Extramile Finance

Getting approved for new loans can be extremely difficult when your credit score is very low. Traditional lenders see bad credit borrowers as risky. So, they either charge very high interest rates or deny these applications altogether. This leaves people with few good borrowing options when they need money for essential expenses.

Sticking with very bad credit loans with no guarantor from a direct lender can save on fees. Direct lenders own the cash they lend, while brokers just connect you with a lender for commission. Research lender reputation and past customer reviews before applying. A reputable direct lender offers clear terms, reasonable rates, and quality customer service.

What Is A “Very Bad” Credit Score?

You generally have very bad credit if your credit score is below 580 on the FICO scale. Lenders consider this a poor and risky score. Having past issues like missed payments or bankruptcies causes low credit scores.

Specialised lenders offer “no guarantor” bad credit loans tailored for borrowers with low credit scores. These loans do not require a creditworthy cosigner to “guarantee” repayment of the loan. They are designed for applicants with scores as low as very poor (300-500). Approval is based more on current income rather than credit history.

Advantages of Choosing This Loan Type

Getting approved for new loans with very bad credit can be extremely hard. Most regular banks will turn down applications from borrowers with credit scores under 580. They see these customers as too risky to lend money to.

However, people with low credit often still have critical financial needs. Speciality lending companies offer tailor-made “no guarantor” loans for those with poor credit. These loans come with unique advantages compared to standard bank loans.

You Can Get Approved On Your Own

A major benefit is that no guarantor loans do not require a creditworthy cosigner to back your application. They are designed for approval based primarily on your own income rather than credit score.

So those unable to find a willing guarantor among family or friends can still access emergency funds for important purchases. Approval depends upon consistent verifiable income and responsible money management skills.

Direct Lender Loans Avoid Commission Fees

Sticking with direct lending companies eliminates broker “middleman” fees. Direct lenders own the cash they lend customers, while brokers connect borrowers with banks for a commission payment.

Eliminating the middleman allows for faster application processing, often in as little as 24 hours. It also saves money by cutting unneeded broker fees. Always check for direct lending and compare multiple loan company options before applying for a no-guarantor loan.

Potential for Customised Loan Terms

Reputable direct lenders understand very low credit often requires more tailored loan terms. They may offer options for smaller, more manageable loan amounts for a constrained budget.

Applications for short 1-2 year loan terms are also often available. The best lenders also adapt loan repayment schedules to your unique pay cycles and cash flow needs. Carefully read through all available repayment terms per lender during rate comparisons.

Educational Resources Provide Financial Guidance

Choosing a no-guarantor loan company that provides free educational resources offers further advantages. Some lenders offer customers tools and information to help raise their credit scores over time. Resources may include budget planning spreadsheets, credit report access, customised score analysis, etc.

Within a few years, you can exit the “very bad credit” range and qualify for better future rates. Responsible direct lenders aim to make rates affordable based on your income.

Comparing quotes from multiple recommended companies helps find the most competitive options. Rates exceeding 35% should raise red flags about lender practices. However, some lenders provide rates as low as 29% APR for borrowers with scores under 500.

Considerations before Applying

Loans for people with very bad credit often have higher rates. This is because lending money to borrowers with low scores seems risky. You should compare a range of private money lenders in the UK.

Even with higher rates, on-time payments help raise your score. This enables you to qualify for cheaper loans in the future.

Consider the Credit Score Impact

When you apply for any new credit, it can lower your score a bit at first. However, responsible use of a bad credit loan builds a positive payment history. Making all monthly payments on schedule is crucial. This raises your score, so better rates are reachable down the road.

Before applying, check your current score on websites like ClearScore or Experian. Make sure you check reports from all major bureaus. This gives the whole picture so you know what your rate may be. Use any free score analysis tools your lender provides to monitor improvement over the loan term.

Can I Afford Payments?

Bad credit loans have higher rates than standard bank loans. Rates typically range from 25% to as high as 49% APR. The max daily interest is 0.8%. You need to consider carefully what payment level you can afford each month.

Make a budget first and figure out your payment capacity before applying. Calculate the loan cost at various terms from 12 months to 36 months. A longer 3-year term often comes with lower set payments. But you pay more for interest over time than a shorter 12-month loan. Applying for terms and amounts you can genuinely manage is critical.

Defaulting on payments makes credit scores and eligibility worse. So, borrow only what your budget allows you to repay on the set schedule. Use money only for essential purposes and resist the temptation to over-borrow.

Conclusion

Access to quick cash when you have bad credit is the main benefit of these speciality loan products. Since there is no guarantor requirement, you can get approved for the loan on your own based on your income and ability to budget for repayment. No collateral like a house or car is required either. These unsecured loans provide people with bad credit a second chance at responsible borrowing.

Getting emergency funds is extremely difficult for borrowers with very low credit scores. However, working with specialised direct lenders provides a solution tailored to your situation. Just be sure to compare multiple lenders to find reasonably-priced loan terms you can truly afford.