How to get a loan with bad credit?
Loan with a Bad Credit
It is a very common situation now for a person to have a less than perfect credit rating. This could be for something as simple as missing one or two payments to a credit card or something a little more serious such as a CCJ. Most people will believe that that this means that they are not able to get a loan, but there may be a loan that is available even in these circumstances. Borrowers will need to be prepared to pay a higher rate of interest and put down a larger deposit on the property.
A bad credit loan with no guarantor will work in much the same way as a standard loan. Some lenders will require a deposit of up to 30% of the purchase price of the property. As with standard loans, they fall into different categories such as fixed rate, variable loans and discounted rates. The loan can help to ‘fix’ the credit rating as making payments regularly and on time will go in the borrower’s favour. Borrowers who qualify can then normally move their loan to a standard loan and benefit from the lower interest rates.
Bad credit – check credit file
The first thing any borrower should do before considering a bad credit loan with no guarantor is check their credit file. This is available from any one of a number of credit agencies for a small fee. It will show all borrowing and will also show any default notices, CCJs or other potential problems. When making plans to apply for a bad credit loan it is also important to work out just how much it will cost. This should take into consideration any fees or charges as it is very easy to forget about these. When first considering this as a course of action, find out more about costs by using one of the many price comparison sites. Find out more about each company and their loan products before making any applications at all.
It is important to start making sure that all payments are being made on time to other types of credit lenders. Credit card payments being made on time can have a positive effect on a person’s credit file and will be seen in a favourable light by the lender. It is also important to take a look at income. Is the income regular and a reasonable amount? No lender will agree to a loan if the borrower seems to be unable to make the repayments.
Bad credit loan no guarantor is getting more competitive
The good news is that these loans have become a little more competitive. Terms and rates for these loans are becoming more attractive and borrowers will find that they are able to take advantage of tracker loans and variable rate options as well as fixed rate loans which offer peace of mind for those worried about potential rate rises so a bad credit loan with no guarantor starts to make a little sense.
A bad credit loan may not sound as though it is the most attractive option, but it has the potential to help a borrower purchase a home of their own and will be instrumental in restoring a person’s good credit rating.
The Great Recession has taken an extremely heavy toll on hard-working UK families; but as the economy begins to turn-around, you can put your domestic economy on the road to recovery, too.
“Smart is the new rich”. The more you know about how money and credit work, and the better you use what you know, the more effectively and efficiently you will grow your family’s wealth. Three fundamental principles support “smart” money management:
- First, shift almost exclusively to a cash economy, using credit only for major purchases or emergencies; the radical shift assures you do not spend money you do not have.
- Second, live within your means by following financial managers’ formulae for household expenses; especially bring your housing, utilities, and car expenses to 40, ten and ten percent respectively.
- Third, and perhaps most importantly, run your household like a profit-making enterprise. The profit you turn becomes the wealth you transmit to your children.
Five fundamentals to credit saving
Strictly, strategically budget.
Studies show, contrary to popular belief and long-standing tradition, women manage the money in nearly 80 percent of UK households, putting their husbands and children on allowances and carefully controlling the cash-flow. According to family therapists, this phenomenon is not at all strange, because moms typically manage family discipline, too. The two responsibilities go hand-in-hand. Write-out a family budget and stick to it; deviate from the budget guidelines only in emergencies. Especially help your children anticipate their monthly expenses, and reinforce the importance of planning by refusing to buy anything at the last minute—even including supplies for school projects and reports.
Set and meet savings goals.
Common sense, and the experts, set two basic savings benchmarks–£1000 in a liquid “emergency fund,” and six months’ salary in an accessible long-term savings account. Meeting those goals almost qualifies you for membership among the one percent, because more than 80 per cent of UK families live just one pay check away from homelessness. To meet these goals, follow the time-honoured rule, “make yourself your first creditor,” putting ten percent of each pay check immediately into savings—not subject to debate, discussion, or negotiation.
Follow the “value” formulas.
Imprint these symbols somewhere you cannot forget them: V=$/d, which translates to value equals the price over the product’s life expectancy; “d” appears in the formula as a placeholder for “durability,” a reminder that, the longer the product lasts, the less it costs. In general, the classic design by the famous maker will cost far less than the disposable “gotta have it” product—up to 90 percent less over the life of the product. A corollary applies, too: The longer you take to pay for a product on credit, the more it costs. In some experts’ examples, a $50 pair of jeans can end-up costing up to $1000 when the buyer abuses her credit privileges and pays penalties and extra interest.
Work your techniques and tools.
Never-ever-ever pay full retail! Nothing is so awesome it justifies paying the full manufacturer’s suggested retail price. Nothing. Search the internet and your smartphone apps for the best prices; shop high-end factory outlet stores, check major discounters’ websites, use coupons, work end-of-season clearances, and risk the occasional haggle. And do not forget resale boutiques, thrift stores, and yard sales in upscale neighbourhoods. The “one-percenters” are downsizing and economising just like you.
Manage credit to build your score.
Locked in a three-way tie with your IQ and NI number, your credit score ranks number one among the numbers in your life. Those three digits determine how much you pay for the privilege of borrowing money; and, in most states, with most companies, it also determines how much you pay for insurance. Although you want to shift most of your household finances to “cash only,” you must use credit sparingly to maintain good credit. Get an American Express card, use it once each month, and pay it off promptly each month to improve your score. Then, pay all of your bills exactly according to the due dates, systematically paying 15% more than the minimum on the card with the highest balance until you pay it off, and repeating that practice until you retire all your unsecured obligations. Meeting the deadlines and reducing the balances, you gain points. 100 points on a credit score translate to a 15% difference in interest rates on auto loans—living proof that a little discipline goes a long-long way.
What you do not know about money and credit can and will hurt you. Adjust your thinking about money, becoming its manager instead of its victim; and reinforce your aggressive attitude and tactics, becoming money-wise by taking an online personal finance course. Managing wisely, you can give yourself a pay raise without pleading to the boss or taking a second job. Following the five fundamentals, you can effectively increase your saving and spending power by 25 per cent or more.