We are taught to believe that having a good credit score opens up doors to numerous opportunities, as your credit score can assumedly affect your qualification for a loan – and that a poor credit score means you will likely be rejected.
No matter if you are trying to get a house loan for a mortgage, or simply a loan for your new business, you might make the assumption that lenders are unlikely to approve your application because of your poor credit score.
While this could be said to be true to an extent, if you have a bad credit score, in some respects, you actually shouldn’t worry too much.
When many of us think of the term “credit score”, we are put in mind of the credit scores that the various credit reference agencies (CRAs) – such as Equifax, Experian, and TransUnion – devise, drawing upon the information they have about a given person and their financial behaviour.
However, it is also important to appreciate that when a lender is determining whether to lend to you, it will carry out its own individual assessment of you, using its own bespoke scorecard. This will enable the lender to determine whether you would be a profitable customer.
You will find that each lender will score you differently – and this is important to note. With each lender having its own scoring system – to say nothing of the models used by the CRAs for their own scoring – there is no universal credit score that solely determines your suitability for a loan.
Of course, it is still a good idea to build up your credit score in the meantime, but if your credit score has already fallen, there is probably no need to obsess over it. When applying for a loan, a lender will usually look at your credit score, but this isn’t the only thing it will take into consideration.
Many factors are involved when it comes to whether your loan application is approved or not, including:
The above is not even an exhaustive list of all the data that lenders will look at when considering your application. As you can see, your credit score is only one part of how lenders evaluate whether you would be profitable for them.
The great news is, there are lenders out there that cater to those who have bad credit scores. This means you may still be able to obtain the right loan for your requirements, even if your credit score isn’t perfect. In fact, here at CashCompare, we can help you find FCA-regulated lenders that can offer bad-credit loans.
However, it's important to bear in mind that loans for those with bad credit might come with higher interest rates or fees. Always consider the terms carefully and think about the long-term implications of taking on new debt.
Before applying for a loan, we urge you to assess your financial situation to ensure you can comfortably manage the repayments. Responsible borrowing is key to maintaining your financial health, especially when you're working to improve your credit score.
This means that not all hope is lost if you are seeking a loan, but don’t have a great credit score. As a credit broker, we work with many lenders that have a proven track record of helping individuals with poor credit scores, so if you are looking for bad-credit loans, you have come to the right place.
For a no-obligation quote for a bad-credit loan, get started with CashCompare today.
Be sure to read our Terms and Conditions available on our website to fully understand our process and any fees or charges that may be applicable to our service.
"Warning: Late repayment can cause you serious money problems. Always consider if borrowing is the right option for you and ensure you can repay your loan." For help, go to moneyhelper.org.uk.