By Tom Dawson

Ever since the credit crunch took a hold of the UK economy the lenders have re thought their score cards, and as a result of this more and more people are falling into the category of having an imperfect credit score. This invariably makes it more difficult to arrange loans or finance of any kind, but not impossible.

What is it that defines bad credit?

There are a number of reasons why you could be deemed as having a bad credit record, with some factors contributing more than others. I have listed them below with the ones that have more of an impact on your credit score at the top of the list;

Bankruptcy: If you are an undischarged bankrupt it is illegal for you to take out a loan of any kind for more than 250 without the permission from the lender that you owe money to, however if your bankruptcy has been discharged, this will still have an impact on your credit score but it will not prevent you from taking out any new loans or finance. Your bankruptcy is usually discharged after 12 months.

CCJs (County Court Judgements): A county court judgement is applied to your credit score when a lender or somebody else that you owe money to, seeks the help of the County Court to make a judgement against you in order to get their money back. The CCJ will stay on your credit record for 6 years, unless you pay in full within one month of the judgement being issued.

Defaults: A default notice is a formal letter issued on behalf of a lender to a borrower, and it will state the amount of arrears and will give you a deadline for you to continue to make repayments. A default notice is usually served after an account is between 3 and 6 months in arrears. The default notice will stay on your account for 6 years and have an impact on your future ability to lend money.

Arrears: Any Arrears or missed payments will show up on your credit record as arrears before they get to the stage where the lender issues a default notice.

No previous credit: not having a payment profile on your credit report can have an impact on your credit score, as the lenders like to see that you have managed to keep up repayments on previous loans and finance before offering any large loans or mortgages.

Electoral register: Not being registered on the electoral register at your current address can also drag your credit score down, as such it is important that you make sure you notify them of any change of address as soon as possible.

Can I still get a loan with a bad credit history?

There are still loans available for people that have a low credit score or have a history of bad credit and they can be broken down into two main loan types and that is secured loans and unsecured loans.

Secured Loans

A secured loan is a loan whereby the lender requires some collateral to be pledged in order for them to approve the loan. There are two main types of secured loans detailed below:

Secured home loans: This type of loan requires a second charge being placed on your home behind your mortgage lenders charge. This type of loan can be arranged for homeowner with bad credit but will require that you have enough equity in your property to ensure the lender can recover their money should you fail to make the scheduled repayments. This type of loan will always require a credit check to be carried out as part of the underwriting process. Loan amounts between 5,000 and 100,000 are available for terms of up to 25 years.

Logbook Loans: This type of loan as the name implies is secured on your car logbook. This is open to people no matter what their credit history, and the lenders do not require that a credit check is carried out as part of the underwriting process. You can borrow up to 25,000 with this type of loan so long as your car is valuable enough and has no outstanding finance on it.

Unsecured Loans

An unsecured loan is a loan that the lender does not require any collateral making this loan ideally suited to tenants and non-homeowners. Because the lender has no security they are less likely to approve the loan and when they do they will charge a higher rate of interest.

About the Author: Tom Dawson is a UK finance expert offering help and advice for all types of

cheap loans

but especially

loans with bad credit

. Why not visit his site today?

Source:

isnare.com

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