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If you’ve never taken out credit in the past, it can be challenging to know how to go about it. You’ll need to consider things like how much you need to borrow, and the best way to find a reputable lender. You may also need to check your credit score, if you’re unsure how high this is, as many lenders will base their decision on your credit history, as well as your current financial situation.
So when you need to borrow money online, where is the best place to start? We’ve composed a simple guide below to help you get the funds you need!
The amount of money you can borrow will depend on a number of factors. These include how much you’re eligible to borrow, based on your creditworthiness and previous credit history, and what sort of loan you’re thinking of taking out.
In terms of creditworthiness, most lenders will check your credit score to see how you have handled credit in the past. Your credit score is a number determined by information on your credit file, which is a record of loans and other forms of credit you have previously borrowed, as well as things like your utility bills and phone bill. Essentially, your credit report shows whether you have kept to your agreements, and made repayments on time.
You can check your credit score for free using websites such as Credit Karma and Experian – they also offer helpful tips on how to improve your score.
When it comes to different types of loan, as a general rule, you can borrow more money with a long term loan than a short term loan. Longer term loans include things like mortgages, some personal loans, and peer-to-peer loans. There are a whole range of short term loan options too, such as payday loans, guarantor loans, instalment loans, and bad credit loans. My Financial Broker work with a number of short term lenders, and can help you find a loan between £100 and £2,000.
As discussed above, how much you can borrow depends at least partially on your credit history. This will also impact what type of lender will consider your loan application. You may find it difficult to borrow from a traditional lender like a bank if you have bad credit, for example. There are always options available for people looking for a credit solution, regardless of their credit score, but you may need to approach a more specialist lender. For instance, there are a number of lenders that specialise in bad credit loans, whether this be bad credit short term loans or bad credit mortgages.
In regards to creditworthiness, it’s also important to consider whether you have a credit footprint. If you have not previously taken out much credit, you may find it harder to borrow. This is particularly true of young people and individuals who have recently moved to the UK. The reason for this is because without a credit footprint, lenders are unable to determine whether you are able to manage your money well, and make repayments on time.
If you have been turned down for bank loans and other forms of long term borrowing, you may wish to approach a short term lender. Short term loans are much more accessible than long term loans, with many lenders offering bad credit loans.
To apply for a short term loan, you will need to be aged 18 or over, live and work in the UK, and have a UK based bank account. In terms of employment, this does not need to be full time – most lenders will consider your application as long as you’re working at least 16 hours per week.
One of the cheapest ways to borrow money is through a 0% interest credit card. With these cards, you can get up to 20 months of interest free spending! As long as you’re able to pay off the balance of the credit card in the interest free period, this is definitely the cheapest way to take out credit. For a comprehensive guide, you can check out MoneySavingExpert’s golden rules regarding 0% spending cards.
In terms of taking out a cheap loan, it can be helpful to use loan comparison sites and credit brokers. A comparison site can compare the interest rates for different types of loan for you, to help you find the lowest rate. A broker can also compare interest rates for you, but will also put you in touch with the lender most likely to approve your application, based on your creditworthiness.
My Financial Broker can help you find a cheap loan of up to £2000, even if you have a poor credit history. Our online application should only take a few minutes to complete, and our services are completely free, with no hidden fees or charges.