Bad credit loans – What does it mean to have a bad credit history?

It is never nice to be rejected for anything, let alone the rejection you will face from a host of credit products should you suffer from a bad credit history.

Just think about it. Do you want to finance that new car, buy the house you have always wanted or simply get a mobile phone on contract? With a bad credit history, you just will not be able to. And in many situations, people just don’t have a clue as to why they have been rejected.

Simply put, in most cases, it’s because they suffer from bad credit rating. Every time you apply for a credit product, your credit history is checked to see if you are a viable candidate. It’s a way that credit institutions assess their risk if they were to give you credit in some form. Basically, they want to know that you will make your monthly payments.

The slippery slope to bad credit

And that’s how people get into credit problems to begin with. Do you think its ok to miss a payment here or there, either on your clothing store card, your car instalment or even your credit card? Do you think it’s ok to pay less than the monthly amount that you are supposed to?

In reality, while you may think that it is and that your bank won’t mind, these things immediately go onto your credit report and lower your credit rating significantly. Carry on doing it and you will have a poor credit rating in next to no time and at that point, you are deemed too much of a risk to be given any other credit products.

Bad credit – how it actually works

Within the United Kingdom, you will find three credit agencies. These are Equifax, Experian and Call Credit. What these agencies do is keep track of data on every individual in the United Kingdom who have taken out credit in any form from housing loans, to car financing to a simply clothes store card. If you have a credit contract that you pay off monthly, these credit agencies will have information on your credit history.

Should you apply for another form of credit, the provider of that credit will approach credit agencies for a report on your credit payment history. This can go back as far as six years. So any irregularities in paying any of your credit products will reflect and ultimately influence the decision of the provider as to whether they should give you a new credit product or not.

This is all based on a scoring system. Each person has a score which moves up or down depending on how they handle their credit. Each score is usually between 300 to 900. The lower the score, the smaller your chances of been approved for a new credit product. Number ranges within the scoring system are classed as follows: excellent, good, fair, poor and very poor. So for instance, if you score 300 your credit rating is considered to be very poor.

Do you see why paying credit accounts on time and in full is so important? A bad credit history will simply mean that you will not have access to regular credit products anymore.

But there is hope!

Luckily, it’s not all doom and gloom. Many lenders such as ourselves have sprung up across the country that cater specifically to those people with a bad credit history. They offer a range of bad credit loans from £100 to £200 000, depending on the type of loan you apply for.

These are certainly a great help if you need money in a hurry but regular financial institutions keep turning you down. A word of warning, however. If you do take out a bad credit loan, make sure that you don’t waste the money. Use it for emergencies only and don’t make the mistakes you have made before that have put you in your bad credit situation. Pay the loan instalment on time and in full each and every month!