Monday, September 27, 2010

Poor Credit Unsecured Loan: Loan Without Any Mortgage for People With Poor Credit

You may have a poor credit record and so you may be apprehensive that no lender will lend you. But to a lender, your circumstances might not seem as bad as you might think they are and you may have more choice than you expect. A poor credit unsecured loan is of such choices.

Almost twenty five percent of people in UK have one or other type of below average credit history, which effectively means that they have poor credit record, which may have resulted due to various factors such as late utility bill payments, defaults, arrears, CCJs, bankruptcy etc. These people face problems satisfying the credit score criteria used by loan providers.

If you have been refused a loan because of poor credit history or before actual lending such loan providers have told you that you have a poor credit score because of defaults in payments of your previous loan or maybe you have been listed in defaulters' list because of your consistent poor credit record, whatever your credit status is, there are loan providers who willingly offer loans to such borrowers and so it is strongly recommended that you search and evaluate such lenders and their quotes before you decide one way or the other. It is also important to know that there are significant difference in interest rates among such lenders and so evaluation of such lenders become important before selecting any one lender.

Poor credit unsecured loans

If you have poor credit score you have two options to further borrow-First, Secured Loan and second, Unsecured Loan. In case of unsecured loan, you are not required to provide any personal property as security for the loan, which we call collateral. In this case, offering loan by lender is comparatively risky compared to a secured loan. However, it does not mean, you can go scot-free, without repaying the loan amount to the lender. In case of non-payment of loan, if the lender initiates any legal proceeding, courts have the power to attach property of such borrowers to compensate lenders.

Poor Credit Unsecured Loan-Amount & Interest Rate

You may feel that your credit status is too bad to fetch a loan but a lender's observation may be different towards your credit status. For example, at time lenders ignore minor credit problems in the past if all other aspects of borrower's application, such as employment history, level of income, record of timely payments etc are good.

However, in case of poor credit unsecured loan, lenders loan remains at risk and this risk is substantiated by the borrower's poor credit record. To add further, since the loan is unsecured, borrowers at time feel that they can manage even without paying the loan amount. So, overall there is increased risk for lenders. To compensate against such increased risk, lender's charge a little higher rate of interest and varies from borrower to borrower, depending upon their profile. Similarly, the loan amount depends upon various factors such as borrower's income and employment record, record of timely payment, recommendations, any other going running at the time of application etc. However, usually, in the poor credit unsecured loan, the loan amount varies in between £250 - £25,000.

Poor Credit Unsecured Loan-Eligibility and Purpose

There is no prescribed eligibility to avail a poor credit unsecured loan. Unsecured loans are available for people in full time employment, part time employment, claiming disability living allowance, housewives, househusbands, unemployed, retired, self employed and contract workers - no matter what your circumstances, all unsecured loan applications are considered on their own individual merit. The borrower may be Tenants, Council Tenants, Living With Parents, Homeowners etc...
Similarly, a poor credit unsecured loan is available for any and every purpose, deemed fit by the borrower. It may be used to purchase a new or used car, a dream holiday, pay off all your existing debt or debts, home improvements, to finance your dream wedding and more. In principle decision are conveyed to borrowers within 24 hours of filling applications.

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