Having a bad credit score means it can limit your ability to secure mainstream financial products such as credit cards, personal loans and mortgages. If you have a record of missed payments or defaults, then this will be reflected on your credit file, and you may subsequently lose out on much-needed finance for a necessary purchase. However, there are many different options available on the market for those who suffer from a bad credit score. Some of the most popular financial options include guarantor loans, credit building credit cards and bad credit car leasing, which is a brilliant option if you are looking for an economical means of transport and have a young family. We are going to explore these different financial products (amongst others) throughout this short, but insightful article. However, if some of these options sound like something for you, then we recommend speaking to a financial advisor before applying.
Credit Builder Credit Cards
Credit builder credit cards are credit cards for people with bad or no credit score at all. If you manage a credit builder credit card well, by doing things like staying within your credit limit and making at least the minimum payment each month, you can improve your credit score over time. But if you don’t manage a credit builder credit card correctly, you could harm your score further. So, approach this financial product with caution if you are worried about managing it.
Bad Credit Car Leasing
Because many car leasing companies can’t lease to individuals with bad credit, you might think it’s difficult to get behind a new set of wheels. However, there are now many car leasing companies that specialise in lending to those with bad credit. Leasing a car with bad credit works similarly to leasing with a good credit score. However, you are assessed on your affordability to make the monthly payments and not your financial history. If your current financial situation means you can make all the payment, then you’re likely to be accepted.
The process of applying for a guarantor loan and being successful with an application is just like many other types of loans. However, they require someone to guarantee the loan (known as a guarantor). If you do not qualify for a standard loan product, then you can apply for a guarantor loan. Before applying you may wish to speak to a few friends and family members first as they could be the one guaranteeing the loan on your behalf.
Unsecured Bad Credit Loans
It can be very difficult to access affordable finance through mainstream banks and online lenders. However, unsecured bad credit loans are specifically designed to offer finance to those with a bad credit history. Fortunately, there are specialist lenders out there that offer unsecured bad credit loans.
Bad Credit Mortgages
Securing a mortgage with bad credit can be one of the touch financial products to secure if you have CCJs, IVAs, defaults or have been declared bankrupt in the past. Although your options may be limited, it’s often quite possible to secure a mortgage product even if you have a bad credit history. There are many lenders on the market that solely specialise in bad credit mortgages. One thing that you should be aware of when taking out a bad credit mortgage is that the interest rates will be higher than they are on standard mortgages. Bad credit mortgages also require larger deposits than standard forms of mortgages.
Consider All Your Options Before Applying for Financial Products
Before you apply for any financial product(s) it’s essential to consider all of your options to ensure you choose the right one for your situation. Speak to your partner or family about the products you are thinking about and then consult a financial advisor to professional advice. The key to choosing financial products when you have a bad credit score is to make sure you’re not at risk of further getting yourself into debt.