Unfortunately, we aren’t born with good money management skills, and if we fail to receive good financial education, then things like saving ample funds for emergency expenses can be difficult. And, even if you are now trying to sort your finances out and save for the future, your credit history can still haunt you when it comes to applying for new credit products.

Whether it’s a low interest credit card or even an arranged overdraft, if you’ve struggled to meet your financial commitments in the past, some of these popular credit products can be just out of reach. So, what are the options available for people with a bad credit history who need to borrow a small amount of cash quickly?

Bad Credit Loans

Well, you might be looking for a bad credit loan. A bad credit loan is just that – it’s a loan that is accessible to people with a bad credit score. It might also be known as a payday loan or an instalment loan which might help explain how it works: you apply for a small amount of cash over a short period of time, and if your application is approved you get access to the funds straight away. Then, on your next payday, you repay the loan with the accrued interest. With instalment loans, you repay the loan in instalments over a few paydays.

How does it help

The idea of a bad credit loan is to help you out in times of temporary cashflow shortfall. Where someone with a good credit history might put a payment on a 0% interest credit card, it is unfair that those with a poor credit history have to suffer the consequences of their poor financial management in the past. As marks on your credit file will show for up to six years, even if you have completely revolutionised your financial situation and money habits, you are not necessarily exempt from the difficulties of obtaining credit.

Another reason you might have a bad credit history is if you have never used a credit facility before. There are things you can do to help improve your credit score, like registering on the electoral roll, but if you’ve never even had a mobile phone contract in your own name then there is probably very little evidence of whether you have responsible borrowing habits. Lenders only want to lend to people who have shown that they have a commitment to their financial responsibilities, and so if you have never had to meet a contractual obligation when it comes to your finances, lenders simply don’t know if lending to you will be a responsible decision and may therefore decline your application. This is sometimes known as having a thin credit file.

Bad credit lenders know that sometimes the reason for having a bad credit history is that you simply do not have a credit history – and everyone has to start somewhere!

Applying for a Bad Credit Loan

If you are thinking of applying for a bad credit loan: a good place to look is online. Most direct payday lenders are online businesses so you can access the application form as quickly as your internet speed allows (usually seconds!). You can often get an instant loan quote by entering the amount you need to borrow and the time you need to borrow for. With cashasap.co.uk, the amount we quote to you at the start of your application is the amount you will repay on your repayment date. There are no fees or subscriptions associated with our loans so you can be clear on exactly how much the loan will cost you before you apply.

The applications for a bad credit loan are usually quick and easy and there are no trick questions designed to trip you up. Online direct lenders want an accurate description of you and your financial circumstances as they won’t ever meet you in person, so it’s important that you are honest in your application form. Sometimes putting false information can actually get you declined as the creditworthiness and affordability assessments include credit reference agencies checks to ensure the information you entered on your application form matches the information held by CRAs.

Which loan company is the best for bad credit?

It’s impossible to say which loan company is the best if you need a bad credit loan, because they’re all slightly different and have different repayment options which will suit different people. However, if you are looking to apply for a bad credit loan, it’s probably best to apply with a direct lender.

There are plenty of benefits to using an online direct lender, but the main ones are the speed in which your application will be processed and how quickly you will have the funds transferred to your bank account if your application is approved.

Because your application will be submitted to the lender directly, there is no broker or third party to act as a middleman, potentially delaying the process of having your application looked at. Secondly, because a direct lender will approve your loan directly, they will transfer the loan to you, so you don’t have to wait for the decision to be passed through another service.

Being a Responsible Borrower

Although there may be various reasons you need access to cash quickly, taking out a bad credit loan needs to be a considered decision. If the payment can wait until your payday, or you’re able to budget for the rest of month to meet an unexpected expense, then these options should be your first port of call. Because you pay interest on a bad credit loan, using your own money instead of borrowing from a lender will nearly always be cheaper.

You should also make a responsible decision when it comes to applying for credit anywhere as failing to make your repayments on time can cause you serious money problems in the future – which is the opposite of what you want if you are trying to rebuild your credit file.