Individuals with bad Credit histories often struggle with quick cash approvals. The most common reason behind this is a lack of knowledge. Generally, individuals applying for instant cash loans often believe bad and very bad credit scores are the same. However, it’s not true.

Confusion arises when individuals use the terms interchangeably. Both share different meanings and eligibility criteria. For example, an individual with a bad credit score may qualify for a loan despite a low score. However, the one with a very Poor Credit history must provide additional proof to get the same amount as the loan. Additionally, the interest rates may vary.

Individuals with poor credit scores struggle to get better rates on credit cards, car loans and mortgages.

What is a credit score? Which factors determine it?

A credit score is a rating that credit agencies provide by analysing your financial history. They analyse factors like- income, debts, employment history, credit length and payment pattern. These are the primary factors that determine the credit score of an individual.

They define credit scores according to categories like- excellent, good, fair, poor, and very poor.

According to Experian, a popular credit agency rates a score on a scale of 0-999. They designate 561-721 as bad credit and 0-560 as very poor credit score.  

Unemployed individuals require a guarantor as repayment proof to qualify. The guarantor or a family member agrees to pay the dues on the borrower’s behalf.

Alternatively, individuals with accurate form information and authentic proof may get very bad credit loans with no guarantor from a direct lender instantly. It helps you close needs and manage finances individually. Thus, it all depends on the credit agency’s evaluation.

The credit agencies pass the result to lenders. You may have more than one credit score. It is the lender’s choice that may choose any agency to evaluate the credit score.

Accordingly, a lender evaluates the possibility of the borrower to repay the dues. A low credit score implies low reliability and the individual does not get affordable loans. Alternatively, individuals with stellar credit scores reveal the best financial management. They may qualify for low-interest credit cards and debts quickly.

What is the basic difference between bad and very bad credit scores?

A poor credit score is a sub-category of a bad credit score. This implies that someone with bad credit may have extremely low credit. This mere difference decides the amount and interest rates one may qualify for. Words like bad credit and poor credit are interchangeably used for someone with a low or below fair credit score. 

Additionally, certain habits differentiate individuals with bad credit scores from poor ones. Individuals with poor credit history may:

• Be habitual to paying utility bills late
• Receive constant warnings and CCJs
• Missed over 2 payments on debts like- car loan, payday 
• Have a considerable debt without a plan to settle it early.

Thus, you may have a very poor credit score if you can relate to it. You have spent the credit limit and got further into debt. However, some loan providers consider individuals despite poor credit history. 

Who may consider a very bad credit loan for instant needs?

Every person has unique financial arrangements. Thus, loan requirements may differ. A loan for a very poor credit score is not for everyone. It is specifically for individuals with extremely poor credit history or scores.  You may consider the loan if:

• You have a score between 0-560
• You have no credit history
• You have pending debts, CCJ notices, bankruptcy
• Your debts exceed the required credit limit
• You have interest and penalty costs due to missed payments
• Have an inconsistent employment history. Self-employed, unemployed, and with part-time income may be considered.
• Tenants without permanent residential history or moving frequently

How does a loan for an extremely poor credit history work?

Individuals with credit scores below a specific number can consider very bad credit loans. Sometimes, having no credit history also results in poor credit scores. Thus, consider these loans if seeking a loan for the first time. A loan provider considers the reasons behind declining credit history. He analyses the approval scope by analysing the genuineness behind the financial crisis.

For this, he evaluates aspects other than credit score like- employment history, income, debt-to-income ratio, and recent credit behaviour. If an individual’s profile reveals improvement, he gets the loan. Additionally, individuals with regular and dense employment history may get better interest rates. One must make continuous payments to prevent credit scores from dropping further.

How much can you get with very bad credit loans?

With loans for very poor credit scores, you can get up to £10000 for personal and business needs. The amount you get depends on your income, sources of income, application filing, details provided, and authentic documents. You may get the loan instantly by providing a reliable personal ID and proof of income.

What if I need an amount over £10000 with a poor credit score?

Getting a loan exceeding £10000 with a very bad credit score is impossible. This is because the borrower is at risk of defaulting with a deteriorated credit history. However, individuals may qualify by strengthening the potential on the affordability grounds. For example, individuals may apply with a partner for bad credit joint loans, respectively. It increases the affordability potential. You may qualify for better rates and amounts here. 

You can enter a joint loan with a spouse, mother, father, brother, etc. The other person must have fair credit and an income higher than yours to qualify. In this case, the loan provider may approve the loan of an amount over £10000 instantly because he shares the surety to get the dues back on time.

Strategies to get affordable loans for poor credit

A loan for a poor credit history has competitive interest rates. It means you pay more than you could have with a good credit history. However, you can still increase your chances of securing a cheap loan for poor credit scores. The following tips may help with that:

1)   Try to pay some dues

It may seem a no-brainer. Reducing some debts from the credit history boosts credit score. It makes your profile a bit more reliable for the lender. It reveals your efforts towards maintaining a healthy credit history. You may get instant cash for your indecent credit score by doing so.

2)   Update personal and residential address profile

Whether applying for the first or umpteenth time, reveal your current profile. It showcases your consciousness towards responsible finance. Check details like- name, residential address, electoral roll number, house number, email ID, and contact number. If you have not updated it for a long, do so now. Loan providers prefer an active and recent profile.

3)   Increase your monthly income

Improved career choices may help you with affordable loans. For example, increase your monthly pay from £12000 to £16000 or more. It may help you get a high amount without extra interest costs. Part-time earners having over 3 part-time incomes or gigs may qualify for better rates.

Bottom line

Very bad credit loans are for individuals with severe credit damage. It may be due to–multiple pending debts, long periods of unemployment, overusing overdrafts, etc. However, the above tips may help you get instant cash help despite a poor credit score.  Analyse your finances and choose the amount that you can pay comfortably. The right amount and repayment term help you fetch an affordable loan. Furthermore, it limits the chances of default.

The post Who are very bad credit loans for and how to get one cheaply? first appeared on 1onefinance.