“it is important to say that there is no such thing as a “credit blacklist” of people who can’t get credit...”
Can I get a loan?
Having a bad credit history doesn’t mean you won’t be able to secure credit; you’ll just be more limited in the options you will have. For example, you may not be accepted for the loans and credit cards with the most attractive terms and rates, as these will likely be reserved for people with the best credit histories. It is important to say that there is no such thing as a “credit blacklist” of people who can’t get credit. In fact, there are companies that tailor their loans and credit cards specifically for people with bad credit histories, like Ocean*
These products may come with high interest rates and lower credit limits, reflecting the higher risk of lending to people who have struggled to manage credit in the past. However, the interest rate you’ll be charged will depend on your personal circumstances.
With that said, if you pay back your bad credit loan on time each month, you should be able to demonstrate your reliability as a borrower and work towards rebuilding your credit history again. You‘ll have to take a disciplined approach to this though, so think long and hard about whether you’ll be able to afford the repayments based on the interest rate that you’re offered.
*Ocean Credit Card 39.9% APR variable (representative)
“if you’re a homeowner but have a bad credit history, you may be more successful applying for a secured loan than a personal loan...”
Loans designed for people with bad credit
There are a couple of loans that can be more appropriate for people who don’t have the best credit history:
As the name suggests, a secured loan (also known as a homeowner loan) is secured against your home. Unlike a personal loan, a secured loan gives your lender a claim to your property if you can’t keep up with your repayments. Because of this, interest rates may be lower on secured loans compared with some unsecured personal loans, but if you can’t keep up with your repayments your home could potentially be put at risk – so you need to think carefully about whether this type of loan would be appropriate for you.
If you’re a homeowner but have a bad credit history, you may be more successful applying for a secured loan than a personal loan.
But although a secured loan does come with its advantages, remember that you are putting your home at risk if you don’t keep up with the repayments – so you shouldn’t opt for this type of loan if you’re not 100% sure that you’ll be able to manage your repayments.
A guarantor loan is an unsecured loan designed for people with bad credit scores, but as the name suggests you’ll have to supply a guarantor to qualify for it. A guarantor is a person willing to meet your repayments if you find that you can’t. They will need to have a good credit score and not be linked to you financially (so not your spouse).
It’s wise to make sure that the guarantor you pick is aware of the risks they’re taking and that they already have a good relationship with you, so that if anything were to go wrong your relationship wouldn’t be ruined.
Okay, so we know this one isn’t exactly a loan, but a credit-building credit card could be a good solution for you if you don’t want to borrow a huge amount. These types of cards, like the Ocean Credit Card, often come with a low credit limit and can help you to build your credit rating back up, as long as you use them responsibly by making the minimum payment on time and staying within your credit limit. Not doing so could harm your credit rating.