What You Should Know About Online Loans for Bad Credit

One of the most important, and most misunderstood, aspects of modern life is the credit score. It reflects a person’s financial past and, in a very real way, determines their fiscal present and future. A great credit rating opens doors. A bad credit rating closes them. Most of us exist somewhere between those two extremes.

When it comes to applying for an instant loan your credit score is your calling card. It tells potential lenders who you are and demonstrates how well you’ve managed your money in the past. It’s an indication of your creditworthiness and lenders use the ratings to determine whether or not prospective borrowers are a safe risk for a one-time loan or credit.

We all fall somewhere on the credit rating scale. Some of us have no credit history at all while others have an outstanding financial profile. For those that have outstanding credit histories life is good. The majority of lenders will be bidding for your attention. They will be all but begging you to borrow money from them.

But if you have a less than stellar credit history most conventional lenders will hesitate to offer you any level of credit. The hard truth of it is, bad credit borrowers are often fighting any uphill battle when it comes to securing the loans they need when they need them.

How do We Define Bad Credit?

At it’s most basic bad credit is an indication that someone has a record of failures in managing their borrowing and spending. If you’ve struggled to make timely payments on a credit card or have defaulted on a loan in the past your credit rating will drop. The lower your score the harder it will be for you to get approved for credit in the future. Whether you’re applying for a mortgage or a small short-term loan your credit rating is key to securing the funds you need.

Credit ratings are determined by credit reporting agencies, or CRAs. In the UK there are three primary reporting agencies, each with its own distinct rating scale. They are as follows:

  • Equifax – 0-438
  • TransUnion – 0-566
  • Experian – 0-720

These CRAs collect information on all UK residents. Every time you make a credit card purchase, pay a utility bill, or repay a portion of a loan the credit reporting agencies take note. Responsible use of credit is rewarded and points are added to your credit score. The same holds true for on time payments and discharged loans. Late payments, missed payments a defaults count against you and cause your score to tumble.

While each CRA has it’s own rating scale one thing is constant across the board. The lower your score the lower your credit rating. A poor credit history ultimately reflects poorly on the individual and can signal to lenders that you may be too much of a risk to take on as a debtor.

How much would you like to borrow?

Representative Example: Rates from 49.9% APR to max 1333% APR. Minimum loan length is 1 month. Maximum loan length is 36 months. Representative Example: £250 borrowed for 30 days. Total amount repayable is £310.00. Interest charged is £60.00, annual interest rate of 292% (fixed). Representative 669.35% APR (variable).

Is it Still Possible to Secure a Loan with Bad Credit?

It’s estimated that over 15 million UK residents have bad, or poor, credit. Another 5 million are estimated to have no credit history at all. By necessity UK lenders have had to shift gears, offering specific lending products to serve that demographic.

Conventional lending institutions such as banks, building societies and credit unions still heavily rely on the customer’s credit score to determine eligibility for a loan. But alternative lenders have moved in to fill the gap left by traditional lenders, offering low-cost short-term loans to consumers with troubled credit histories.

So-called bad credit loans typically take the form of short-term loans designed to provide limited funding to borrowers in a fiscal emergency. These are not long-term lending products. Bad credit lenders aren’t in the business of underwriting mortgages and car loans. But if you need cash fast to cover an emergency a short-term bad credit loan can be a lifesaver.

Alternate lenders specialising in short-term loans still consider the borrower’s credit history. The Financial Conduct Authority (FCA0 requires all lenders to review an applicant’s credit score. However, bad credit lenders also look beyond your score, taking into account other important factors to determine your creditworthiness.

