It seems there is a comparison website for everything nowadays, but unfortunately until now there has not been a bad credit comparison website. We explore the first UK bad credit website, discover what causes bad credit and how you can improve your credit score.
By using a bad credit comparison website, you will be able to compare loans and financial products and find the best interest rates and terms for your personal situation.
Let's jump in.
What is Bad Credit?
Bad credit is a negative score assigned to you by a credit reference agency and can be caused by several factors:
Missed payments,
Arrears,
Defaults,
County Court Judgments (CCJs),
Bankruptcy,
Not Being on the Electoral Roll,
Having No Credit History.
In the UK consumer borrowing has been falling due to rising interest rates and people relying on savings. As the cost-of-living crisis bites though, this trend is reversing.
Financial pressures are mounting and leading debt charity Step Change state debt problems are increasing. According to their latest report:
33% of debtors are in arrears with their energy provider,
15% of people have struggled with the cost-of-living crisis,
Unsecured lending has increased by 25% over the last year.
How Prevalent is Bad Credit
Not all debt is problem debt. Most people will rely on some form of borrowing in their lifetime and unless the debt is unmanageable it is perfectly fine to borrow money when needed.
However, bad credit is still prevalent, and many people experience problems keeping up with financial commitments.
Many financial products are structured in a way to entice borrowers such as 0% introductory interest rates and Buy Now Pay Later schemes. Despite their appeal, these products are extremely profitable for lenders as they charge fees and penalties that often detrimentally impact people.
How Are Credit Scores Calculated?
Credit reference agencies use algorithms to calculate an overall credit score for everyone in the UK. These credit scores are a headline number that represents the risk you pose to a lender.
If your score is high, you are low risk. If your score is lower, you represent more risk to lenders.
This risk calculation can prevent you from applying for credit you need such as mortgages, overdrafts, or hire-purchase agreements.
Most major lenders in the UK have what's known as a very low risk appetite, making it difficult for those with adverse credit scores to secure low-cost borrowing.
Bad Credit Comparison Website
To help people who have lower credit scores, BadCredit have set up a comparison website to assist borrowers in finding affordable and suitable financial products.
When you consider that some lenders will not extend borrowing to those with bad credit scores, it is incredibly important consumers have a range of competitive products to choose from.
Bad credit score lenders typically impose higher interest rates compared to traditional unsecured lenders.
By using a comparison site, bad credit borrowers can find the products with the lowest possible interest rate and obtain finance at a much cheaper rate.
How Comparing Bad Credit Loans Helps You
Being able to compare bad credit loans helps borrowers in numerous ways:
Seek out the best interest rate,
Find the maximum amount of borrowing for circumstances,
Compare flexible repayment terms,
Rebuild credit score with credit building loans.
Financial products on BadCredit also utilise soft credit checks to source appropriate products as opposed to hard credit checks.
Hard credit checks should be avoided wherever possible as three or more in close succession can cause a further drop in your credit score.
Ultimately, a bad credit comparison website puts a lot more control in your hands, allows you to view loans side by side and pick financial products that best fit your needs.
Improve Your Credit Score
Some bad credit loans are designed to help improve your credit score, commonly known as credit building loans.
Typically, these are low level loans with small repayments that are designed to be cleared quickly. When payments are made on time and the debt is cleared this will normally provide a small boost to your credit score.
Credit building loans alone will not improve your credit score significantly and you should address any underlying problems with your credit profile.
For example, if you have an outstanding CCJ on your credit file, no credit building loan is going to offset the damage the CCJ is doing.
Why Should You Improve Your Credit Score?
If you have a bad credit score you may be wondering why you should bother trying to improve your credit score. After all, there are still going to be loan providers that extend credit to you.
Now there is a bad credit comparison website you may believe your credit score is irrelevant.
The truth is bad credit loans are markedly more expensive than traditional loans. By relying on bad credit finance, you are further exacerbating any financial problem you may have.
This can lead to what's known as cyclical debt or a debt spiral where you are constantly trying to catch up on your current finances by borrowing more.
Improving your credit score allows you to escape this scenario.
You should ensure you are borrowing money only when you NEED to. It is very common for people to borrow money without much regard for the consequences.
The bad credit comparison website is designed to do just that, allow those with bad credit to borrow when they NEED to.
Bad Credit Comparison Site - A Step Toward Financial Freedom
Ultimately, BadCredit is a tool to help people with adverse credit secure money when they must borrow.
It helps borrowers compare a wide range of bad credit financial products and examine the terms and conditions attached to them.
You should always approach any financial contract with caution and borrow money responsibly. BadCredit believes everyone deserves access to borrowing and that anyone can improve their credit score with responsible money management.
When used appropriately, bad credit finance can be a step toward your financial freedom and the ability to build your credit score.
