Is it possible to get an unsecured loan if I have bad credit?

What are your loan options if you have a poor credit history?

It is a well known fact that it is much harder to get an unsecured loan if you have bad credit. However, despite the myth that it is impossible, there are in fact some options available to you if you are looking for an unsecured loan and you currently have a bad credit rating.

What defines a poor credit rating?

There are numerous reasons why someone might end up with a poor credit rating that then means they are unable to get a mainstream unsecured loan. This could range from having problems with paying off credit card bills and making mortgage payments on time, to having no credit history because you have never had a loan. Unfortunately saving to buy something outright does not give you any sort of credit when it comes to lenders assessing you for a loan.

Specialist loans for bad credit applicants

If you have a bad credit rating then you are not just going to be able to walk into any lender and request a bad credit loan. Instead there are a specialist range of products available for people with a bad credit rating or low credit score that include unsecured loans, guarantor loans and also adverse credit cards. This type of credit demand higher rates of interest due to the increased risk to the lender.

What are the advantages and disadvantages?

Bad credit loans are more expensive with high APR rates

Perhaps the biggest advantage of a bad credit lender is that you are actually able to borrow the money you need, which you would otherwise not be able to do as an unsecured loan, although there may be secured loan options that are available to you if you are a homeowner. Taking out this type of loan could allow you to consolidate your debts and make a single, affordable, monthly repayment. A knock-on effect of this is that by only having one repayment to make and making it every month, you will not only be paying off your debt, you will also be repairing your credit score and gradually improving it.

The biggest disadvantage of this type of loan is that you will find the interest rates are much higher than mainstream loans because of the higher risk you represent to lenders, therefore they are keen to recoup their costs as quickly as possible through interest repayments.

How to choose the right loan

As there are a number of options available to you it is in your best interests to make sure you get plenty of advice about the products that are potentially available to you by consulting experts. A specialist bad credit loan broker is a good place to start to ensure you have all of the secured loan option details, and they will also be able to provide you with unsecured loan options as well.