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.