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I Have a Poor Credit Rating. What Are My Borrowing Options?

The easiest way to finance new purchases is with cash, but if you don’t have enough cash, or the object of your adoration is very expensive, you will need to investigate other options. But what happens if you have a poor credit rating?

Money Makes the World Go Round

Everyone needs to borrow money from time to time. Cars, home improvements and glamorous weddings all cost a lot of money and unless you are richer than Croesus, borrowing the cash is really your only option. Unfortunately, we don’t all have a wonderful credit rating. Missing loan repayments or defaulting on credit card payments soon tarnishes a previously unblemished credit score. You may also have a poor credit score if you have been out of the country for a few years.

Good and Bad Credit Scores

People with great credit scores have access to the best interest rates and most favourable terms. They can also take their pick from the widest choice of lenders. Having a poor credit rating is not ideal because it will limit your borrowing options. Not many lenders will touch people with a poor credit history, and those that do charge more for the privilege.

Lending Options

Although having a poor credit rating is not ideal, sometimes it happens through no fault of your own. You may still need to borrow money, so if you do have a poor credit rating, here are your best options.
  • Short-term payday loan companies will consider borrowers with poor credit histories. The interest rate on your loan will be very high because you are a high-risk customer, but if you are having a temporary cash flow crisis, a payday loan could be the answer.
  • If you need a personal loan, there are specialist lenders such as who will work with customers who have a poor credit rating. Again, interest rates are higher, but if you need to borrow money, taking out a loan with one of these lenders could be a good way of rebuilding your credit rating.
  • Credit re-builder credit cards are designed for customers with poor credit ratings and as long as you use them responsibly, they can be very useful if you are unable to get a regular credit card from a high street lender.
  • Credit unions are community lenders. They offer good interest rates to people other lenders won’t touch, but there are terms and conditions attached to the loan and you will probably be expected to show you can save up for a specified period before you can borrow anything.
  • Pawnbrokers will lend you money if you have something valuable to use as collateral. This might include jewellery or an antique. Anything that has a re-sale value will be considered, but don’t expect to get the full market value in return, and if you fail to repay the loan, you will have effectively signed over ownership of the goods.
If you have a poor credit rating, check your credit report to find out why and then work to improve it as soon as possible.
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