Getting a loan with a poor financial history is not always easy, but that doesn’t mean to say it’s impossible, and there are many lenders out there willing to lend to those with less than ideal credit history subject to certain restrictions and with generally higher fees. Here we’re going to have a look at some of the main things that creditors will look at if you’ve got a poor history.
Note: Many people are overly concerned with their credit score. This is not the same thing as your report or history. It’s a number generated by any one of the credit reporting agencies in order to give a numerical value to how good your history is. It’s unique to each agency, and tends to only be used to assess an applicant’s credit risk. Whilst there is a need to be aware of your credit score, your Public Report and Repayment History should certainly hold the priority.
The biggest things that creditors will look for when deciding to lend is those major black marks against your finances that come through the courts. This includes things like County Court Judgements and bankruptcy. These show a severe prior problem with debt, and should be avoided wherever possible. If they were far in the past, then you may be OK.
Current debt is an interesting one, because it can go one of several ways. You might have too much current debt in addition to a poor history, which will be negative, but you might also have no open credit accounts at all, which could also be seen as negative because a new creditor can’t be sure if you’ll be able to manage their loan. A small, well-managed debt can be very valuable indeed. Often it’s a good idea to chat to the company you’re hoping to use as a creditor. Everyday Loans, for instance, have advisers for you to talk to before you even apply.
Previous Repayment History
This is the most obvious one – lenders will look to see when your last negative impact happened. They fall off your report after six years, but lenders who are willing to lend to those with poor history will often still be comfortable if some time has passed. Another big plus is if you did eventually pay off the debt that you owed, rather than having to settle or otherwise.
There are of course many different things that lenders look at, so it’s always a good idea to have a chat with an expert beforehand.