Once you’ve done this, check your credit history. When you apply for a loan, lenders will check this to see whether you’ve been a responsible borrower in the past.
This is why it’s important to make sure everything is correct on your file. After all, any mistakes could hinder your loan application.
Search without leaving a mark
If a loan is something you can afford, the next step is to use a price comparison site or see whether lenders offer a soft search tool. This lets you shop around for loans you’re likely to be eligible for without the search leaving a footprint on your credit history.
Why’s this important? Well, every time you apply for a loan - regardless of whether you’re accepted or rejected by the lender – it’s recorded on your credit history.
A spurt of applications could give lenders the impression that you’re desperate to borrow cash. As a result, they may turn your application down. This is where a soft search tool can work in your favour.
You can find loans you’re likely to be accepted for by looking at credit checking services like CreditMatcher. Check out our previous blog for more information on this.
So what does this mean for the lender? Well, if you fail to make your repayments, they have the right to recoup the debt by repossessing your property. This minimises their risk of losing money – but obviously, it presents a greater risk to you.
If you’d prefer to take out a personal loan that isn’t secured to anything, this could still be an option if you have a poor credit history.
Just be aware that you may be offered a higher interest rate than you’ve seen advertised, as this reduces the risk to the lender.
Is there an alternative to a loan?
Remember that lenders will take into account a number of factors when you apply for a loan, including your employment status, income and details of how much you want to borrow.
Having a poor credit history is always a major factor in whether you’ll be accepted, but it’s not the only thing they’ll consider.
If you’re turned down for a loan because of your credit history, don’t worry - there are things you can do to increase your chances of being accepted in the future.
For example, you could consider a credit card, which, if you’re accepted and use it responsibly, you can use to gradually improve your credit history.
For ways on how to improve your credit history, head here.
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Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender.