Without a good credit score, it can become quite challenging for any person to get a loan. Even if you get lucky and the lending company does approve your loan application, the chances are that you will be charged with exorbitant interest rate. Due to this, you may find it difficult to improve your financial situation and end up with some serious debt on your plate.
Mostly, loan applications are rejected, if the borrower has:
- Taken no previous loans or no credit history
- Poor credit rating or history
- Not on voters roll
- Frequently moved address
- Defaulted on previous loans, credit accounts, or credit cards
- Incurred County Court Judgments (CCJ) or mortgage arrears
However, in the past few years, some new options have emerged for people with bad credit score. One of the most popular options is guarantor loans which allow people to borrow money based on the credit ratings of another person who agrees to be a guarantor of the borrower.
Is Guarantor Loan for You?
For people who are looking to build credit history or to improve credit score, guarantor loans are a great choice. They are also easy to qualify for, and if you need cash for an emergency situation, these loans can be of great help. The lenders offering guarantor loans only take a few hours to review your application and give you money, if they approve your loan request. Some lenders even offer loans to people who have incurred County Court Judgments (CCJ) in the past.
You only have to fulfil the eligibility criteria which are quite straightforward:
- You must be a UK citizen.
- You must have a bank account.
- You must be 18 years or older. Some lenders have set a maximum age limit, which can be anywhere from 60 years to 75 years.
- You must have a steady source of income.
Choosing a Good Guarantor Loan
Nowadays, finding a lending company that can offer a guarantor loan is not difficult. The hard part is to find the one that is offering loan at good terms which are in your favour. There are three important things to take into consideration when you are looking for a good guarantor loan.
- The interest rate which will directly affect the amount you will pay on a monthly basis and also the total loan amount.
- The loan repayment period.
- The list of fees and charges that the lender will bill you so that there aren’t any hidden charges that you might not know about.
Make sure that you take offers from a few guarantor loan lenders and compare them based on the above points. Then choose the one who offers the best interest rate, reasonable loan repayment period, and don’t charge any extra fees. If you are unsure about a lender, then check for recommendations and reviews online, as they are quite helpful in assessing the reliability of a lender.