Can I Get A Small Personal Loan With Bad Credit?

Can I Get A Small Personal Loan With Bad Credit?

There are times that even the best budgeters find that their finances are running a bit thin. Despite best efforts, unforeseen expenses continually crop up, making stretching a pay cheque across a month a difficult task. Sometimes, this may mean that some of us end up having a bad credit rating but still needing a little extra cash to make ends meet. But how do you get that funding with a bad credit history?

In our guide to small personal loans and bad credit, we look at answering that question by exploring what exactly bad credit is and how it can affect you. We identify how you can get a loan even if you have a poor credit history as well as highlighting how the Money Shop can help you when your bank either can’t or won’t.

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What is bad credit?

Your history when it comes to repaying money or settling bills is kept on a file. All that information and data is stored and if you have missed any repayments or not settled any outstanding bills in a timely fashion, your credit history is affected negatively. Or, it could be that bad credit occurs when an individual simply does not have an extensive enough file depicting their credit past. For people without a mortgage or without a credit card, this may well be the case as it can be difficult for your file to build up a picture of how well you settle outstanding debts.

How can bad credit affect me?

As your credit history is kept electronically, any lenders can run a report on you to see how you have dealt with debt in the past. Any instances where you have missed payments means your credit rating will be lower, so the lower the number on your credit rating, the less likely that lenders will be to extend you a loan.

Additionally, bad credit can also affect your ability to secure a property to either buy or rent. To buy, you will often approach a lender to provide you with a mortgage which is a form of a loan. If you have a poor credit rating, a lender will deem you as a poor candidate as they will not be able to lend you money for fear that you will miss payments and not repay your mortgage. When it comes to renting a property, a bad credit history can mean that landlords are unwilling to rent to you as they too will fear you will miss payments that they rely on as income.

When it comes to getting an overdraft, your ability to have one extended to you by your bank may be reduced if you have a bad credit history. The reason for this is that an overdraft is actually another form of a loan, so a bank will want to be sure that you can repay it. With a bad credit rating, they believe that you are less likely to be able to do so.

And, of course, having a bad credit rating can mean that you cannot access funding. It could be that you need a loan for personal reasons when you are finding it difficult to make your pay cheque meet all your day to day living costs. Or it could be that your car has broken down and needs fixing. With a poor credit history, it can be hard to access loans via traditional lenders who have a very strict and inflexible way of looking at loan applications.

Your questions, answered

Traditional lenders will not extend credit to applicants with a poor credit rating, but payday lenders or short term personal loan providers, that The Money Shop work with, will help fill that void.

The Money Shop can help because our lenders have a flexible approach to each individual application, meaning they take onboard more criteria that improves a person’s eligibility even when they have bad credit. Looking at applications in this way means they can also ensure that loans are affordable to our customers so they can pay back their debt – something that disreputable lenders do not always do.

There are other things you can do to help your bad credit rating however too. You can, firstly, check your credit file to ensure that it is correct. It could be that your credit rating is poor due to a result of fraudulent activity which was not your fault. If you identify such instances, you need to take steps to ensure that this is rectified as soon as possible.

Secondly, you can settle any outstanding debt that you can. Doing so helps your credit rating but also means that you have more funds in the future as you are not paying off expensive debt elsewhere. Finally, ensure that you are not continually maxing out all your credit cards. Instead, only spend a small portion (less than a quarter) of your credit limit each month. By taking this action, you not only improve your credit rating, you make it easier to pay off your credit card, leaving you with more money each month too.

A small personal loan can help you bridge that gap between outgoings and income. There can be times that the shortfall comes about because of a huge unforeseen expense – or many smaller expenses that add up to a big amount. Plus, unforeseen expenses have a very bad habit of occurring all at once. It is easy to become overwhelmed and depressed when bills and costs seem to be spiraling out of control.

A small personal loan can help in such instances as it helps consolidate all expenses into one place. When you use a reputable lender, you have an affordable repayment schedule meaning that you will be able to pay off your debt, without worrying that interest rate charges will add up to too much in the future.

Applying for a small personal loan with bad credit is easy with the Money Shop. All you need to do is follow the steps on our website – as well as ensuring you fully understand our terms and conditions. Then, we’ll give you a speedy response to your application then, should your loan be agreed, the lender will transfer your loan within minutes#.

Bad credit loans have a number of eligibility criteria. Looking at these may make customers with bad credit history worry that they won’t be successful in their application with us. The reason that we have this criterion is to ensure that you can afford the repayment terms – which is the only way you become debt free.

  • You must be over 18
  • You must be a UK resident
  • You must not be bankrupt
  • You must have a steady income
  • You must have a bank account.

For bad credit loans, you must also pass affordability and credit checks.

It can be an exceptionally stressful time when we are struggling financially. Yet, it happens to so many of us. However, because money is not often talked about, we don’t know how common it is that people struggle on a monthly basis to make ends meet. Now, with the recession caused by the pandemic restrictions, even more people will be negatively affected by the loss of earnings.

Taking out a loan via The Money Shop when you have bad credit can be a good idea, as it can ensure your credit rating doesn’t deteriorate any further. If you are able to pay off expenses with our loan, you are not missing any payments elsewhere.