For example:

  • Overall Affordability – Online lenders will consider how much money you have coming in on a regular basis and compare that with how much is being paid out each month. Affordability is a good indicator when it comes to determining whether a potential borrower can afford the loan in question.
  • Employment History – Online loan providers need to know that you are employed and how long you have been in your current position. They want proof that you’re in a stable situation. Loan applicants who are self-employed often face another barrier to qualifying for even short-term loans. In those cases online lenders may need to see proof of income via banking records.
  • Incoming Cash – In addition to proof of gainful employment bad credit lenders also need to understand your rate and frequency of pay. Short-term bad credit loans are highly structured and the repayment periods are typically brief. The lender will need proof that you have a steady stream of cash coming in on a regular schedule.

Are Online Bad Credit Loans Different than Conventional Loans?

The short answer is, “yes”. There are some significant differences between bad credit loans and traditional lending products. First and foremost bad credit loans are designed to fill a specific niche in the financing landscape. These products target consumers with poor credit histories who would are unable to secure a loan through conventional outlets. If you are currently struggling with bad credit and have been turned down for loans in the past a bad credit loan may be able to provide the financial relief you need.

Bad credit loans are also specifically designed to meet the short term funding needs of borrowers with less than perfect credit histories. These are short-term lending products and are meant to provide cash assistance for consumers facing a sudden financial shortfall. You won’t find long-term loans being offered through bad credit lenders.

Finally, online bad credit lenders differ from their conventional counterparts in another important way. You can apply for a short-term bad credit loan online, streamlining the application process and keeping it quick and easy. No setting aside time in your busy work week to keep an appointment with your banker.

Are Online Bad Credit Loans a Good Option?

Online loans for people with poor credit are quickly becoming a popular option for many UK consumers. The process of applying for a loan is quick and easy and applicants can usually receive an answer to their loan request on the same day. Depending on the borrower and the loan amount some customers can receive an approval within minutes and see the cash they need depositing into their account within hours.

One thing worth paying special attention to is the potential cost benefits of applying for an online loan, even if your credit score is lower than you’d like. Conventional banks have high overheads. The costs of running a brick-and-mortar bank are significant and must be passed on to its customers. Online lenders are not burdened with those costs. This often allows them to make bad credit loans at more reasonable costs than you’d receive from a traditional lender.

Why Use Us

  • PCAW Approved
  • £100 - £5,000
  • Instant Transfer
  • Same Day Cash
  • Direct Lenders
  • Flexible Terms
  • Reputable Lenders
  • No Guarantor
  • 1 - 36 Months
  • 98% Approved
  • Fast Application
  • No Paperwork
  • UK Service
  • 24/7 Support
  • Quick Decision
  • Bad Credit OK
  • Easy Repayments
  • No Hidden Fees

How Hard is it to Apply for an Online Loan?

At Bad Credit Loans we keep the application process as quick and easy as we can. Everything is handled online to facilitate a speedy turnaround on your loan request. Simply state the amount fo money you wish to borrow and then fill in the online application form.

Naturally, we will need to collect some personal information before your loan can be processed. It is always advisable to have important documents at hand when filling in your online request. This will prevent you from have to pause in your application to go and search for the necessary data.

All loan applicants at Bad Credit Loans should meet the following requirements:

  • Must be a valid UK resident.
  • Must be 18 years of age or older.
  • Must show proof of current employment.
  • Must have proof of income including pay rates and payday schedules.
  • Must provide accurate estimates of outstanding debts and recurring payments.

How Can You Improve Your Credit Rating?

Bad credit ratings don’t have to follow you forever. The decisions you take today can help set you on the path to a stronger credit history. Short-term online loans for bad credit borrowers can help you along that path. Remember, every on-time payment you make towards your short-term online loan adds points to your credit score. Fully discharging that loan will help to raise your score considerably and, in the long run, will give you greater borrowing power in the future.

Apply Now

Simply select how much you'd like to borrow and for how long:

Representative Example: Rates from 49.9% APR to max 1333% APR. Minimum loan length is 1 month. Maximum loan length is 36 months. Representative Example: £250 borrowed for 30 days. Total amount repayable is £310.00. Interest charged is £60.00, annual interest rate of 292% (fixed). Representative 669.35% APR (variable).