Adverse Credit Loans

When it comes to borrowing money, one factor has a large influence over whether your application will be accepted by the lender, and if you are, the rate of interest that you will be offered. This factor is your credit history – those who have a good record of borrowing money, and, crucially, paying it back as agreed with no missed or late payments will find that getting further credit is no problem. Conversely, those who have had financial difficulties in the past and have a blotted credit history may find that certain loans are not available to them.

People find themselves with what is considered a bad credit history for a number of common reasons, ranging from missing a payment on a loan or mortgage, through to having a county court judgement made against them. Lenders pay close attention to an applicant’s past history with regards to credit, using it to gauge the risk that the borrower would pose in terms of non-payment on any future loans.

Thankfully, there are lenders in the market who specialise in offering finance to those considered to be a higher risk, while many mainstream lenders shy away from providing loans to those with a bad credit history, that needn’t prevent such people from getting the money they need as the smaller specialist lenders are there to help.

If you do currently have a poor credit record, then your options when it comes to finance will be fairly limited, however there are still options open to you. What you will need to be aware of is that such options do carry a premium over standard loans and mortgages, as for one there is less demand, and secondly the lender is taking on a bigger risk. The interest rates on so called ‘bad credit’ or ‘adverse credit’ loans tend to be in the range of one to three percent higher than an equivalent regular loan, the exact difference will depend on the borrower’s circumstances.

Being a homeowner can greatly reduce the effect on your credit worthiness of having a poor credit history, as you will be able to use the capital that you own in your home as security against an adverse credit loan, which will make lenders more likely to approve you for a loan, and also give you a better rate of interest. If you are not a homeowner then you will find that your options are more limited, and the rates you can expect to pay will be higher.

An adverse credit history isn’t a permanent thing, your credit record only keeps note of your borrowing for a certain number of years, and also includes any loans which you have successfully repaid, so even if you can only currently get an adverse credit loan, if you keep up the repayments on it you may find that further down the road your credit situation will improve, and you will have access to the full range of regular loan and mortgage products.