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Can you get a loan with a bad credit score?
If you’ve had problems managing credit in the past, like making late payments, or missing payments completely, or perhaps you’ve never borrowed before – these can all have a negative effect on your credit score. As a result, if you apply for a loan, you might find that you won’t be accepted by a lot of lenders. However, it doesn’t always mean you won’t be able to get a loan.
At Ocean, we have a range of loans to suit all situations, so we can try to find you one that you will be accepted for, even if your credit rating’s not the best. You may have to look at ones with less competitive interest rates, as those with 5% APR or less could be out of your reach, but don’t give up just yet!
It’s important to remember though to only take out a loan if you’re confident that you can afford to pay it back – as if you can’t you could damage your credit report even further and it could lead to debt problems.
Why are you being rejected?
Lenders decide whether or not they’ll let you borrow based on your credit score, and if they can see that you’ve got a history of managing credit badly, or that you have no history of borrowing at all, you’ll be seen as more of a risk, so they might not want to lend to you.
If you’re rejected once, don’t be tempted to apply for loads of credit cards or loans in one go, hoping that one might accept you. Each application leaves a mark on your credit report, whether you’re accepted or not. This could make you look desperate for cash, which might scare potential lenders off.
Some comparison sites also have loan finder tools that will help you identify loans that you are more likely to be accepted for, before you apply. These can help you narrow down your options without making any more applications and putting further searches on your credit record.
What else can I do if I’m rejected?
If you find yourself being rejected, it’s a good idea to act now, in case you ever want to take out a loan in future by starting improving your rating. The first thing to do is to try and make sure you don’t miss any more repayments as these stay on your file for 6 years. There are a few other things that are worth checking on your report too. Find out more here.
Are there any alternatives?
You may be able to get a loan from a credit union, a co-operative set up in the community to invest and lend money to others. These loans generally have a higher interest rate than the best buy personal loans, but they’ll still be more competitive than short term loans or other high interest forms of credit. You usually have to be a member of a credit union already to be able to borrow from it, so have a search in your area to see if there’s any you can join. Find out more about credit unions here.
If you’re after money to cover the cost of rent, furniture or any household appliances, you may be eligible for a Government interest-free budgeting loan. You’ll usually have to pay the money back over 2 years and you need to have been getting income-related benefits like Income Support, Jobseeker’s Allowance, Employment and Support Allowance or Pension Credit, for at least 26 weeks. Find out more here.