Any would-be borrower will find that a personal loan application is vastly more likely to be rejected as a result of adverse credit. Whether a personal loan application is rejected will depend largely upon what caused the bad credit.
High Street Lenders are More Likely to Reject Personal Loan Applications
High street lenders are vastly more likely to reject a personal loan application as they have very strict lending criteria. Personal loan brokers can help a bad credit customer identify a lender. The rate of APR will reflect the severity of the credit impairment.
Check Credit Reports Prior to Making a Personal Loan Application
Before making a loan application, pay £2 to Experian to get a copy of a credit report. It is possible that adverse credit shows on a credit report that is inaccurate. Contact the credit reference agency to get any errors amended before submitting a loan application. It is also sensible to ask for any duplicate credit searches to be removed as these work against someone.
Serious Adverse Credit and Unsecured Personal Loans
Adverse credit, such as loan default, missed payments and bankruptcy, will lead to the most competitive APR personal loan applications being rejected. This means that loan applications will only be approved for bad credit personal loans charging borrowers 50-60%.
No Credit Check Unsecured Payday Personal Loans
No credit check Payday loans will be available to all those seeking to borrow money, regardless of adverse credit. The problem is that such personal loans are only suitable for very short term borrowing because the rate of APR is in excess of 1000%. The rate of APR reflects the lending risk.
How Adverse Credit Affects Secured Loans
Secured loans will be available to all borrowers, provided that affordability can be proven and sufficient home equity exists. However, an adverse credit rating will affect the rate of APR. Although a high APR, it will be cheaper than unsecured personal loans because the lender has collateral in the event of personal loan default.
Whilst a personal loan application is more likely to be rejected when a borrower has a bad credit rating, both unsecured loans and secured loans are still available. Think carefully before securing a personal loan on the family home, especially during times of economic uncertainty.