Are you trapped in a tricky financial situation because of adverse credit scores? The hardship of finding suitable external funding is real. You cannot even look for traditional financing options.
This is because you cannot prove your creditworthiness to the lender. When credit scores are very poor, it indicates the bad state of your affordability. When you lag this aspect, getting a loan for very poor credit scores, even from direct lenders is difficult.
In this scenario, the lender does not have the least means to confirm the likelihood of loan payments. Despite this, they get ready to offer you financial help. However, this time, the lending conditions will become tougher.
Getting a considerable amount of loan should not be your aim. You are not in a position to afford even minimum payments. Moreover, hardly any lender will get ready to process your request.
With very poor credit scores, you can borrow any amount from between £ 1000 to £ 5000. This range is not a standard one, as different lenders might come up with various ranges. One thing that you must note is that you will be able to see limited options because of terrible credit scores.
The rate of interest and monthly payments for credit scores from fair to very poor have been shown in the table below.
| Credit scores | Rate of interest |
| 601 to 660 (Fair scores) | 7.7% |
| 500 to 600 (Poor scores) | 8.53% |
| 300 to 499 (Very poor scores) | 9.43% |
Certain pointers that should be in your mind while applying for loans with very low credit scores are there. Not to worry, as this blog has delved deeper into this aspect to educate borrowers like you.
Are you left with no choices because of very poor scores?
This is certainly not true, as not all doors are closed for you. Mainstream lenders might be out of your reach, but not direct lenders. Although they might have different sets of requirements, borrowing is not out of the question.
It is that you should be ready to research and compare loan offers as much as possible. When your credit scores are below 500, it is this phase where you are currently. The different types of loans you can consider obtaining will be limited.
- Guarantor loans: Since your credit scores are beyond questionable, you would need someone to support your loan payments. These loans let you produce someone else with perfect credit scores and stable income. They should be in a position to sponsor loan payments on your behalf.
- Secured loans: Now, if you are not ready to provide a guarantor, these loans can be an alternative for you. Convincing another person to commit to paying off your debts is a tricky job. With these loans, you must be willing to put your assets at stake. Getting a comparatively bigger amount is possible because of the security.
- Payday loans: These loans can be another way of dealing with financial stress apart from very poor credit scores. You can get them based on the salary that you earn every month. Since it is an income-based loan opportunity, you do not have to face any credit checks as well. However, the loan rates might shoot because of your credit history.
What to do to apply for these loans as unemployed?
You may be in search of these loans when you are out of a job. As you do not receive a fixed salary every month, tackling payouts is a hard task now. For this reason, many payments can be left pending due to lack of funds.
Because of this situation, your credit scores hit their low, and you are here now. Thus, people like you should get financial assistance, and this is the main goal of a direct lender. They agree to support you with funds provided you can show some alternate source of income.
In your case, with very poor credit, only income would not be enough. Besides this, you should be ready to provide a guarantor or collateral. Both these factors together will increase the weightage of your application.
Now, the question is how to proceed with the loan application. Fret not! Here, you will confront the simplest formalities. Direct lenders have by far designed the most sophisticated to apply for a loan even when you have very poor scores.
1. Fetch an online form
No paperwork should be done. These loans need an online application filled with valid details. Get it from the lender’s website.
You can ditch the traditional process that revolves around the bank branch. As it is an online form, you are supposed to produce fewer details. Do not be in a hurry while filling out the application.
2. Wait for the processing
Submission of the online form from your end is necessary. Otherwise, the lender will not be able to access your information to process your request further. Share valid details so that your form does not get rejected at this stage.
The lender will conduct a few checks that concern your affordability. If needed, they might ask you to share further details. That would be between you and the loan provider.
3. Final decision
As the requirements are simple, getting through this step is not very difficult. At times, some incorrect information from your end can delay the processing. Make sure that you have checked the eligibility conditions.
Direct lenders do not make you wait for a long time. They have a seamless process to assess your information and give the final verdict. On approval, your checking account will be credited with the needed sum of money.
4. Repayment
This is the last step of the borrowing process. Once you receive the loan money, you become accountable for paying it back on time. For this reason, take advantage of the pre-approval facility to check the rates and repayment terms.
If the duration provided is not suitable for you, check with other lenders. Loan payments should be completed at the given time or else you will have to be prepared for further charges.
The bottom line
To get favourable rates with loans, you must follow the necessary steps to upgrade your credit scores. Although it can be tough, it is doable.
Lisa Ann has developed a well-experienced professional career. From managing the staff of more than 50+ loan experts at Fastmoneyfinance to boosting the delivery of various loan offers, she has acquired many challenging roles to come out with the best results for the company. Lisa Ann is a Senior Content Author and the Chief Financial Advisor at Fastmoneyfinance. To back her massive experience in the UK’s financial industry, she has the postgraduate degree and diploma in Business and Finance.