There are various reasons you might have a slightly less-than-great credit report. Perhaps you were a little irresponsible in your younger years, prioritising fun over finances and – despite it being years later – you’re still suffering the consequences. Maybe you came across a large expense before you had the money saved to deal with it and during the repayment period, you hit a bunch more cashflow issues which caused you to miss a few payments. Whatever the reason for having a poor credit history, you’ll probably find that you’re not exempt from the same trials and tribulations that others with a good credit score encounter. And you’ll end up facing the same financial woes, with none of the same financial support available.
For people with a good credit report, finding credit is fairly easy. They can apply with almost any bank or lender and have a high chance of being approved. So, when an unexpected or emergency payment arises, they’re safe in the knowledge they can cover the expense with credit. This means that it’s not only their money management that benefits, but their general wellbeing too, as they’re not burdened with financial stress.
There are a few ways to borrow if you have bad credit, and one of the most commons ways is through online payday lenders. Payday lenders originally offered just payday loans but now they generally provide instalment loans too. Being online means you can access the service regardless of your location or the time of day and if approved, you’ll often receive the funds almost instantly.
You might also consider guarantor loans which require another person to agree to repay the debt if you are unable to, and even pawnshops can be an option if you have something of value to pawn for quick cash. There are pros and cons to all types of borrowing, and depending on your circumstances, certain credit facilities might be more helpful than others.
Instalment loans have various advantages to make borrowing simple and easy. As most instalment loan lenders provide loans online, you can access the application form at any time of the day and from wherever you are. So, if you find yourself in need of cash to pay upfront for an emergency car repair, you can apply online and have the money in minutes if you’re approved.
Repayments for instalment loans are usually made on a monthly basis, so the total cost of your borrowing is split over a longer period, resulting in smaller and potentially more manageable repayments. Instead of having to repay in one lump sum next month, you can ease the financial impact on your budget and reduce the risk of having to borrow again if another cashflow issue crops up. As instalment loans are borrowed over a longer period than payday loans, the loan will cost more in the long run. If it means you won’t miss any repayments because they’re smaller, then it’s probably worth thinking about. However, if you know you can afford to repay the money in full next month with no difficulty, then consider using a shorter term loan to reduce the interest that accrues. You should also compare loan lenders before applying – even if an instalment loan is exactly what you need, use a loan comparison site to find a lender that offers a suitable instalment loan for you. The amounts and durations can vary, and repayment frequencies also differ between creditors.
Instalment loans can only help if the repayments are affordable. If you’re borrowing money knowing you might struggle to meet the payments, you could end up in financial difficulty or even missing the repayments altogether. This will negatively affect your credit file and make credit even harder to obtain in the future. While instalment loans have higher acceptance rates for people with a poor credit history, you shouldn’t rely on this kind of credit, and it should only be used in emergencies.
Just because you have a low credit score now, it doesn’t mean you can’t improve this over time and work towards accessing more mainstream financial solutions when you come across cashflow issues. There are some quick ways to increase your credit rating, and some things that might take a little longer – and a little more effort.
This is one of the quickest ways to better your credit file as it can be done online. It helps credit reference agencies identify you – and enables you to vote in local and government elections.
This is another relatively easy way to clear up your credit file and potentially add a few points to your credit score. Close any old unused bank accounts or lending facilities you no longer borrow from – while having a long standing relationship with a bank or lender can be a good thing, having too many facilities open can negatively affect future applications.
While it’s unlikely you’re ignoring any outstanding debt, consider whether you could be doing more to repay any loans or credit services more quickly. For example, if you only make the minimum payment towards a credit card, maybe you could increase the next few repayments to bring the balance down.
Having a poor credit history can massively affect your chances of borrowing, but it’s not the be-all and end-all. There are bad credit lenders who can help in the meantime while you try to improve your credit file.
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