Money Makes the World Go Round

If you have a poor credit rating the financial services industry has a message of mixed blessings for you. First the good news: yes, you can get a loan, but the bad news is, it’s going to cost you!

But I haven’t done anything!

There are two reasons why you might have a poor credit history. Firstly, you haven’t had much of a history of borrowing so the credit rating agencies have nothing to judge you on. Secondly, and this is probably the most likely one, you have had credit in the past and been less than successful in maintaining all your payments consistently.

• What is Different about Bad Credit Loans?
  These days, banks offer a range of products and services designed to meet the needs and wants of all their customers. Many branches will have a different advisors and customer relations managers who are assigned to the different customers of the bank.

By hook, or by crook

It might have been a mortgage that over stretched you for a couple of months, it might have been a credit card that you kept forgetting to pay when the statement arrived, or it might have been that utility bill you thought wouldn’t matter if they chased you for payments for a few weeks.

Big business, big brother

Well, those indiscretions or mistakes can get you registered with a low score at credit ratings agencies. Big companies have the manpower to do this sort of thing. So unfortunately, if you want to play the game and make sure you have a good credit rating for when you need to borrow money, you also need to keep your house in order.

Where can I go to get finance?

Are you looking for a loan so you can buy a car? If so, you could go directly to companies that specialise in finding cars and finance for people with poor credit rating or CCJ’s. But be warned in searching for your next set of wheels you could be placing your hands in a set of golden handcuffs: 29.9% apr is not unheard of with these companies. That’s one expensive motor.

There are some companies, such as Netcars which is offering finance at a more respectable 17.9% on loans between £2,000 and £100,000 and there may be others around which are even more reasonable. It definitely pays to shop around for credit.

A loan for other purposes

If you want a loan to consolidate you existing debts you will probably find it very easy to get the money. Finance houses look favourably on people who appear to be responsible about clearing their debt. Most of the industry recognises that it’s very easy to get into trouble with finances and hence there are a huge number of people with poor credit ratings who are looking to clear their indebtedness.

A loan for tenants

If you’ve got a bad credit rating and you are scouring the internet for a loan you will see dozens of sites that are offering these bad credit loans to homeowners. This is because the lender uses the house as security. So as a tenant what can you do?

Well, many lenders will accept a large possession as security, as long as it is worth the same or more than the amount of money you want to borrow. So a car for instance is a common object put up as security. The lender will officially take charge of the vehicle when they lend you the money, but you will still have possession and use of it. Once you have paid off the debt the ownership of the car reverts to you.

For smaller sums, you could always consider a pawnbroker. There are increasing numbers of these establishments being opened up in UK cities; a reflection of today’s credit society.

When you use a pawnbroker you take an object in to the shop, usually it’s something like jewellery, which you then ‘pawn’, or swap, for money for a set period of time. Hopefully, you are then able to return to the shop and pay back the loan before your time is up, otherwise your jewellery will end up in the shop window for sale to the public.

More Information:

• How is Your Credit Rating?
  If you’ve ever been offered a substantial line of credit with one company and been refused by another, it’s all a result of each company’s credit scoring policies. Your personal credit score may fall within the acceptable limits for one company and not for another.
• What can I do to improve my credit score?
  Credit scoring models are complex and can be difficult to understand. If one factor changes, your score may change – but improvement generally depends on how that factor relates to other factors considered by the model

External Links:

• Credit Scoring from the FSA

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