If you’re someone who’s considered to suffer from “bad credit” then you might have trouble getting support from banks and building societies when it comes to applying for credit cards and loans. Bad credit happens when you miss repayments on your bills or have previous CCJs and bankruptcies against your name. You can even get black marks on your credit history when you apply for too many loans at once.
Importantly, there’s a difference between having no credit, and having bad credit. The latter means that you’ve never any kind of loan, so lenders won’t be able to check your history to see how well you interact with money. On the other hand, bad credit means that you’ve done something in the past that would cause lenders to consider you as a “risk” in the future.
If you have bad credit, then you may struggle to access traditional forms of lending. Many of the loans and credit cards available from big-name banks, credit unions, and building societies today are reserved for those with good credit, or at least a reasonable rating. When you drop below a certain number with your credit score, it becomes much harder to find a loan that you’re applicable for.
A bad credit payday loan can be an alternative lending option for people who would struggle to get short-term finance elsewhere. This small limited-time loans are designed to be used for financial emergencies, when you might not have enough money to pay for an important item or service until your next payday, and you need extra cash to tide you over.
When you apply for a bad credit payday loan, you tell the lender the amount of money you need, and they tell you how much interest they will expect you to pay to borrow that money for the agreed time period you have chosen. The FCA has capped the amount of interest that can be placed on a payday loan, which means that you will never have to pay more than £24 for every £100 you borrow from a payday lender.
Although a bad credit payday loan provider will not always use your credit history to determine whether you should be approved for a loan, they might ask for other information about you. For instance, your lender might want to know if you have a regular job paying money into your bank, and you will have to be over the age of 18 to apply.
If you have a problem with credit and you’re concerned about how you’ll apply for other loans aside from bad credit payday loans in the future, then there are ways you can improve your financial standing. For instance, you can make sure that your name is on the electoral roll when the information is sent to your home.
Another good tip to keep in mind is to make sure that you’re always paying your bills on time by setting up direct debits for important expenses. This will make sure that you always send the money owed for things like gas and electricity, broadband, and other utilities on the right day, without having to think about it.
Most financial experts will also recommend spacing out any applications you make that would require a lender to check your credit history. Every time someone taps into your credit file to see how well you’ve been able to handle money in the past, they leave a mark on your documents that other people can see. Too many marks can make you less attractive to lenders.
Most people will be suitable for a bad-credit payday loan, because there’s no restrictions around how good your credit history has to be for a company to offer you the money you need. Although payday loans have had something of a bad reputation in the past, they actually have a lot of great benefits to bring people today. For instance, taking on a bad-credit loan can help you to improve your credit rating by showing that you’re a trustworthy borrower who can pay money back on time.
Additionally, when you take out a bad-credit payday loan, you might be able to avoid other financial issues that can further damage your financial reputation. For instance, your payday loan could ensure that you can pay for bills on time and avoid going into your bank account overdraft.
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