Problems with your credit rating can lead to all sorts of other difficulties when it comes to borrowing money. Any traditional lender will simply not give money to people who have had credit problems in the past. The credit check sounds an alarm bell for the way they operate and you are seen as too great a risk for them. Fortunately not all lenders operate the same way, so there are a few options for getting money quickly even if your credit is bad.
You will not be surprised to hear that there are few lenders out there who are either completely reckless or just plain stupid, so they do want to be pretty sure that you will pay back whatever they agree to lend you. Lenders that are not interested in your credit report are only ignoring it because they have some other factors that they focus on in terms of covering their risk.
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The main options open to you that do not depend on good credit are either for very small amounts for a short period of time (Payday Loans), borrowing where you can get someone else to act as a guarantor, or loans that are secured against an asset that you own which is worth more than the amount you are asking for.
Payday loans are by far the fastest way to get cash into your bank, and with the best companies you can have money in your account within hours of completing a form online. These are always for small amounts of money (seldom more than $1,000 or £750) and usually have to be repaid in full on your next pay day. The reason your credit rating does not matter is that the only thing they need to know is that you have a job and that you have enough due in your next pay packet to repay the loan.
Payday loans should only be used to cover emergency expenditure such as large unexpected bills. They can lead to problems if you try to use them to cover a gap in your regular income and expenditure.
If you need to borrow more money than you could get with a payday loan, you need to look at the next type of bad credit borrowing. This type of personal loan is available through a few specialist lenders that do not need to credit check you because they ask that you provide someone to act as a guarantor for the loan. What this means is that you have to be able to name someone who does have decent credit, who will sign a form to effectively say that if you default on the loan, they will then be liable for repaying it.
This gives the lender the security of knowing they will still get paid even if you do fail to keep up with payments. These loans are not going to be quite as fast as an online payday loan, because the guarantor will normally need to sign a form, but a good company will turn it round in about three days from applying.
The final type of bad credit borrowing is an option for larger amounts of money, and is only available to homeowners. The mortgage loan or secured loan is when you borrow money and legally tie it to your house, so that if you default on payments the lender can ultimately have your house sold to get their money back. While these should not be entered into lightly, they are an effective way of using the equity in your home to access considerable amounts of money when you need it.
You can see that the door to borrowing is not completely closed when you have bad credit, but the lender always needs some sort of assurance of repayment, which inevitably dictates the nature of the loans available. When taking out any type of loan you should always ensure that you only approach reputable and well established lenders.
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