If you have a poor credit history, then the chances are your options regarding credit and finance will be limited. Fortunately, you don’t necessarily have to turn to a payday loan or an overdraft for help. Guarantor loans are a form of fixed-term loan available to people who struggle with poor credit ratings, and difficulty with their credit history.
These unsecured loans can range in amount and duration to give you greater flexibility when it comes to choosing the solution that works best for your circumstances. If you want to successfully apply for a guarantor loan, then you’ll need to make sure that you’re over the age of eighteen, and you have a valid UK bank account. Your account will be what you can use in the future to pay back the money that you owe.
At the same time, you’ll need to make sure that you can access a guarantor that’s suitable to support your request for a loan.
Unfortunately, not just anyone can act as a guarantor for a loan. If you want to support someone else’s loan for them, you’ll need to be over the age of 21, and you’ll need a relatively good credit history too. Most of the time, it’s important to have your own UK bank account, and you will sometimes need to be a UK homeowner too, although there are options available for potential guarantors who don’t have their own home.
Having a home that you can link to someone else’s guarantor loan will mean that they can borrow a larger sum of money. However, it’s important to remember that some guarantor loans can be secured against your property. This means that if the person applying for the loan, and the guarantor cannot make the repayments on time, the guarantor could risk losing their home.
A guarantor loan might not be the right option for everyone, but it is a great solution for people who are desperately in need of finance and may be missing out on opportunities to access the money they need because of problems with their previous credit circumstances. Here are some of the benefits of guarantor loans:
1. They’re Available to People with Bad Credit
Guarantor loans are perfect for people with a bad credit history. They’re often easily accessible too, so long as you can get a guarantor who has a good credit score. In some cases, you won’t even need to get a credit check to apply for a guarantor loan. However, your guarantor will be subject to a check.
2. Greater Flexibility
There are fewer limitations to borrowing money through a guarantor loan. This is because a guarantor who has good credit is giving additional security to a bank or building society who might otherwise be opposed to lending money to a specific borrower. Most of the time, you’ll be able to borrow the amount you feel comfortable repaying, for a period that suits you. Unlike payday loans, guarantor loans allow much longer for repayment in most cases.
3. The Process is Quick and Simple
Guarantor loans are often quick and easy to access. Upon the completion of a successful application, and the availability of a guarantor, the process can take less than a day to go through. Additionally, guarantor loans provide additional safety and security to someone in a difficult financial position, as they know that they have someone to help them shoulder the burden of debt if something goes wrong.
4. Can Boost Credit Score
In certain circumstances, guarantor loans can create amazing opportunities for people with poor histories to improve their credit score through a guarantor who already has a high credit score. If you and your guarantor can meet your monthly repayments, the credit reporting agencies will receive a report about their performance, and your score will receive a boost.
Ultimately, guarantor loans can be incredibly helpful for people with bad credit histories who need additional funds. However, before you apply for your loan, it’s worth thinking carefully about your past and future financial interests to make sure that you’re capable of repaying the loan on time. What’s more, it’s important to discuss any issues regarding repayment with your guarantor so you both know exactly what you’re getting into.
Make sure that you never take out more money than you can reasonably afford to repay, regardless of whether you’re using a guarantor or not.
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