I get a lot of calls from people whose credit is bad, or who have CCJs (County Court Judgements) against their name. What can you do if this is the case?
Well, you can try to erase or ameliorate these black marks. First you check what loan brokers might find out about you, when they do a credit check. Go to Experian and Equifax. Order your credit report from BOTH sites, as there may be different entries in each. Make sure you give the same name and address as you normally have on your bills. If you moved recently (in the past two years), give your old address as well. You're dealing with a bureaucracy, and big computerised databases. They can only find what you tell them; if you give incorrect information, you may not get the full picture.
You can also apply to the County Court to satisfy outstanding judgements against you, and have this entered in their records; it'll still count as a mark against you, but it will be more of a dark grey instead.
Even if your past credit background reports problems, be sure you may still be able to get your funding. This includes applicants who:
- Have previously declined applications;
- Have CCJs;
- Are self-employed;
- Have a bad credit rating;
- Have an Order of Court to pay an outstanding debt;
- Have any other credit challenges.
You may be surprised to discover that loans offered by loan brokers are often more convenient and less restrictive than those offered by banks. This is because banks earn money by a range of different methods as opposed to online loan brokers, whose primary income is a direct result of the amount of money they lend.
Ask about loan brokers today!
Be aware of the fact that a lower rate does not always indicate a lower cost. When it comes to loan brokers, there are a number of factors that combine themselves to calculate the total cost. For example, in addition to the interest rate, you should consider the additional borrowing costs (often stated somewhere within the small print), as they may be high enough to make the whole loan expensive. Typical examples of these additional costs are the payment protection plans, which may vary from lender to lender.
Start with banks and well known credit unions – When you begin to research loan brokers, first start with your current bank, or with large credit unions. These are large institutions with solid reputations, so scams will not be an issue. Although may not get the best rate with a large bank, the security you receive can offset this.
The total cost of your loan will depend on the annualised percentage rate (APR). The annualised percentage rate takes into account the whole interest amount, and all those charges associated with the loan including the arrangement fees.
Variable interest loan rates may seem better at first glance, but can be subject to rapid increase, while fixed interest rates might start off slightly higher percentage but offer more security.
TIP: Make sure you understand and are willing to pay all of the fees listed.
Loan brokers origination fees are usually about about 1% of the loan amount. Some consumers have paid (in ignorance) as high as 15% for origination/broker fees. For a £150,000 loan, that means paying £22,500, versus £1,500 to another company would have provided the same loan with the same terms. If you have bad credit, you will probably have to pay higher rates and fees, but shop around.
Beware of statements such as "No cost to you". Some loan brokers lenders will add fees to your loan balance rather than require you to provide cash upfront at close of deal. Make sure you understand all the fees you are required to pay.