Bad credit loans

A poor payment record can happen for all sorts of genuine reasons.  Even had an extended holiday, an unforeseen large bill or a bank mistake can result in negative strikes going into your credit report.

Some financial institutions have an open minded view on minor incidents of arrears in your credit file, but in the event you get a default notice or a CCJ (county court judgement) many lenders look down on this and you are then considered “sub prime”.

Lenders largely use statistics to decide what credit agreements they will grant you under what terms.  Bad credit loans are usually at a much higher interest rate than normal “prime” lending.  In the case where a lender can take a charge on a property, it’s still possible to get some good terms.  Some bad credit history loans are secured loans.

Since the credit crunch, lenders are tightening up their lending criteria quite a lot, where previously in the UK, getting most, if not all of the equity out of your home was quite easy, and relatively cheap, even with some adverse credit history.

Now, lenders are far more unwilling to lend, especially on a sub prime basis, and interest rates are much higher.  If you are a home owner, it can often be cheaper to re mortgage your home, than take on a bad credit history loan.

It can be easy to get a credit card instead of a loan.  Some credit card companies have very lax criteria.  The advantage with a credit car is it can be used like an interest only loan, as you can pay the minimum payment each month, but then re spend part of it.  Then essentially, you are only paying the interest and not paying back any capital.