Applying directly to lenders
When looking for a quick cash injection, people often feel that applying directly to a lender is the most straightforward thing to do. The problem with this is that there are hundreds of different options available when applying for a loan in the UK, and choosing which to pursue can be a thankless task.
Even though some lenders claim to offer loans without the need for a credit check, all UK credit providers are obligated to conduct these checks by the Financial Conduct Authority (FCA). If you’re applying directly to a lender who then rejects your request for a loan, the hard credit check they conducted on your file could damage your credit rating further and numerous checks within a short space of time (if, for instance, you applied directly to multiple lenders) could result in your credit score taking a significant hit.
We can’t speak for other brokers but applying via Little Loans could help you to secure the money that you need with a single hard credit check. For one thing, applying for a loan through a broker will grant you access to multiple lenders rather than just one. Following a quick affordability checker, our application process involves only a soft credit check which means that your credit rating will not be impacted until you make an application directly to one of our lenders (at which stage they will conduct a full credit check).
What is bad credit?
Having bad or poor credit rating usually means that there are negative features in your credit history that indicate to lenders that you could be a risky borrower. Your credit score is the product of many factors, and some that can cause a person to have poor history include high debt balances, recent bankruptcy or other insolvency solutions, or a history of late payments or defaults on outstanding debts.
Although a ‘bad’ credit score could be the result of financial mistakes you made in the past, it could also be that you simply haven’t taken out enough credit over time for credit agencies to build up a picture of your borrowing habits. Poor credit history is something that can be improved upon, but it won’t necessarily prevent you from accessing credit when you need it.
Will applying for a bad credit payday loan have an impact on my credit score?
Making an application for a payday loan could impact on your credit score, but unfortunately, things aren’t quite that simple. As we mentioned before, all authorised and regulated lenders in the UK are required to conduct credit checks on applicants as part of their affordability checks and the results can influence their lending decisions.
Bad credit applicants might start to run into trouble if they make multiple applications to various lenders as a result of being rejected. This is because each full (or ‘hard’) credit check will leave a marker on the applicant’s credit record which could be damaging to payday loans OH Covington Ohio their rating.
How do payday loans for people with poor credit history work?
It used to be the case that payday loans were high-cost credit that people used to keep them going until they next got paid. On receipt of their paycheque, borrowers would then be required to pay back the amount they borrowed in addition to any fees and interest charged.
Nowadays, when people talk about payday loans, they’re often actually describing high-cost short-term credit that is repayable over several months rather than just on next pay day.
What are the disadvantages of bad credit loans?
They are often thе last resort for people with poor credit, and there are some significant disadvantages to payday loans. For one thing, they often come with a high rate of interest that outstrips other forms of borrowing. These days, firms are restricted in how much they can charge borrowers, but it’s important to make sure that you can actually afford to make the repayments in full and on time before you take the plunge.