Applying for a Loan When Your Credit is Poor

It seems to be a universally accepted truth that if you really need a loan you can’t get one, whereas if you have plenty of money it is much easier to borrow more. This of course makes sense. If you were a bank, who would you prefer to lend money to? The person with a regular income and an excellent credit record, or the person with an irregular, patchy income and a somewhat questionable credit record? Put yourself in the banker’s shoes and you will see the logic of The Way Things Are.

The problem is of course that it is often those who don’t have much money whose needs are greatest when it comes to borrowing. People with low income, who are on benefits or unemployed with poor credit, these are often the people who really need a loan. So if you fall into this category, say if you are a tenant on low income needing a loan, what are your options?

The first thing you will want to do is to put together all the information that the potential lender is likely to ask for. Get all your recent payslips together if you have them, together with bank statements and any other proof of earnings, income or assets.

Then you will want to clearly document your monthly outgoings. Gather together your recent electricity and gas bills, mortgage or rent statements, work out how much you spend each week on food and other essentials. The key thing here is to try to rove that your monthly income is greater than your monthly outgoings. The higher the difference between the two, the more money you should be able to borrow.

If you do have a poor credit record, it will be more difficult to find a lender willing to take you on, but take heart because it is not impossible because there are reputable lenders out there who will lend you money, as long as you can show a realistic repayment plan. Do watch out for sharks though, make sure you only ever borrow from a regulated lender.

Try to approach more than one lender so that you have different deals to compare. Often it’s not the first lender  who gives you the best deal, so shop around. As long as you do your research, put the necessary information together and show you are a good risk rather than a bad one, you might find it easier than you think to get a loan with poor credit.

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