The fact that you can’t get a credit loan does not mean that you will always have the most favorable interest rate however,, it means you can still get a loan.
Although this can be a beneficial idea in a time of need it’s worth checking out other options like an overdraft, a short-term loan or credit card, or secured loans, particularly when they’re better for your situation. If you’re in the market for alternative called GreenDayOnline.com with bad credit we’ve compiled an incredible list of options to peruse.
Credit cards with bad credit explained
As the name implies, the term “bad credit” is designed for those with a low credit score, giving them the possibility of borrowing money. The ability to get a loan with bad credit is likely however, you will discover that these loans have low-interest rates and may be costly to pay back in the long run.
The most commonly used loan option is a way to get around in the event of a poor credit rating. A guarantor loan permits the guarantor to choose someone in your family or friends to be an guarantor for you in the event that they have a higher credit score than you. This also means that in the event you don’t pay your guarantor, they will be legally liable.
Other alternatives to credit cards with poor credit
There are other financial options available in the event that you aren’t convinced that a loan with bad credit is the best choice for you. These include:
- A short-term loan
- Credit card for building credit
- Secured loan
It’s worthwhile to look at all options in the event that one may be more suitable as it will keep the risk of jumping into the deep end and falling into more debt.
Loans for a short-term duration
- A small amount, generally around a few hundred pounds
- The loan can be repaid for a brief period of time, ranging from 2 to 12 months
- High-interest rate
- Acceptance of bad credit scores
While a loan for short-term duration could technically be considered an unsecured loan but it’s on a smaller scale than the majority of personal loans. This is certainly the alternative to traditional bad credit loans but only for those satisfied with borrowing a modest amount.
This is a great option since it ensures you’ll still be able to borrow funds however, it may not be able to tick all the boxes when it comes to the amount you require. So, if you’re looking to take out more than a couple thousand pounds, taking a loan for a short period may not be the most suitable option.
- Simple to apply for someone with an existing credit card
- Flexible borrowing, based on the provider you choose.
- There isn’t any interest rate however, there is often an expense
- A good buffer than as a strategy to borrow for a long time
An overdraft may be the most straightforward method of borrowing. This is since it’s an expansion of the existing account rather than a new financial product that requires the addition of a new lender. However, there is a process that your bank will decide if they are satisfied to provide you with an overdraft, or not.
Although you could use an overdraft to access extra funds, it’s really an insurance policy instead of a specific type of borrowing, particularly since you could be charged daily charges for the use of it. This is why it may not be a good option unless you are able to pay it back quickly and avoid fees.
Credit card to build credit
- A great option for those who have a poor credit score
- It allows you to get a loan for a small amount, but you’ll need to remain within the limits of your credit
- The rate of interest for credit cards
- The added benefit is that it will assist in helping to improve your credit score
While you aren’t able to take out a huge amount the credit builder card could be an option, particularly when you want to improve your credit score at the same while. It’s not necessarily able to get as much money as an unsecured loan however, it will be an amount of credit that you can spend within.
This is a great option for those looking to increase their credit score so that they can access better financial options in the near future. This is particularly important for those considering the possibility of applying for loans in the near future.
- A substantial amount, typically over PS10,000
- A loan that was taken over a significantly longer time
- A standard rate of interest
- The greater risk of having to guarantee the loan against an asset
While this kind of loan is an excellent option for those who want to borrow more but the risk is higher since it’s secured loans. It means that the loan is secured by an asset of value, such as your home, and could lead to the asset being confiscated if you fail to pay back the loan.
If you’re comfortable with the risk it is an option to consider in the event that you want to obtain a larger amount even if you have poor credit scores. But, since the consequences of failing to pay are quite severe and can be quite costly, it’s best to search for alternatives to unsecured loans in the event of a problem.
The dangers of loans with bad credit
There’s always a risk when you borrow money, particularly if you have a difficult time repaying the entire amount due since you could encounter additional fees and charges. If you have a guarantor loan it is possible that you transfer the risk to someone else who will be held accountable in the event that you do not make a payment.
Always conduct your research before you borrow money to ensure you know what the risks of each loan are. This will allow you to determine if the loan would be the best choice for you or if you have to look for alternatives.
An excellent place to start is to check your credit report to confirm your score before filling in our online tool for comparison or money matches. It will run a soft scan of your credit file which will allow you to determine which products you’re eligible to apply for. The good thing of this is your score won’t be affected and is particularly important for those who have an unsatisfactory credit score.