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Debt Consolidation Loans with Bad Credit
Although the economy is to be blamed, there are other reasons why a person receives a poor credit remark. Most of the times, it’s because of negligence. Some people ignore planning and instead of deciding the loan amount they need, they just quickly jump into the loan application. Such practice is risky as this often leads to late payment or even default. Having a bad credit loan is discouraging because financial institutions, such as banks and traditional loan facilities reject the application. The credit report indicates how risky the borrower is, therefore, to ensure that the loan will be settled, lenders will only approve those who have good credit remarks.
Luckily, there are now loans available to anyone who is anxious about their credit but are in need of extra cash. These loans come in different forms, including bad credit payday loans, debt consolidation loans bad credit, personal loans bad credit, etc.
What Is The Criteria For A Debt Consolidation Loan
Since credit scores are not an issue, the lender has provided other criteria that the borrower should meet. Despite having a good credit score, the lender may still decline your application if you miss the necessary prerequisites. The same thing applies to individuals with poor credit scores.
One of the basic prerequisites is the source of income. Your earnings should be enough to cover all your expenses, including the loan. The maturity of bad credit loans different but regardless, your income should be enough to pay the loan on time. Qualified incomes may come from employment, pension, or benefits. Another requirement is the proof of employment. Most bad credit lenders will require that the applicant has a regular job, instead of having just a part-time work. Apart from that, the loan provider may ask for credit card and utility billing for verification purposes. Possessing these can increase your chance of getting approved. Valid identification cards are also necessary.
Consequences Of Bad Credit Loans
Even if the lender accepts borrowers with bad credit, they still see them as high risk. Therefore, to secure their money, their loans carry staggering interest rates which are often too hard to settle. Another issue is the loan amount itself; borrowers can only borrow a small amount so that they can repay it without any hassle. However, considering the constant rejection received from banks and other lending facilities, bad credit loans are not a bad thing. After all, the loan does not only provide the borrower money, it also gives them the chance to improve his credit rating.
By having another line of credit, they can fix their mistakes by repaying the loan on time. Being approved means having the chance of gaining back the trust of the lenders. Once you’ve succeeded in acquiring an impeccable credit rating, you can apply for a new credit line without any pressure. You can now choose loans and bargain for its interest rate. In addition, you can ask for a bigger amount even without collateral. There are many advantages of good credit rating, thus, it’s important to work hard on repaying the loan back.
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