What are bad credit loans? Bad credit loans (also known as poor credit loans and refused credit loans) are a form of finance that can be either secured or unsecured. When secured, they may be ‘tied’ to an asset such as your home or car. Should you not keep up with repayments, you risk losing the named asset.
Many consumers of bad credit loans have previously been refused finance from providers such as their bank or building society. When used responsibly bad credit loans can repair a person’s credit history, while also providing a vital financial lifeline.
What are bad credit loans?
Bad credit loans are a discreet alternative for millions of consumers. They provide flexible, fast funds through an online loan application process that can be completed within minutes. In this article you can find more detailed information on the types of bad credit loans which are available in the UK.
Bad credit loans: A brief history
The bad credit loans market has been around in one form or another for decades. However, it experienced significant growth during the credit crunch – when many consumers were routinely turned down for credit by banks and building societies that had suddenly become more cautious. In 2004 the market was worth £100 million, while some 10 years later it had become an industry valued at £2 billion.
This growth placed a focus on the way providers were operating, and as a result, the bad credit loans industry underwent significant change. Providers came under fire to be fairer and more transparent, and as of 2014, the FCA (the Financial Conduct Authority) overtook regulation of the market.
Providers and brokers of bad credit loans must apply for FCA authorisation and adhere to the following guidelines:
- Interest and fees cannot surpass 0.8% of the amount borrowed per day.
- Borrowers mustn’t pay more in interest and fees combined than the amount initially borrowed.
- Default fees mustn’t surpass £15.
What are bad credit loans and Who are bad credit loans suitable for?
In navigating the question of what are bad credit loans, unsurprisingly bad credit loans are ideal for consumers who have a blemished credit record. A bad credit score may have arisen due to numerous reasons, including:
- Late or missed repayments on credit cards, catalogue accounts or car finance etc.
- A limited/non-existent credit history.
- A debt that passed on to in-house collections for recovery.
- A debt that passed on to the County Court for recovery (known as a CCJ)
How can you find out whether you have bad credit?
Bad credit is often deemed as a credit score of 550 or below. You can discover your credit score by using a credit service such as Experian. This is a completely free service (Experian make their money from recommending financial products). There are many other credit reporting companies, however, you should take care that the Credit Reference Agency you use won’t later enrol you into a monthly subscription. Call Credit offer a free credit report tool called Noddle.
Experian credit scorecard explained:
|Excellent||750 & Above|
|Good||700 – 749|
|Fair||650 – 699|
|Poor||550 – 649|
|Bad||550 & Below|
Remember – repairing your credit begins with using credit responsibly. In order to increase your credit score any credit agreement must be fulfilled and repaid in full on time.
Discover your bad credit loan options with CashLady – Apply here
Why would you choose a bad credit loan?
The MoneyAdviceService recommends that you hold savings equal to 3 month’s salary. Yet in reality, one in four UK families have less than £100 in savings. Read the article on “How to avoid bad credit loans” and restore your credit.
Bad credit loans are a valuable source of finance for those who need cash at short notice, such as when you need to:
- Pay an overdue bill
- Cover medical treatment
- Pay for a funeral
- Repair your vehicle
- Repair your home or a home appliance
- Cover delayed income
As well as helping those who’ve had a chequered credit history, bad credit loans also provide many other benefits, including:
- Providing a solution for credit repair
- Fast payment of funds – usually within hours rather than days
- A quick approval decision
- A process completed online with an ‘e-signature’
- Flexible payment conditions
- An option to repay early without paying fees
How do I apply for a bad credit loan?
CashLady bad credit loans are provided by one of our FCA approved lending panel. All bad credit loans applied for through cashlady.com are unsecured and applying is simple and fast. Fill out our online application form (this takes around 3 minutes), then receive your decision (this takes around 2 minutes). We work hard to find you the best payday loans for bad credit in the UK.
As an Award-winning Credit Broker (FCA authorised), we take our responsibilities to our customers seriously. The service that CashLady provides is, and always has been, free of charge. We guarantee that we will always be transparent. We clearly display our interest rate and representative APR and provide the total cost of borrowing before you apply.
We are registered with the ICO, providing you with peace of mind that your personal data is in safe, secure hands.
Reputation is a clear indicator of how seriously a provider takes their responsibilities. We can be found on both Smart Money People & Reviews.co.uk, where we hold a 4.68 rating out of 5, and a 4.2 rating out of 5 respectively.
If you’re unsure about whether a bad credit loan is right for you, if you still don’t understand the question what are bad credit loans or have another question, contact our team using the email address below. You can also use our live chat service for the answers you need almost immediately.