UK consumer lending for people with bad credit histories — Retail Technology Innovation Hub
Just because you have bad credit doesn’t mean you can’t borrow money at all. If your credit is damaged, many creditors can still lend you. You won’t get the best deal, but lenders can be more lenient than you might think.
A lender can calculate that the odds are in their favor if they lend you a loan, despite some issues with your credit history. They might calculate the odds of getting their money back if they lend you a loan and decide it’s a bet in their favor.
The ticket is to have income. If your income is low or irregular, and you’ve struggled in the past to make your payments on time, you may not be able to borrow money at all. However, if you have a regular income – even if it is quite low – you may be able to borrow money.
Just because the terms you’ll get with bad credit aren’t good doesn’t mean you’ll have to agree to terrible terms.
Don’t assume that you will only be offered a small amount of money at an absurdly high interest rate. You can get decent terms and interest rates with bad credit, but not the same terms / rates as someone with good credit history.
Are UK lenders forgiving?
Yes, the UK is a relatively good place to borrow money with bad credit. They let employees with poor credit scores borrow money.
While there are many consequences for defaulting on debt in the UK, there are also many laws that protect lenders from creditors.
While borrowing money to buy things when you already have bad credit might not be the best idea, a lot of people do and get away with it.
If your income is higher or your expenses are lower than when you missed payments, it may be a good idea to borrow money to buy things.
The bank could leave you with an overdraft
Bank overdrafts are one of the easiest and easiest ways to borrow a small amount of money. Anyone without cash savings sometimes runs out of money and may need to bring their bank balance below zero.
Most banks will allow you to drain your account of a few hundred pounds below zero without charging you a lot of money.
The bank overdraft is secure enough that you can use it for shopping. If you want to buy something now rather than later, you could overdraw your bank account to get it.
You should keep your bank account above zero most of the time, but overdrafting your bank account isn’t a big deal.
Even if you have bad credit, your bank will likely let you use a discovered. Usually, overdrafting your bank account is harmless. You may have to pay fees or interest, but you can usually overdraw your bank account without affecting your credit score.
Your bank won’t even call or send you an email or letter stating that your bank account is overdrawn. As long as you get money in your account and use it, they can allow you to keep your bank account overdrawn for a long time.
Other banks may have limits on how long you can stay negative, and while the fees are usually low, keeping a bank account overdrawn for a long time isn’t free.
Overall, bank overdraft is one of your best options. It’s an easy, hassle-free, and secure way to borrow a small amount of money.
The only downside is that you usually can’t borrow a lot. A person with money problems usually has already overdrawn their account and cannot rely on this method.
Payday Loans For Bad Credit
Payday loans are risky and have a bad reputation, but they can still help you if you need cash quickly. They allow you to borrow a small amount of money quickly and pay it back the next time you get paid.
You can’t always get payday loans, but you don’t need good credit to get them. As long as you have a stable job, you can get payday loans UK.
Payday loans are specifically intended for people with bad credit. These are short term loans that you are supposed to pay off in a matter of months. If someone has a job, needs to move to a new location, and cannot afford to move, they can get a payday loan to cover it.
Many people also use payday loans for their purchases. If you can easily keep your job and earn money, you can buy new furniture or something else with a payday loan without consequences.
Sometimes you can get a bigger, longer-term payday loan. You can borrow up to Â£ 10,000 and pay it back over five years. Most loans are much smaller – people borrow Â£ 1,000 or even Â£ 100.
Payday loans might not be the best idea if you want to borrow money, but they are relatively easy to get even if you have bad credit (More info here).
Other bad credit loans
Many UK lenders allow individuals or businesses to borrow money even if they have credit problems. Larger, longer-term loans are great if you can get them. Usually, you can get a much better interest rate than with a credit card.
Companies are ready to give credit cards to people with poor credit history. Banks and credit card companies often get their money back if they land with people who have poor credit but have a decent current income.
Companies offer cards with smaller limits and higher interest rates for people with bad credit, but you can still easily get a credit card.
Some offers are worse than others. If you get a credit card for purchases rather than emergency spending, you might not take the first offer you get.
Look at a few different offers because you might get a much better interest rate that way. Read the terms and conditions. A credit card can have a lot of extra costs that make it worse than a card with a slightly higher interest rate.
Buy now pay later
This is an increasingly popular way to make purchases that you cannot pay for with cash in the UK. Buy Now Pay Later is available for people with bad credit. Sometimes there is no deposit and no credit check.
Buying Now Paying Later is for people who have credit cards, with money on their cards. As long as you have a credit card with some credit, you will likely be approved to buy now pay later. Some companies will turn you down for your credit score, but bad credit can be enough.
With buy now pay later, you can simply delay your payment until you have the money to pay it. You can also use Buy Now Pay Later to split a purchase into installments. You can split it into 3, 6, 12, or even 24 payments.
Most of the time, buying now and paying later is cheap – there may not even be interest as long as you make all of your payments on time. However, sometimes interest rates can be very high.
If you want to spread your payments over a long period, an interest rate of 40% is possible.