Finding A Loan When You Have Poor Credit And Nothing To Borrow Against

 Image: GettyImages

Image: GettyImages

Finding a loan when you have a poor credit rating and you don't own your own home isn't easy. Or to be more accurate, finding a loan at a decent APR which isn't going to do your finances more harm than good under those circumstances is close to impossible. 

There are many reasons you might have ended up in a position where your credit rating is less than perfect - you might have lost your job, or it may even be as simple as having one too many unexpected bills piling up, one after the other, that you couldn't pay. You might even have had spending habits you couldn't afford that you're now on top of. Whatever the reason, you can't borrow at the kind of preferential rates the next guy with a better payment history can do.
Since legislation has been tightened up, there's even a good chance that you won't be able to borrow relatively small sums from a reputable online payday lender, even if you can demonstrate a good, regular salary with which to cover repayments. In fact, someone with a good salary looking for what is generally thought of as emergency lending can ring warning bells without any kind of back story to explain your circumstances. 

If you have a good relationship with your bank, and you are now clearly keeping up with repayments, it's still worth talking to your branch first, especially if you're paying your salary into your current account. The answer may well still be "no", but it's not unheard of for customers to be treated individually, especially if they're a year or more into repairing past damage.

If you're looking for money for consolidation purposes, or even to start a new business for yourself after losing another source of income, a same day loan isn't going to cut it in terms of affordability or the amount you can borrow. Tenant loans usually require a good or better credit rating, so these are unlikely to be open to you. Guarantor loans, however, will be perfect for your circumstances. Firstly, you need a friend or family member with a regular income to stand as guarantor for you if you default against the debt - this may seem like an uncomfortable situation, but you are far less likely to default than you might be to a bank. Additionally, if you know you will find it uncomfortably difficult in any given month to make your full repayment, you can talk to your guarantor first, who may be in a position to give you a little breathing space.
Anyone over the age of 21 with a good credit rating and a regular income can act as your guarantor, and rates tend to be around 44.9% APR - still higher than bank rates, but undercutting other expensive poor credit lending by some margin. 

As with any major financial commitment, it's worth shopping around to make sure that not only do you have the best deal possible, but that you can afford any repayments without getting into further difficulties.