Your credit report underpins a lender’s decision about approbating your loan application. Previous missed payments and defaults wreak havoc on your ability to qualify for lower interest rates. In case of an abysmal credit score, most lenders cannot see you in a position to apply for a loan, let alone qualify for lower interest rates.
While some loans, including payday loans, which are aimed at meeting small emergencies, are approved without emphasising the requirement for a stellar credit history, personal loans and other long-term loan applications cannot be accepted. Lenders will most likely repudiate your application straightaway.
Easy availability of emergency loans has downplayed the preponderance of having an up-to-scratch credit report. While it cannot throw light on your repaying capacity, for which lenders are basically reliant on your current income sources, it speaks volumes about your financial comportment in the past.
Being capable of discharging your obligations does not guarantee that you will not abdicate your responsibility to settle your dues. Lenders feel inclined to sign off on your application when your credit score is not less than perfect.
Not all borrowers can maintain excellent credit reports, but there are certainly some measures they could take to spruce it up. If not perfect, your credit score should be fair.
The greatest advantage of a fair credit score is that it paves the way for qualifying for lower interest rates. It reveals that you have managed to be loyal and committed towards your financial obligations. Whether you take out a personal loan or a mortgage, your chances of obtaining lower interest rates are high. However, getting the best loans for a fair credit rating in the UK is not a cinch.
When it comes to giving the “green light” to your application, lenders run an affordability check, and your credit score perusal is a small course of action for the process. Approval of your loan application is not guaranteed by a fair credit score. Although it insinuates that your chances for receiving low interest rates are up, you will still likely fail to secure the best deal. Lenders will take stock of the risk involved in lending you money.
Chances are, your credit score is fair, according to credit reference agencies, but your lender’s measures might find you a risky borrower. Lenders employ their own methods to calculate the overall risk, and if they find that you are likely to commit a default, they will either turn you down or charge high interest rates.
If you want to borrow money to meet unforeseen expenses, you will need small emergency loans such as payday loans. The size of these loans is so exiguous that you will be required to pay them off in one fell swoop. You do not need to have a good credit score in order to qualify for these loans. As a matter of fact, some lenders approve these loans based on the income details you provide in your application form.
But loans that are required to be paid down over an extended period of time involve strict approval criteria. You must have a good credit score to be eligible to attain lower interest rates. Online lenders are flexible, and therefore, they do not mind entertaining applications from borrowers with a fair credit rating.
Here are the loans that you can obtain with a fair credit score:
Personal loans are small loans, but they are paid down over a period of time. They could be used for a variety of purposes such as buying a car, home renovation and the like. The minimum repayment length of unsecured loans is about six months, and the maximum is up to five years.
Bad credit personal loans are available, but they charge high interest rates. Bear in mind that personal loans with a good credit score are also not so inexpensive because a lender does not have the right to repossess any of your valuable assets to liquidate them in case things go wrong. Despite that, APRs for personal loans are lower than those of payday loans.
No guarantor loans online are small loans, but they provide you with more money than payday loans. No guarantor loans are also as expensive as personal loans, but the loan size will be smaller. You should still try to compare interest rates because they vary from lender to lender.
While personal loans could last up to five years, no guarantor loans cannot go beyond a year. The whole amount is paid down within a year. APRs for non-guarantor loans could be higher than personal loans, but they will still be lower than small emergency loans.
Secured loans can be easily applied for from a direct lender when your credit rating is fair. One of the benefits of these loans is that they do not charge as high interest rates as personal loans and non-guarantor loans.
This is because your loan is secured. Your lender has the right to liquidate your asset in case you fail to discharge your obligation. Secured loans also enable you to borrow a larger amount of money than personal loans and non-guarantor loans. Because these loans are not as risky as personal loans and payday loans, their APRs are much lower.
No matter which loan you take out with a fair credit rating, you must bear in mind that it does not guarantee that you will be able to secure lower interest rates. Your lender will carefully peruse your repayment capacity and credit history. If you are perceived as a risky borrower, they will certainly charge you high interest rates.
There is a possibility of getting a loan with a fair credit score at a low APR. Such loans include non-guarantor loans, personal loans and secured loans. Although they charge a lower APR, it is still recommended that you peruse your repayment capacity.
Jennifer Powell embraced finance writing just the moment she started working as a finance executive with EasyCheapLoan, which is a direct lender in the industry. Jennifer has an exceptionally keen eye for details and used her skills to pen down numerous blogs and articles on finance. When asked, she simply replies with a look on her face that shows how genuinely she cares for people struggling with financial problems. Jennifer works dedicatedly as a finance professional and considers sharing both her experiences and knowledge to increase the financial literacy of people and businesses.
