Do you need money in a hurry but you are afraid that blips in your credit history will bar any company from taking any application you make seriously? A lot of people in need of emergency financial help are scared of this very thing but the good news is that there is actually no need to be. And the Loan Broker team want to explain why.
In this article, the team write about the following important issues –
- what a guarantor loan is,
- who a guarantor can be,
- the reasons why certain lenders are happy to work with people with poor credit histories,
- the importance of credit history,
- benefits of no guarantor loans, and
- ask Loan Broker how to find the right no guarantor loan for you.
What is a guarantor loan?
A guarantor loan is a loan made to you where your application is “backed” or “guaranteed” by someone else – a “guarantor”.
That backing or that guarantee means that, in the event that you’re unable to pay the loan back yourself, the loan company would then approach your guarantor for repayment of your loan. If your guarantor is unable to pay your loan back because they had fallen on hard financial times themselves, both of you would then be pursued for the money with the likeliest outcome being county court judgements against the pair of you.
The Financial Conduct Authority have “expressed alarm” about the growth in the numbers of guarantor loans because of the number of loans made where the guarantors have had to step in has “risen considerably” (source: The Times).
Who can be my guarantor?
Anyone who has a good credit history and whose finances are in good order can be a guarantor. Your guarantor will need to have a job which creates a significant amount of disposable income in their household each month – that gives the lender peace of mind that they will be able to pay the loan back if they’re required.
They will also most likely need to be a homeowner although they won’t be required to offer their home as security to become your guarantor. However, if you and your guarantor can not pay the loan back, depending on the lender’s policy, they may attempt to take out a “charging order” against you and/or your guarantor.
In most cases, it is highly likely that a guarantor will be someone who is close to you – a family member or a friend.
Why would a company want to lend to me if I’ve had problems in the past?
That’s a great question. The answer is that some lenders set themselves up specifically in business to help those people with poor credit histories. They lend to people with poor credit histories and they don’t need a guarantor.
The management team and the investors running and funding these types of lenders have experience in understanding the issues faced by people with unresolved past money issues. Because of that experience and understanding, they’re able to structure their companies and products in such a way that these types of loans can be made safely without putting the viability of the company at risk.
How important is my credit history?
It is of some importance – that’s most certainly true. But the chances are that your credit history is not as important to a lender as you think it is.
Most people in Britain suffer periods during their lives when the money coming into their households is not as high as they’d like it to be and when their outgoings are hard to keep under control. Most of the time, these periods, although painful, are temporary butthey often mean that adverse information can find its way onto your credit report.
Your credit report is only one factor a lender considers – the other factor is your current financial situation.
How “bad” can my credit actually be?
The more recent adverse information a lender finds on your credit report, the harder it is to get a no guarantor loan. Each lender will have a maximum amount of adverse information they’ll be prepared to accept on a credit report so if you apply to one lender and get a “no”, another lender would have no hesitation on accepting your application.
The other important factor is how much spare cash you have left at the end of the month – your “affordability assessment”. Some lenders might want you to have £500 left at the end of the month before you get your wages and/or receive your benefits. Other lenders might want £700 and others £1,000.
Each lender has something called a “borrower profile” and that profile details what they want to see and what they don’t want to see on a credit report and on an application form. Each lender’s borrower profile is different – this makes knowing which lender to apply to complicated.
Loan Broker can help you with this, please read on for more information.
Benefits of no guarantor loans
Ideal for emergencies
Unexpected car repair bill? Gas and electricity bill much higher than expected? No guarantor loans can be for small and large amounts – work out what you need to help you out financially to get over your rough patch but please be sure you can meet the repayments comfortably, in full, and on time.
Quick decision, quick repayment
With many lenders and brokers, Loan Broker included, the application process takes just a minute or two. Once you’ve completed your application, you should know within seconds whether your application has been accepted. If it has been, you’ll see the best deal on offer for you and your financial situation.
Once you’ve read the Terms and Conditions, if you’re happy to proceed, sign the online form and, depending on who you bank with, the money could be with you within the hour.
Keep relationships with family members and friends healthy
If you take out a guarantor loan and your guarantor loan ends up having to pay that loan back, there is a very strong and real risk that the relationship you have with your guarantor could be permanently damaged if they feel that:
- they didn’t understand the risks of the agreement into which they were entering
- they resent paying back money on a loan from which they have received no financial benefit themselves
- they, for whatever reason, feel that you did not try hard enough to pay back the loan and that, because of that, they are finding money tight in their household.
Loans with Bad Credit and No Guarantor – ask Loan Broker how
Loan Broker doesn’t lend any money– what we do is act as a bridge between lenders and borrowers trying to find the perfect match.
When you apply via Loan Broker, we check both the details you give on your personal application form and on your credit report. Once we understand better who you are, we can then propose your loan to lenders whose “borrower profiles” you’re the closest to.
We don’t charge for our service and you don’t have to take out any loan offer we find you. To start your application, please click here.