What options are there for those with bad credit?

If you are struggling with money to pay for bills or outstanding debt, perhaps due to an emergency situation that has arisen – such as losing your job, or a family member becomes ill, you may decide to look at borrowing money to tide you over in the mean-time, until you find a more permanent solution However, you may find that getting accepted for a loan becomes increasingly difficult if you have a less than perfect credit history. So what do you do? Here at TechRound, we take a look at some of the options available to you if you have bad credit, in order to help you get your finances back on track, sooner rather than later.

Guarantor loans

Guarantor loans may well be an option for you if you have bad credit. These types of loans are aimed at those who are finding it difficult to get accepted for a loan through traditional means due to their credit history. This is an unsecured loan (lasting up to seven years and the ability to borrow up to £15,000) that needs the applicant to have another person acting as a guarantor for the loan – this can be a family member, work colleague or a friend. This is in case you are unable to pay back the loan at a later date.

Secured loans

Secured loans may be another way to borrow money if you have bad credit. Secured loans work by making an agreement with the lender to borrow money that is then secured against assets. This will usually be one of the following:

  • Property, such as your flat or home
  • Car
  • Jewellery
  • Art
  • Bike

Offset by these assets, you can raise finances in order to be able to get out of financial difficulty. However, it is important to note that should become unable to keep to a repayment plan, the lender has the right to then repossess any items that were part of the secured loan agreement, in order to recover the outstanding debt.
If you decide that a secured loan is the right option for you, you should check that the company in question is regulated by the FCA, prior to making any arrangments with them to protect yourself from scams. You can check online through the FCA register to see if they have been authorised.

Borrowing from family and friends

It may be a choice that you feel totally comfortable with, but it is an option nevertheless – and it could work out a lot cheaper for you in the long run compared to asking for a loan from a lender, as typically, if you are borrowing from relatives or friends there will not be interest incurred. However, it is important to set up a mutual agreement stipulating guidelines in order to avoid any potential problems in the future, and so you both know where you stand.