So you’ve just been turned down for a loan or remortgage and although you have a good disposable income and can afford to repay you just don’t know why.
It’s likely the lender has checked your credit history and sees entries, which makes him believe you are a high credit risk. However, don’t worry, as there will always be a lender who will offer you a loan if you can offer some form of security
Getting yourself a bad credit history can happen quickly and accidentally. But no matter how it happens e.g. missed payment on a phone bill, utility bill. Or even worse a mortgage repayment missed or a personal loan payment missed can all add up on your credit record.
One of the top tips if you are rejected by a lender due to bad credit scoring is not to apply anywhere else until you are 100% sure why you were refused. Applying repeatedly and getting refused repeatedly will only give you an even worse credit record. So, if you really need a loan then make sure and apply to a specialist adverse credit lender who is ‘more likely’ to accept you ir-regardless of your credit record.
Keeping a close eye on your credit record will help avoid any nasty surprises when it comes to applying for a loan. So the advice is to always check your credit file before you apply for a loan, mortgage or even a credit card or anything where you need credit.
However in certain circumstances you can obtain a low credit score even if you have kept a squeaky-clean credit record. This can happen for example if you are not a t a fixed address for a lengthy period of time or you are not in regular employment.
Depending on how bad your credit history you may not even be able to borrow any money, even from specialist lenders. In the current light of sub-prime risk a lot of lenders are not keen on offering big amounts of money e.g. mortgages to people who are considered sub-prime.
If you find yourself in this situation then you will need to seek advice from a financial advisor. These can certainly help find you an appropriate mortgage and help you avoid any repeated rejections. You will of course have to pay a small fee for such help but if you feel that you can easily keep up with repayments then the extra cost will prove insignificant in the long run.
However, you will end up paying a higher interest rate so make sure and be fully aware of the financial commitment you are making before making such a move.
Of course you can also take out a secured loan even if you have a bad credit history. As the loan is secured on your property the lender sees there is less risk as if you default repeatedly then they ‘could’ repossess the house to help pay off the outstanding loan.
So with this type of loan you should carefully consider whether you can really afford to repay.
If a secured loan is not your preferred choice then taking out an unsecured loan may be your best option. Although you wont be able to borrow as much as a secured loan it will at least give you a chance to get your hands on the cash. Expect the interest rates to be higher than the advertised rates.
Conclusion
When a lender says ‘no’ it is not necessarily your last chance. Once you know the reason why then it can help you approach the most appropriate lender and help you focus on what type of loan you can afford or are willing to risk taking out.
Paul Hockney is an online loan expert who provides
bill consolidation loan tips and advice.
