A bad credit rating can prevent you getting credit with the vast majority of lending companies. Personal loans and credit cards are likely to be completely out of the question, which can be a real problem when you find that you need extra cash for something. However, there are certain types of lending that either do not require a credit check at all, or which will still lend money even when there are problems with your credit. There are really two options open to you, depending what your requirements are. If you need a small amount of cash for a very short period, then a payday loan could be the answer. If you need a larger, longer term loan, then your only option is likely to be a secured loan.
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Payday loans are never for large amounts of money and are usually just to cover a shortfall until your next salary or wage payment arrives. In other words they are not the solution if you need to borrow money for anything longer than a few weeks. This is important because if you were to go for a payday loan and then find that you could not repay it on the due date, you are likely to be penalised quite strongly by excess charges.
The reason you can get payday loans even with bad credit, are that the lender does not need to care what your credit record is like, as long as you have enough money coming in your next pay check to cover the loan. So the main thing a payday lender will look for in order for you to qualify for a loan is that you have a steady job. Payday loans are for unexpected emergencies and one-off expenses, and should never be seen as a way to tackle ongoing debt problems.
Secured loans, sometimes known as homeowner loans, are an entirely different ballgame. When you borrow money in this way, the loan is secured against a substantial asset that you own, usually your house. This means that your home is legally tied into the loan, so that if you were to default on payments, the lender could sell your house to get their money back.
Because the loan is secured against such a valuable asset, the lender is far more willing to take a chance on people with bad credit, because they know that ultimately they can always recover their loan through that last resort of selling your house. For the same reason, you are usually able to take out a much larger secured loan that you could an unsecured one. Needless to say, with the possible consequence of losing your home, secured loans are not something to be entered into without very careful thought.
If your bad credit report is stopping you borrowing money and you are not sure why your rating is not good, it would be well worth checking your credit report for yourself. You need to do this so that you can ensure there are no mistakes on it, such as records which are simply wrong, bad debts which have been settled, or things which should have been removed by now. US citizens can get one free credit report each year, and UK citizens can sign up for a free trial and see their report free of charge that way.
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