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UK Mortgages & Loans -> Adverse Credit Loans

Adverse credit is a common problem it the UK today. Our service can help you find a loan even if you have a poor credit history or are have previously experienced difficulty getting a loan.

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An adverse credit loan is a form of loan which is specifically planned to cater for those people who possess a bad credit history. These types of loans will normally incur a higher rate of interest because of the greater level of risk which is undertaken by the loan lender.

A borrower’s credit rating is determined by their previous repayment habits. Therefore, if they have not been able to repay debts on time, they have had a court judgement made against them or if they are unemployed or have just started a new job, a lot of lenders would not be very confident that they will be able to meet all of their repayments in full and on time. If they do choose to lend money to these borrowers, they will then need to compensate for this higher risk by charging higher interest rates on the loan.

In former years, there was actually a time when a person who had a bad credit history would not be successful in applying for a loan. This may still be the same with a number of high street lenders. These Lenders however have now realised that a person who has a few errors on their credit history does not mean that they are a high risk to them. This means that it is now quite possible for someone who has mortgage arrears, CCJs or just a poor repayment history to be able to apply for one of these specialist loans.

An adverse credit loan is available in two forms - an unsecured loan or a secured loan. However, with the latter loan there is a higher trust from the loan lender simply because of the fact that a borrower will be placing their property under a form of collateral against the loan. With the unsecured bad credit loans, the sum of loan which is offered to the borrower will be a lot less than that of a secured loan and the loan lender will have to look at the severity of the borrowers’ credit rating and base their decision regarding the loan amount based on these figures.

There are however, a few advantages to a borrower if they obtain a bad credit loan. Firstly they will have the chance to apply for the exact loan that they will need. Then if they make regular payments to their loan, they will have the opportunity of repairing their credit score which will help to prove to any of the future financial lenders that the borrower will not be posing any risk to them.

There are however, quite a number of points that may actually affect the borrowers’ loan application. When the borrower completes their loan application for a lender, the lender will insist on performing a credit check on the borrowers’ personal circumstances in order to calculate the risk level that the borrower may pose on them. All lenders within the UK will need to have a credit check. This is the case whether the loan is a secured or unsecured loan. If the borrower has applied for a loan or credit card to a number of different lenders within a short space of time, or simply by applying for a great deal of credit cards and/or store cards prior to applying for a loan, this could actually damage their credit score. This is because the credit check will show all of these applications to the lender.

Credit arrears as well as mortgage arrears will make up the large number of customers who look at obtaining an adverse credit loan. Any payments which are late for whatever reason will actually be recorded on the borrowers’ credit history. This could be because of the simplest reasons such as the borrower having an illness which has stopped them from being able to get to the bank, or they could have just forgotten to make payments to their debts prior to going on holiday. Unfortunately a huge number of financial lenders will not make any allowances for this. Loan lenders who offer these bad credit loans will accept that these things can happen, and although they are still very cautious they are more willing to supply a loan to these types of borrowers.

However, CCJs and greater credit arrears or increasing mortgage arrears are a fair bit more serious. There are still a few internet based loan lenders who will still loan money to these forms of borrowers however.

However, lenders could also charge a fixed fee which will depend on the level of the borrowers’ adverse credit. This amount would be declared up front, so that the borrower is aware of it prior to obtaining the loan.