How do People with Bad Credit Become Regular Part of Loans?
Applying for loans has been considered the last source of generating emergency funds when other sources fail. Many people still do not favour them because they think that it is costlier and it would be better to get assistance from relatives or friends.
Well, it can be an option but not all the time, your near and dear ones would able to help you, as sometimes they also have their own financial compulsions. And, is there any need for revealing your financial situation to any other person? Certainly, no.
We are not favouring the loans because they do occasionally prove costly to an individual’s pocket due to the high interest rates.
When it comes to borrowing options, one class is still struggling a lot, and it is those people who have blemished credit scores. They are almost deprived of financial services as they do not have the plus point of the ‘trust factor.’
How do lenders trust a person who is not good at making payments? Indeed, very tough for them. However, it may be difficult but not impossible. It is what we will try to make you understand in this blog.
The numbers are huge of the individuals with poor credit scores in the UK. It may be the outcome of their mistakes or due to some unwanted circumstances. However, a bad credit score is bad, and you have to do a lot of hard work to convince the lender.
In the modern era, everything seems possible, and so does funding a person with no financial creditworthiness.
Some lenders think that these people should deserve more chances to save their finances. Therefore, they have taken the initiative themselves to offer financial assistance as direct loan lenders with no credit checks.
Why the UK Lenders have to prioritise these funding sources?
It is a good question to ask, especially when plenty of short-term loans already exist in the marketplace. Now, it is the time to discuss what will be the possible answers. Let’s get started.
#1: The growing number of People with a bad credit record
Yes, this is true. For the last two years, the number of bad credit people has significantly increased a lot. There may be some reasons behind this, such as:
- Uneven economic scenario
- Inability to maintain financial balance
- Lack of financial responsibility
A bad credit score is not just a blot on your financial profile but also a major problem that has to be rectified immediately. Therefore, people look for an alternative where they can fetch not only the required funds but also a chance to improve their credit scores.
Bad credit loans offer exactly that to them, where they can easily qualify and apply without indulging in too many formalities. In addition, when they have the comfort of the application procedure, it is obvious that they demand more deals from the lenders.
#2: The Advent of ‘FinTech’ Lending has changed A Lot
The growing numbers of poor credit people in the UK have forced the lending sector to bring the concept of ‘FinTech’ as part of their policies. In the country, one can see that many online lenders are flourishing and offering loans through the internet. It is a big change that this concept has brought to the marketplace.
The loan application form can be submitted on the lender’s web portal, and there is no need to travel anywhere. That is what the impact of FinTech is.
It has also benefited the loan companies in expanding their business more. They provide an answer to the query that borrowers used to type in Google search “where to get a loan in the UK with bad credit”. They can have a vast online presence and attract maximum borrowers to their loan products.
Apart from that, the lenders can also look at the maximum loan applications online in a single day and offer the loans on a same-day basis. It will increase their efficiency, and more people would like to approach them again and again.
#3: A Shift from Hard to Soft to No Credit Check
Indeed, it may look strange point to you but it is the reality. In fact, we can consider it as the best answer to the question asked above. In mainstream lending, the provision of a hard credit check has special importance because the lender examines the credit history of the borrower, and if it is not up to the mark, it can straightway reject his application. Now, the whole scenario has been changed. The soft credit check process has replaced the hard credit check where credit history will be checked but no rejection from the lender’s end.
Furthermore, a few direct lenders are also taking one step ahead by clearly advertising their products with no credit check policy. It means they do not visit the borrowers’ credit histories but rather consider the approval on the basis of their income status and repayment capacity. Direct loan lenders with no credit check certainly have eased the way for people with low credit scores to borrow funds in crucial times.
Let’s come to the conclusion
Financial marketplace and services have both changed a lot in the last few years. The biggest benefit is for the people with poor credit records. Initially, they got rejection most of the time, and now they are being treated with specialized funding sources like these bad credit loans.
In fact, their loan applications are dealt with instant decision and it is indeed a huge advantage for them. Still, borrowers should be very careful about choosing the right lender and the loan deal.
Getting the lending option may have become easier but there might not be any difference in terms of the interest rates. Do online research, compare the lenders and then make the final call.
Bad credit is just a temporary situation, and it can be improved with sincerity as well as a good selection of funding sources with facilities like no credit check. Once your credit score improves, you will see plenty of lending doors will be opened for you in the future.
Ailsa Adam is the Editor-in-Chief and former content head at Hugeloanlender. She has been a valuable member of the content strategy team since 2017 due to her abundant experience in the finance sector. Passionate about helping individuals navigate the world of loans and personal finance, she has dedicated herself to acquiring extensive knowledge on various financial products. Before her role at Hugeloanlender,
Ailsa worked as a seasoned journalist and writer, specialising in creating informative blogs and articles on diverse loan types. She is known for her meticulous research and commitment to delivering accurate and engaging content. She holds a degree in MBA Finance and has a keen interest in creative writing and art.
