There is a relationship between your credit rating, your ability to obtain credit, and the interest you will have to pay.
If you have a very poor credit rating, then you will find it quite difficult to borrow money. There are ways, but they are very expensive. An example of these very expensive loans is a type of loan called a payday loan. These can charge high amounts of interest (typically APRs of nearly 2000%). They lend relatively small amounts of money for a short time and charge a fixed amount of money. Typical of such a loan would be a maximum loan of £750 and a fee of £25 for every £100 borrowed. What is intended is that the loan should be repaid very quickly and the term of these loans is 31days. If they are not repaid on time then there are penalty charges.
If you have a car, then it is possible to obtain what is called a logbook loan. This is a longer term loan that is secured on the registration document of your car. Essentially you are securing the loan against your car. Interest rates are typically around 430%. A typical loan might be for £1,500 and you would need to repay £53.60 a week for 78 weeks which is a total repayment of £4,180.
If your credit rating is poor but there are no outstanding CCJs even though you might have had them in the past, then there are some specialist loan companies that will offer unsecured loans with typical APRs of around 65%, but the rate will depend on just how bad your credit rating is.
If you own your own home and have a bad credit rating, then it is possible to obtain a loan based on the equity in your home. A typical poor credit rating secured loan might offer an APR of 20% to 30%. Securing such a loan against your home is dangerous unless you are sure that you will be able to maintain repayments.
So, if you need credit and have a poor credit rating all is not lost, but you need to be careful. Your best course of action is to contact a reputable
debt management company to see what they advise.
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debt advice, why not speak to the experts at
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