Everyone knows that getting an unsecured loan is not an easy task. This is because an unsecured loan is mostly a loan where the lender doesn’t require you to offer collateral but they may require you to have a guarantor. This makes it harder to even get an unsecured loan for bad credit as most lenders will use your bad credit score to deny you the loan.
It’s not impossible to secure a loan though, there are circumstances that could be understood by the lending institution so you should explain your case, fill in the gap as to why it is safe for them to offer you the unsecured loan.
When the best option is to choose an unsecured loan
When you have a bad credit score it is easier for your lender to give you a secured loan in which you can use your home, car, land as collateral than an unsecured loan. This is because with that you give them a safety net in case you default in payment. However, an unsecured loan is the best option for you since you are assured the safety of your property even when you are unable to pay. You just have the duty to convince the lending institution that you are able to repay.
Your income is your saviour for this option
Because of the nature of your credit score you have to assure your lender of your ability to repay the loan. This can be done by showing them your budget versus your monthly income, you then prove to them that you always have extra funds to support the loan. If you can prove that at the moment you have a higher income and lower financial obligation then you will be in a good post.
Understand the reality on ground
Since your credit score presents a situation that shows you must have hit a rock bottom in the past, be ready for some penalties for the unsecured loan. which may include;
- Low principal amounts; they will not be at ease giving you a large sum of money even if your current financial state is appealing.
- Higher interest rates; since you are being given an unsecured loan for bad credit your interest rates will be way higher to cater for the lenders fears.
- Higher fees and penalties; since you have bad past records the lender will not hesitate to charge you high penalties in case you give late payments.
Getting the unsecured loan
Note that there are many companies that specialize in giving unsecured loan for bad credit. Be informed that these lending institutions have more to gain from your transaction than you do therefore be careful before partaking in any activity. Some of the lenders will be predators who don’t care if you go to the worst situation than you initially were and can use your desperation in the rat race search for a proper lending institution that will give you the loan to manipulate you so stay smart.
In conclusion, although you may desperately need that loan, only choose a type of unsecured loan that will help you improve your credit score, visit for more info: https://www.opalloans.co.uk/