If you don’t have good credit that doesn’t have to stop you from borrowing. There are many different options for borrowing with bad credit, no matter what the reason for it. Lenders today offer flexible loans that are designed for anyone who has a less than perfect credit history, including people on low incomes. If you’re looking to borrow and worried about how your credit will affect the opportunities that you have, there are still plenty of options.
Loans for bad credit and low income
Lenders don’t exclude potential borrowers who have bad credit and a low income. You can still be approved for a short-term loan, or a longer term loan, even with a patchy credit history and a lower than average annual income. Although mainstream lenders have strict lending criteria, the lending market has evolved today to offer a wide range of different loans that cater to borrowers with unique credit history and financial needs. So, there are loans for bad credit and low income borrowers – all you need to do is find the right lender and the best loan.
Best loans for poor credit
- Payday loans – as payday loans are short-term and often for smaller amounts, it’s easier to be approved even if you have poor credit. Payday loans are designed to be borrowed for a month until you next get paid.
- Homeowner loans – the benefit of homeowner loans is that you have an asset (your property) to offer as security for the loan, which means the lender is more likely to approve your application. It’s important to note that if you don’t make the repayments on a homeowner loan, the lender may be able to take the asset to sell to cover the repayment amount.
- Guarantor loans – if you have a trusted friend or family member who is willing to be your guarantor then you could borrow a guarantor loan even if your credit is bad. Guarantors need to be at least 18 years old and should have a positive credit rating themselves.
How to get a loan with bad credit
Even if you have bad credit it’s still possible to borrow – as long as you know how to do it.
- Target the right lenders. There are some lenders that are much more open to providing loans to people who have bad credit. Most mainstream lenders will refuse to lend if your credit score is low but if you broaden your search to bad credit lenders you’ll be more successful.
- Choose the right kind of loan. For example, secured borrowing – which uses your home, or an asset like a car, as security for the repayments – is much easier if you have bad credit.
- Provide evidence of income. Many lenders don’t carry out a credit check when they are approving borrowers for lending. As long as you can provide evidence of income then you will usually be approved.
- Borrow less. The smaller the loan you’re looking for, the more likely you are to be approved. Bigger loans mean a bigger risk for lenders so, if you have bad credit, you can increase your chances of being approved by making an application for a smaller amount.
- Pay off some other debt. If you already have a lot of debt it might be worth reducing this a little before making an application.
Can I get a loan without a credit check?
Yes. Not every loan with every lender is available without a credit check but many are. For example, payday loans are designed to be short-term borrowing in relatively small amounts. Most payday lenders won’t carry out a credit check so you can borrow without your credit history being an issue.
How do you get a bad credit rating?
A bad credit rating can happen to anyone. Your credit rating can be affected by a range of different factors, including:
- Missing repayments on existing credit arrangements
- Making late repayments on loans or credit cards
- High levels of borrowing that you don’t pay off
- Continuously making borrowing applications that are rejected – if an application is not successful it’s always better to wait a while before making another
- Not being registered on the electoral roll
- If your credit report is connected to someone who previously lived with who has a low credit score
- Incorrect information or mistakes on your credit report
- Not having any history of borrowing at all – i.e. you’ve never had a credit card or a mobile phone contract or a loan
There are lots of options when it comes to finding loans for poor credit borrowers. Lenders today are much more willing to provide finance and the flexible range of loans available means that most people are able to find a loan that will suit their borrowing needs and still be completely affordable.