Having bad credit tag against one’s name is no more a surprise or a shock to any including the lenders. This is because over spending has become norm of the day and as a consequence of late payments, defaults etc people are having a blemished credit history. But at the same time, the loan market has thrown up lots of lenders who are providing bad credit loans to all those people having host of credit problems like arrears, payment defaults, late payments, CCJs or IVAs mentioned against their names. Such people can pocket the loan for variety of purposes like renovation of home, buying a car, planning a wedding party, going to a holiday tour or for debt consolidation.



In these days of cut-throat competition in the loan business, lenders prefer seeing the borrowers’ financial ability to repay the loan rather than bad credit history. Once the lender has verified the borrower’s repaying ability through past employment record, annual income and bank statements etc documents, usually the loan is approved. But in deciding over the loan amount and repayment duration the lender will take caution.

To further reduce the risks, lenders prefer taking some property of the borrower as collateral. Secured bad credit loans are therefore easier to avail. But these loans should be preferred when greater money is to be borrowed depending on value of collateral. Other advantages are comparatively lower rate of interest and larger repayment duration of 5 to 25 years.

Unsecured bad credit loans, however, are harder to get as lenders’ risks are higher in the absence of collateral. Tenants and homeowners both can borrow money under these loans without risking any property. Only smaller amounts of up to £25000 are approved for shorter duration of 5 to 15 years. To cover risks, lenders charge interest at very high rate.

Take a copy of your credit report and ensure that there are no errors in it. It is advised to go for the loan with improved credit rating that you can achieve by paying off some easy debts.

To combat high rate of interest rate, take bad credit loans from online lenders who are known for competitive rates. They also are known for less additional fees and faster approval.