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Whether you've got a spotless credit history that you've carefully built up over a number of years or a less than squeaky clean record containing a number of defaults or possibly county court judgements, there are a range of loan and credit card products to choose from without having to resort to the less reputable lenders.
1. CREDIT CARDS
If in the past you've managed your money matters carefully, paid back your loans on time and not missed any payments on your plastic then you'll be lucky enough to be able to select from the most competitive mainstream products on the market, such as the Virgin Money MasterCard offering 0% on balance transfers for a whopping 16 months.
However if you fall into the category where there are blemishes on your credit history, in many cases through no fault of your own, you can still obtain credit, but because you will be viewed as a greater potential risk, you will probably have to pay a higher rate of interest.
But just because your credit record is not in the best of health doesn't mean that it has to remain that way. There are ways and means of improving your credit history and, surprisingly, taking out more credit can actually help to repair a poor record. It won't happen overnight, but gradually over time you can improve your credit status so that you will be recognised as somebody with a reliable borrowing history and once again be considered for the lowest rates of interest available.
So whilst you may not be currently eligible for the finest rates of interest, don't despair and opt for products at the other end of the scale such as pay day loans or doorstep loans where you can end up paying interest rates in excess of 1300%!
In the credit card market for example there are 'credit repair' cards available from Capital One bank or from Vanquis . Now whilst the interest rates of 34.9% typical APR and 39.9% typical APR are a lot more expensive than standard cards with an average rate of around 18%, the trick is to use the card responsibly and pay the balance off in full every month - that way you don't have to pay a penny in interest, you are simply using the card as a tool to help you improve your credit rating. And, once you have improved your credit rating sufficiently you can then ask the card holder to reduce the interest rate (which they will often do) or move to a more conventional card at a more reasonable interest rate.
PERSONAL LOANS
If it's a larger sum of money that you require, perhaps it's time to change the car or carry out some essential maintenance on your home, again there are a range of loan options and interest rates available, dependant on your credit rating.
If your rating is good, Lombard Direct are offering loans over £7,500 from 8.3% APR and Alliance and Leicester from 8.7% APR.
On the other hand if your credit record is improving, but is not yet back to full health, it's still possible to borrow monies from specialist providers such as Yes Loans who cater for people with an adverse credit history.
The interest rate you will pay will be higher than on the high street, but if you really need the money to ensure you have a reliable car to get you to work, or there are some much needed repairs for the home, this is still a far better option than turning to a doorstep lender or a loan shark. Just remember that the loan will have to be repaid and make sure you can afford the repayments comfortably - if not then resist the temptation to borrow more.
UNDERSTANDING AND CHECKING YOUR CREDIT RECORD
So you can see that whether it's a credit card or a personal loan that you require, there are suitable products available even if your previous track record is not 100% positive.
But rather than pay higher interest rates for ever more, it's important that you make every effort to rebuild your credit history, so that in future you can take advantage of more competitive deals from mainstream lenders.
To get a free copy of your credit rating to ensure it is accurate and up to date and to see what it currently says about you, just click now.
If you use your credit card responsibly or take out a personal loan and always ensure that you make your payments on time, you'll gradually start to see your credit score improve. Once your credit card or loan has been up and running for 4 or 5 months, request a new copy of your credit report to monitor your progress.
PROTECTING AGAINST ACCIDENT/SICKNESS AND UNEMPLOYMENT
In these uncertain times it's certainly worth protecting any borrowings against the possibility that you are unable to work at some point in the future. But don't be tempted to take out the policy offered to you by your lender without shopping around. Sickness and unemployment policies offered by most lenders are poor value and, almost invariably, better cover at a lower price can be obtained by shopping around. At Moneynet we offer policies from British Insurance that are amongst the cheapest on the market so get a quote here before making up your mind.
The key message here is, even though you may have had problems with your finances in the past, you can put things right over time if you can prove that you are able to manage your money carefully, make repayments on time and keep within any agreed credit facilities.
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