A bad credit score loan can be a good way to access additional funds quickly. The application process for these kind of loans are designed to be as transparent as possible. Previously, having a bad credit score made it very difficult to obtain a loan. Money lending organizations traditionally use a credit scoring system to assess each loan applicant.
A poor credit score signifies that the applicant would be less likely to pay back the loan amount on time, increasing the risk factor for the money lender. The main concern is that money lenders have no standardised credit score or rating which leads to lenders scoring loan applications differently according to their criteria.
The Procedure to Apply for a Bad Credit Score Loan
Bad credit score loans are designed for people who have a poor credit rating. From the lender’s perspective, people who have a poor credit rating represent a higher risk, due to this there will be a higher interest rate to offset the additional risk.
Availing this type of loan and repaying the amount on time will improve your credit rating in the long run. There are a few direct lending organizations that specialize in providing bad credit score loans, depending on the amount required and the duration of the payback period.
Generally, lending organizations let you apply for bad credit loans ranging from 50 pounds to 2000 pounds, some organizations give you a range of upto 5000 pounds. The payback period for a small amount ranges from 3 months to 36 months. Be sure to select a term that suits your circumstances.
What is a Soft Credit Search?
When conducting multiple hard credit searches, do note that these can also be viewed by lenders. If you are looking for bad credit score loans and have applied many times, there is a higher chance that your loan approval will be declined. However, you can carry out a soft credit search as they are not seen by lenders and do not impact your credit rating.
By using a soft credit search, you can check the best options from over 50 Financial Conduct Authority (FCA) approved loan companies which will not leave a mark on your credit record.
The Online Procedure to Apply for a Bad Credit Score Loan
You can perform an unlimited number of soft credit searches until you find the best option suited to your needs. Once you find the right lender, you can apply for the loan process. Most money lenders have a similar procedure for availing bad credit score loans online.
Find a comparison website pertaining to bad credit score loans and fill in the loan application form along with the desired loan amount. The data entered will be completely secure and confidential and comes with a 256 bit level of encryption.
Once the application form has been filled, a panel of money lending organizations will be displayed, based on the amount you entered and will contain a list of the interest rates and repayment cycles for you to choose.
Once you have chosen a specific money lender, your loan application will be submitted for approval. Most direct lending organizations have the ability to instantly approve your loan, if selected.
If your application is approved, the amount for the bad credit score loan will be deposited to your bank account. Depending on the lender, the money will be received within 15 minutes to 1 working day from the time of getting approval.
However, be extremely cautious of money lenders that grant loans without performing a credit check, they are either unregulated or are deliberately misleading you as all money lending organizations have to be in compliance and regulated by the FCA.
How Long Does it Take to Avail a Bad Credit Score Loan?
The first thing to check is your credit information from the 3 main credit reference agencies, Experian, Equifax and Callcredit. Double check for any incorrect information and incase the information is found to be inaccurate, immediately get it corrected. Close down other factors that could impact your credit score such as unused bank accounts and easy credit cards.
The duration taken to avail a bad credit score loan largely depends on the amount you wish to avail and the repayment cycle you choose.
In the case of small amounts, these loans will be issued instantly but are required to be paid back within a period of 3 months.
In the case for large amounts, lenders may take longer to approve your application but most of them will provide you with flexible plans according to their terms and conditions and will give you optimum time with regard to your repayment cycles.
Why Don’t all Lenders offer Bad Credit Score Loans?
Many traditional lenders only approve loans to people with a good credit score, as they are considered to be a low risk. These lenders have a strict criteria and anyone with a bad credit score is generally rejected. Sometimes, previous dealings will be considered when availing a loan.
Some people tend to have a low credit score because of poor financial management in the past which can lead to them being penalised unfairly, bad credit score loans exist for this purpose. Remember that your credit report will establish your chances of obtaining a loan and how likely you are to repay it on time.
Hari Prasath has been a full-time Internet Entrepreneur and Life Hacker since 2014. He is a self-taught web developer and Marketing expert building many Online Businesses and testing greatest strategies with Clients during the day and at night, build Niche websites.