Why having a bad credit record doesnt mean your financial options are limited

It has been some time since the UK exited the recession. Today, the economy is coping with the aftermath, and the new coalition government is trying to do this by introducing severe austerity measures. These include plans for public spending cuts and a rise in the VAT rate. But is the UK improving at dealing with debt?

If the latest surveys are anything to go by, normal people in Britain are becoming more deft at balancing their old debts, yet doesn’t automatically convey that they are not pulling in more debts. Saving has gone up, so it goes to show there is a trend which proves that consumers are behaving carefully about how much cash they hand out. But a compendium can only show a general average for the whole country. In reality, personal debt is still rather steep and there are many individuals who experience a daily struggle with money.

On an almost daily basis, there are new cautions about dodgy loan providers like loan sharks, which sell criminal loans with bad credit to households who are desperate for money. Loan sharks are not legitimate loan providers, and generally charge extremely high interest rates, which the individual could never repay. When the victim lands in difficulty with the loan, the loan shark will either offer them more money at even higher rates or introduce warnings of violence to dictate payment. It is never worth using a loan shark as the situation will inevitably end badly. Yet what about other non-bank loans available these days? What precisely is available and which ones are safe to use?

There are lots of authentic loans on the UK loan market nowadays. These include payday loans or wage advance, logbook loans, personal loans and many more independent credit products. They are not usually offered by commercial banks yet you can find them on the internet or in TV commercials. Pay day loans are on offer to people who do not hold a perfect credit score, or who might have been rejected for a lending product from a traditional bank.

Therefore even if a borrower has CCJs or is unemployed, they will usually be accepted by loans with bad credit lenders. Because the loan taker poses a higher risk to the lender, the rates on these types of loans are generally a bit more steep than on other loans. This is because the loan taker is more than likely to experience some problems to pay back the loan, due to their past performance with lending products. By introducing a slightly bigger borrowing rate, the lender is dealing with the additional risk level. Yet, payday loan lenders are (in most cases) fully legal lenders and won’t employ any of the approaches used by loan sharks. Certainly, it is fantastic relief to someone who is hard up, that they can borrow up to 500 pounds and receive the cash in a short space of time. However if they hold a large amount of outstanding debts, then it may be careless to apply for more loans.

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