It can be a worry, if you know that you credit record is not good, to think that you will not be able to borrow any money as a result. Although borrowing should normally be done as a last resort, it can give us peace of mind to know that it is an option available to us and that we can use it if we really need it. It is good to be aware though, that not all lenders use credit scoring and so there will be borrowing options available even if you have a poor credit rating and will not be able to borrow using traditional methods. Examples of the types of borrowing you can choose from are
A payday loan is a very short term loan. You will normally be able to borrow between £100 and £1,000 and you will be able to keep it until you next get paid. A direct debit will be set up so that the repayment is taken from your account on the day that you are paid. This means that you will not forget to repay, but you will need to find the money to repay everything that you borrowed plus the interest and fees, so that you will be able to avoid any extra charges. The loans can be arranged very quickly, because it was recognised that a lot of the people applying for these loans needed money for an emergency and therefore, they decided that they would make the loans really quick to arrange. Some lenders will even provide the money within a few hours and others are available outside of normal banking hours so you can get the money that you need at any time.
Instalment loans are very similar to payday loans but they have a different repayment system. So rather than repaying what you owe in a lump sum, you can repay in a few instalments. This makes it easier to manage the repayments and it means that you will be able to more easily repay the loan without having to worry about finding a really large lump sum to repay all in one go. However, you will need to think about the fact that as you will owe the money for longer, the loan will be more expensive and so you will need to decide if you are prepared to pay the extra. If it makes the difference between whether you can repay or not, then it will be worth it, as if you cannot repay then you will have extra fees, which could be more than the additional cost that you pay for the instalment loan compared with the payday loan.
A guarantor loan will allow you to borrow a lot more money. You will normally be able to borrow between £1,000 and £10,000 which means that you will be able to use it for more significant purchases. It is repaid over a period of time in monthly instalments as well, which means that you will spread the cost. However, as they take on borrowers with a poor credit record, they insist that you have a guarantor. This is a person that is willing to cover the payments if you are not able to pay them for yourself and has a good credit record. This means that you will need to know someone like this and be happy to ask them to help you out.
So, there are a few options for you if you do have a poor credit record and need to borrow money. However, it is worth bearing in mind that they will be expensive because they are taking on a big risk by lending money to you.