Your credit score tells a lender that you are a high-risk borrower and this makes it harder for you to get a mortgage, credit card, or car loan. You might have bad credit due to a history of failing to keep up with payments or bills. If you’re in a situation where you need money as soon as possible but have a bad credit score, you still have a few options. What types of loans can I get if I have bad credit?
A personal loan is the typical way to cover a large expense up front, such as a car or holiday.
You’d normally pay your debt back in a monthly repayment, and you aren’t required to put up any assets as collateral.
This means if you can’t meet the repayments, your lender can’t repossess any of your assets.
If you have bad credit, you will have limited options when it comes to lenders for personal loans, and interest rates will be higher.
Peer-to-peer loans are when you borrow money from individuals rather than a bank or building society.
You are matched up to someone who will lend you money at an interest rate.
This option could offer you the chance to borrow lots of money at a lower rate than with a bank.
However, you need to pass a credit check to qualify for this type of loan.
Should I take out a loan with bad credit?
If you are really strapped for cash, a loan is sometimes necessary.
Some lenders can give you the sum you need within 24 hours.
Taking out a loan could actually improve your credit score, as long as you keep up with your repayments.
However, if you have a poor credit score already you will be charged higher interest rates.
This means the loan will cost more overall.
The risk of losing collateral such as your home or car is high if you miss a few repayments.
Before you take out a loan, you’ll need to be 100 percent sure you can make the repayments.