banks or building societies.

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Why Might You Need a Bad Credit Loan?

Your credit history may be poor for a variety of reasons. As everything stays on your credit file for 6 years, any negative marks on this could impact your ability to take out loans, even if the late payment or other issue was from a few years ago. This can be compared to claiming on your car insurance: you'll generally be penalised for the next 5 years or so, despite having a perfect track record since the claim.

ca You may have poor credit due to missing or late repayments. This could be anything from your water bill to your credit card repayments. If your account is recorded as being in arrears on your credit file, this can leave a negative mark, and prevent you from taking out some forms of credit. The length of time the account is in arrears for is usually taken into account, but your chances of taking out a bank loan, for instance, could be impacted.

If your account remains in arrears for an extended period of time, a Default Notice could be issued. This is the first step towards legal action and could result in a County Court Judgement (CCJ) being taken out against you. A CCJ will often mean that the lender can enforce it through an Attachment of Earnings Order (AEO), and collect payments directly from your wages. Having a CCJ or AEO can mean that you struggle to obtain conventional credit.

Another reason for having a low credit score is not having much of a credit footprint. If you have what is referred to as a 'thin credit file', you may not have taken out much, or any, credit in the past. To some lenders, lending to someone with a thin credit file can be as risky as lending to those with a bad credit history. If you don't have much of a credit footprint, there is no way of confirming how well you handle credit, and whether you're able to make payments on time.

Having poor credit doesn't have to hold you back though: there are options available if the unexpected happens.

Should your car break down and you need to fix it, or even buy a new one in order to get to work, you may not have the funds saved in order to cover the costs. In a similar way, if your fridge stopped working and you needed to replace it, you'd need a quick cash loan to cover the emergency cost. In these types of situation, you couldn't afford to wait and save money to buy a new appliance or car. However, the likelihood of your wages being paid in the previous few days and you being able to afford a replacement you haven't planned for is probably slim. If you are simply looking to upgrade a product, saving up would be the best option.

At My Payday Loan Broker, the direct lenders we work with won't simply look at just your credit file when making a loan decision. We only work with reputable, responsible lenders, so you won't be eligible for short-term credit if it will put you into financial difficulty, but each lender will assess your application on an individual basis. You may not have perfect credit, but we'll do our best to find the right lender for you.

Am I Eligible?

To take out a bad credit loan, you must be a UK resident, aged 18 or over, and be in part-time or full-time employment. To transfer the funds should your application be successful, you'll also need a valid bank account and debit card.

Some lenders will also ask for documentation showing your income, like your bank statement or your wage slip. This is to make sure they are lending responsibly, and that you can definitely afford the agreed repayments.

If you have bad credit, before applying for a loan, you should consider whether you really need it. Payday loans can be expensive, so it's often a good idea to assess your financial situation first. You can complete a budget form online, to see whether you can afford to make repayments. If you think you may need help with your debts, you can approach charities like Step Change of the Citizens Advice Bureau for free impartial advice.

If you are looking to take out credit to pay back other loans, you could be entering into a debt spiral, and borrow more and more to cover your expenses. In this sort of situation, or if you are experiencing long-term financial difficulties, taking out a loan through My Payday Loan Broker will not be the best option. The lenders we work with won't be able to help you in these cases, as they would not be lending responsibly.

Are There Other Options?

If your credit rating is poor, finding bad credit personal loans can be difficult. No lender can guarantee a 100% approval rate, and bank loans with no credit checks are pretty much non-existent. So what options are there?

Some banks may approve loans with bad credit. Each bank and building society has different criteria for lending, and depending on your circumstances, you may be eligible for anything from a small bank loan to a mortgage.

The issue with bank loans is that you don’t always get the flexibility as you do with short-term lending. Banks tend to only lend larger amounts, often up to £50,000, which you may not need. Borrowing more than necessary can result in you paying far more in interest than you would with a short-term loan.

In addition to this, the length of borrowing can be restrictive with banks and building societies. Few will let you borrow over a short period and a lot of banks also charge you for making early repayments. The lenders that My Payday Loan Broker work with won't charge you for making early repayments, so you can save interest if you're able to make early partial payments or repay in full before the date agreed.

Some people choose to go into their overdraft rather than taking out credit. But going into an unplanned overdraft can cost more than five times as much as taking out payday or instalment loans. Therefore if you are planning to go into overdraft it’s best you go to your bank and see if you can get an arranged one. Some banks will offer a set amount of your overdraft that you can use interest-free, however, it’s not very common and you will be charged a usage fee to access the overdraft. The interest you’re going to be charged on an overdraft can be lower than on a loan. But a loan could be a better option if you’re looking to borrow for a longer term.

Another option if you are looking to cover an unexpected expense is to ask your family and friends if they're able to lend you the money. Few people will choose this option though, as financial issues can be an embarrassing topic to bring up. Not only this, but those close to you may not have the funds to lend you even if they want to help. With My Payday Loan Broker, we can help you find loans of up to £2000, which is more than most people have in savings.

If you are able to save up for an expense, this is always the best choice, as you won't have to pay back interest. If the expense is urgent though, you may not be in a position to do this.

Credit cards can be a good alternative regardless of your credit history. If you're looking to get a credit card, you can find lots of helpful tips and advice on the Money Saving Expert website. The interest rates you can get with a credit card will depend on your credit score, so it's often a good idea to do a 'soft search' when applying for a credit card. This won't leave a mark on your credit file and can tell you the likelihood of you being eligible for that particular card. Too many searches on your credit file can damage your credit rating, so it's best not to apply for a lot of credit cards where they conduct a full credit check on the application.

If you've got good credit, you may be able to apply for credit cards with 0% interest in the first year. So, if your expense is only small and very short term, this can be the best path to take. However, bad credit cards tend to have high-interest rates like bad credit loans.

With bad credit, your credit card options will be more limited. You may still be able to apply for credit cards, but the interest rates will undoubtedly be much higher. Sometimes these types of credit cards can be more expensive than taking out short-term credit.

If you have poor credit and need to borrow between £100 and £2000, My Payday Loan Broker will try to find the right lender for you. You can apply for a loan here.

How Long Does it Take?

Once you have completed our online application, we'll try to match you with a lender as soon as possible. You can then fill in their application form to check if you're eligible for a bad credit loan. If you're approved, you can have the funds in your bank in as little as an hour.

If you've had an emergency expense, like a leaking pipe, you'll need fast cash to cover the repairs. With My Payday Loan Broker, we can help you find same day loans, so you don't have to worry about waiting until your payday to pay for your unforeseen expense.

How Can We Help With Bad Credit Loans?

My Payday Loan Broker can help you find the perfect lender for a bad credit loan. As a broker and not a lender, we can do the searching for you, and if a lender approves your application, you could have the funds you need for that unexpected expense the same day.

Our application is short and simple, with no fuss or frills. We'll ask for a few personal details, your employment information and your income and expenditure. Once we have this data, we can locate the most appropriate lender for you, ensuring you get the best rates possible. We understand that no-one has a perfect credit history, and we’ll try to help you find a loan regardless of your credit rating.

If you have any questions or need some help, you can contact us at any time at [email protected].

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