Often, it can be fairly hard for people with bad credit in the UK to get a loan. For example, banks usually turn down those with bad credit so as to ensure that they receive all of their payments in full.
However, payday loan companies, despite providing loans with extortionate interest rates, sometimes provide people with bad credit with short-term loans, although one can only generally borrow small amounts of money at a time.
Loans for people with bad credit may also have higher interest rates so that the company can account for those with similar credit ratings who are unreliable in their payments.
In addition, credit unions can offer loans for people with bad credit, as they normally base their decisions around a personal meeting as opposed to a specific credit rating (which can be found online by signing up to a website such as Experian Credit Report).
However, in the UK bad credit loans are sometimes provided if that person can offer an asset as collateral on the loan – this firstly shows that they are serious about paying back the loan, while also giving the bank or company providing the loan service a level of security on their money, thus making them more likely to lend to this person.
Another option are peer to peer lending services, where instead of borrowing money off a bank, a person with a bad credit history can borrow money off an individual – these people are normally slightly more lenient in the terms of the loan, and are less interested in one’s credit history, which is suitable for someone with a bad rating.
Overall, although some companies charge extremely high interest rates on loans for people with bad credit, and some refuse to provide the service at all, there are various ways that someone with an inferior credit rating can receive a loan.