What is a Bad Debt Loan

Over time, there can be occasions where we are under financial stress. This can be due to a lot of different reasons. Loss of job, reduce working hours, unexpected bills, increases in the cost of living. Not all of these are in our control but affect your ability to pay bills.

Being unable to manage your expenses and pay the bills on time can unfortunately affect your credit rating. Your credit rating is based on how many debts you have; if you have been late or missed a payment; credit searches on your file plus other elements.

A low credit score will mean you are a high risk to a lender. To improve your credit score, reducing the number of creditors and improving your payment history will help. However achieving this may leave you little or no disposable income each month.

Representative 546.1% APR. Representative example: £200 repaid over 3 monthly instalments of £134.76. Total charge for credit £404.27. Interest £204.27. Interest rate 546.1% (fixed)

Consolidation loan?

A bad debt loan is the amount of money you borrow from the lender, to help pay your bad debts. This can also be known as a consolidation loan. A loan is used to pay smaller outstanding balances on debt, leaving you with a more manageable monthly payment. If you do have a low credit score and bad debt, obtaining one of these loans may not be easy.

When a lender looks at a customer, they have to assess if the loan is in the best interests of the customer. Secondly that they can afford the repayments on the loan, whilst being able to afford their other outgoings. This also known as their affordability. They also look at disposable income, which is the difference between your monthly income and outgoings.

Bad debt loans, due to their nature, can be difficult to get. If you are in real need of a bad debt loan, you may look at the option of a guarantor loan . These type of loans normally start from £1,000 and can go up to £10,000, depending on the lender.

If you can find a guarantor with a good credit score, owns their home, you have a greater chance of being accepted. You will still be responsible for the repayments of the loan and the loan will be in your name. However the lender will request loan repayments from them if you are unable to pay.

Getting a debt consolidation loan for bad credit, to pay off your debt, is not always the best solution. We recommend that you talk to a debt charity. If you are struggling to pay off your existing credit, there could be a better solution than a loan.

What is bad debt?

Bad Debt is the term used by consumers to describe credit they are having problems repaying. This could be credit cards, store cards, catalogues, payday loans, car loans etc. Moving all the debt into one place makes it easier to be managed, with one payment vs many payments. However this may not always be in your best interests.

We always advise, that if you have issues speak to the lender. This may be something you find difficult to do but they will help. This should always be your first option, before considering more debt. Lenders in the UK have to be registered with the FCA (Financial Conduct Authority). As such, follow rules to help customers and treat them fairly.

All lenders we work with are FCA regulated and will only ever connect you with an FCA regulated loan.

Representative 546.1% APR. Representative example: £200 repaid over 3 monthly instalments of £134.76. Total charge for credit £404.27. Interest £204.27. Interest rate 546.1% (fixed)

Can someone with a bad credit score be eligible

Each Lender is different and some will accept you. Others may not. Lenders don’t just look at your credit score but your ability to make repayments. Even with a good credit score, if you can not afford repayments you will be declined. There are many aspects that lenders will look at before making a decision, however having a high level of borrowing is not good.

Representative 546.1% APR. Representative example: £200 repaid over 3 monthly instalments of £134.76. Total charge for credit £404.27. Interest £204.27. Interest rate 546.1% (fixed)

How do you apply for a bad credit loan?

As with any loan, using a broker such as Pixieloans will improve your chances of finding a suitable loan. From completing just one application, we will pass your details on to lenders that accept your criteria. They will then tell us if they wish to look at your application further. .

All of this is done in normally less than 2 minutes. You will be redirected to the lender, whom you will complete your application with. They may request further information such as copies of bank statements or access to your bank account via Open Banking.

How do you apply? We have certainly tried our best to make the loan application process as smooth and as transparent as possible. All you need to do is submit your:

• Name
• Address
• Employment status
• Income
• Expenditure

We know with a bad credit score, applying for a loan can be risky. At Pixie Loans we strive to make things easier for you! When you need a loan, be assured you can rely on us!