There are many reasons why loan applications may be rejected. Ultimately, it simply means that the borrower does not meet the criteria set by the lender. However, there is no such thing as a blacklist for rejected applications and bad credit.
Many people believe that by having a bad credit history, they are banded from getting a loan in the future. It is a common misconception that one’s personal data are added to a “credit blacklist” and that you will not qualify for any blacklisted loans.
Blacklisted loans: No such thing as a Blacklist
When you apply for a loan, the blacklisted loans lender will see whether your personal and financial status are acceptable to their lending criteria. If you meet their requirements, you will be offered a loan. Otherwise, your application will be rejected. But, there is no central blacklist of people with bad credit that lenders use as the basis of their decision in qualifying borrowers for a loan.
If one lender turns you down, it doesn’t mean another will refuse you. The criteria to qualify for a loan vary from lender to lender. Lenders share information through individual’s credit record. However, each lender has its own requirements as their basis in examining and evaluating the information on your credit report. You may have been refused a loan before, but it doesn’t mean you won’t be able to get approved on your future blacklisted loans applications.
Some lenders will only accept those with good credit history. These lenders usually offer loans with the lowest interest rates to be accessible only to those with highest credit scores. So if you know your credit history is not so good, you know you’ll only be disappointed if you try to apply from these loan lenders.
If you do this, your loan application will be likely turned down and could ruin your chances even further because every application you make will be recorded on your credit file. Multiple loan applications in a short span of time are often perceived as having financial difficulties, and would make lenders suspicious.
If you’ve had financial problems in the past, select carefully the blacklisted oans you’ll apply for. Target specialist lenders who are actively looking for customers with poor or bad credit history.
Blacklisted loans: Loan Options for Bad Credit
There are loans specifically for people with bad credit. When you are looking for any sort of bad credit loans, you have the options of whether to get an unsecured loan, secured loan, payday loan, guarantor loan, and more.
Unsecured loans do not hold any of your assets or important resources as security. These loans are extremely risky on the part of the lenders. With risks of losing the sum offered, they just offer up to a certain sum over a certain period and put up a set of criteria. Lenders take your word that you’ll make the repayments on time as agreed.
Secured loans, on the other hand, are guaranteed by an asset. In this case, the risk is lower. Therefore, the interest rates are lower, and the blacklisted loans terms and conditions are more flexible as well. However, you have to read and understand the blacklisted loans lender’s terms and conditions before you agree to the arrangement.
Blacklisted Loans in the UK
You can find many blacklisted loans lenders in the UK offering loans for the so-called “blacklisted” people. These blacklisted loans usually have a set number of regular payments. The maximum amount you can borrow is usually £25,000, which is payable over a maximum term of seven years.
A payday loan is another viable option for you, but it is for small amounts and for a shorter term. It is often paid back in a single lump sum payment on the borrower’s next paycheck, but some lenders allow up to three months loan term. Payday loans have a higher interest rate than regular personal loans.
Secured loans are also quite popular in the UK, where the loan is secured on your home. This type of loan is only available to people who own their own property, and not to people who are renting or living with family or friends. Secured loans normally have lower interest rates, but you must understand the loan’s terms and conditions.
Important Tips for the “Blacklisted”
The key to dealing with an overwhelming amount of debt is to understand how you got to into it in the first place. If you tend to overspend on your credit cards and cause unauthorised overdrafts, then perhaps you need to request an extension on your credit limit or switch to a regular account that simply doesn’t allow overdrafts.
If you struggle with your budget, then it may be time to get some help such as a financial adviser. It would also be more beneficial to find ways of increasing your income to catch up on and maintain your debt repayments than to get another loan to deal with them.
This will help you repair your credit in the long run and you may even have some extra money left over to put away in an emergency fund. Once you have an emergency fund, you will feel more confident about your financial situation. This way, you’d be able to handle any emergency expenditure.
The important thing however, is that you do a little shopping around to find the best deal, and not only one that has the lowest interest or APR but one that meets your needs. If you know you won’t be able to afford the monthly repayments, then it will obviously make sense to extend the term of the loan so that these repayments are more affordable, even if this means that you’ll end up paying more in the long run.
Before taking out a bad credit loan with any lender, you should always compare the rates and terms of lenders to find the best deals just as you would if you had an excellent credit rating. Many lenders prey on those with bad credit because they know that their options are limited so they will accept ridiculously high interest rates and absorbent fees.
Avoid these dangerous lenders. Simply know all the facts on financial terms and procedures, and check out all your possible option. Use one of the many great loan comparison tools or loan calculator you can now find online to compare deals.