Finding unsecured loans from main street lenders is a far cry for people with poor score. For, your past credit history is what has always made you eligible for more loans from conventional lenders. However, with the emergence of FinTech industry it has not only become more convenient to borrow with poor credit, it has also become possible to leverage these loans to improve your credit health.
In one of the recent studies it was revealed that 80 percent of online borrowers of payday loans in the UK were the ones with bad credit rating. In fact, many of them used payday loans multiple times in a year. This proves that these borrowers had managed their loan repayments carefully before availing the loan. Thus, it would be wrong to say that online loans are for the one who can never afford their debts.
If you too are looking for additional funding for your personal, social or business reasons, here are some of the popular loans you may consider using:
Payday loans are instant cash advance loans which are extended as emergency loans at higher interest rate for a period of few days. As the name suggests the deadline to repay the loan and interest rate is your next salary day. These loans are generally used by people on full time jobs as a gap fill loan before their payday. Currently FCA has put out a cap of £24 interest rate on £100 payday loan within a month.
Short term loans
However, owing to poor credit health if u find it difficult to repay in a lump sum payment, you may consider applying for short term loans. Many lenders extend small loans to bad credit borrowers and that too, without any guarantor or collateral. Short term loans can also be used as an effective way to improve your credit rating as these are easy to manage and repay.
Long term secured loans/ Homeowner loans
A loan should always be borrowed according to your credit situation. As bad credit loans come at higher cost, a lot of borrowers opt for second charge against their homes. It helps them raise more loans despite the current mortgage. Many borrowers use home owner loans for home improvement or debt consolidation as it helps them avail big ticket loans at low rate of interest.
Also, being a homeowner, you can avail unsecured personal loans with more ease. Being a homeowner your credit rating is considered higher than those of tenants.
All in all, FinTech industry has paved a legal way to stay afloat for UK households with credit hassles. In fact, when you deal with FCA authorized loan broker, you could also use their loan advice to avail the best loan for your credit situation. You can compare and make a choice. They also help you draft a repayment plan if you seek their help.