The fact that not everyone has a chance to build up their credit score over time is a reality that most lenders are aware of. However, the services that they offer are set up in such a way that they favour those with high credit ratings. This, unfortunately, lease all the ones who have a poor credit score unable to get the loans that they need from banks.
This having been said, there are other lenders, most of which have designed their products and services specifically for individuals with low credit scores. All of them are regulated by the government and can be trusted with your financial data, however, some will have rasher terms and conditions than others, which makes knowing which one to choose a priority.
Requesting a Loan from a Nearby Credit Union
Credit unions are nonprofit organizations that consist of people who either come from the same community, work in the same place, or share another common bond. This restricts their services to those with which they share a particular link.Finding a credit union should not be difficult. They often advertise their services in local newspapers or through online ads.
From a financial point of view, credit unions are great choices if you need a loan as they are limited to how much interest they can charge (usually 3% per month). Furthermore, there are no hidden charges to worry about and the loan can be repaid early with no issues.
Getting A Budgeting Loan from The Social Fund
Those who need money urgently may be able to get a loan from the social fund. These funds are handled by local administrations throughout England and are given to individuals regardless of their credit score. However, depending on where you apply for a loan, there will be various conditions and requirements that you have to take into account.
Worst Case Scenarios
If you have had bad relationships with lenders, consistently, and cannot use any of the options presented above, you might be able to borrow money from the following ones. Keep in mind that the lenders presented above are far from ideal places to borrow money and they often actively work towards forcing their clients’ hand into paying more than what they initially expected. Nonetheless, they can be useful in extreme cases.
- Payday Loans
Payday loans are a very expensive form of debt, however, they can be lifesavers as long as you try to repay them as soon as possible. Aside from the large interest rate, it is important to also keep in mind that these loans have limited value.
When it comes to pawnbrokers, you must take into consideration the fact that they are not traditional lenders, but companies that focus on maximising their profits. This having been said, borrowing money from pawnbrokers will require that you offer your property as collateral. This can be anything from a smartphone to jewellery. How much money you get is established by the value of the object that you leave behind.
Getting the object back will require you to return the money, along with interest.
Regardless of which service or lender you use to borrow money, always make sure that you stay clear of loan sharks. These are illegal lenders that are not regulated by the government or authorised in any way. They often have very high interest rates and often harass their clients in order to get their money back. As for the rest, all the lenders that are included in this article are safe to use in case of an emergency.