What is a Bad Credit Loan?

In this blog we are taking a look into what some people refer to as bad credit loans and in particular what is a bad credit loan? We look in to what our underwriters review when considering loan applications and why we do not use this term ourselves when considering a loan application? Read more about it below.

Loans are an everyday part of modern life and come in a large variety of guises. Whether you are buying a sofa or fitted furniture, most of us will usually take out an interest free loan over a period of between three and five years depending on the amount you are looking to repay and over what period of time.

The same can be said for buying a car. Again many of us will need to take out a loan with affordable repayments in order to make the purchase.

Every time we make an application for credit in the form of a loan, we agree with the company who will be lending you the money to perform a credit search. Different companies use different credit software such as Experian, Equifax, Call Credit and more besides but they all do a similar function and that is to track your credit history and generate a score based on that information. If you have a high enough score, your application is accepted, and you move to the next stage of their process.

What some people call:  “Bad credit loan” is one designed for people that have experienced some form of previous credit issue and their credit score is showing as too low to be immediately accepted for a high street bank loan or similar.

George Banco does not approve loans where they would impact the borrower in a negative way. For this reason the term bad credit loan is not one that we recognise or use in any way shape or form.  To be clear, no applications are made to our business, or assessed by the business using this terminology.  Instead, our loans are designed to help people who have all sorts of different credit histories, and may include those with a history that may be unattractive to some lenders. As shown below, we look at more than just the credit history to determine suitability or otherwise for a Guarantor Loan.

When considering an application for a loan which may sometimes be described as a” bad credit loan”, our underwriting team look in to the situation in a lot more detail than many other lenders may, and take all factors in to account before making the decision to approve or decline an application.

Our team here at George Banco have a huge amount of experience in this area and understand that sometimes there are genuine reasons that an individual is showing as having a bad credit score but in actual fact things are not as cut and dry as first thought.

We take in to account a range of factors that allow our underwriting team to make a more informed decision before accepting or rejecting a bad credit loan application.

Some (not all) of the factors we look at include:

  • Recent lines of credit and whether the individual has been able to make those repayments as agreed
  • Overdrafts and whether the loan application has stayed within the agreed limits
  • Whether the applicant has had any CCJs
  • How many times the applicant has applied for credit recently
  • Whether they are in a IVA
  • Any debt management programs they had been involved in
  • Whether the applicant had been declared bankrupt
  • Affordability and whether the applicant and guarantor (if relevant) can afford to make the repayments whilst maintaining a standard of living

Only when we have taken all of these factors and other considerations particular to the individual and their guarantor in to account can the team make a fully informed decision whether the bad credit loan application is successful or not.

So as you can see there is a lot more going on behind the scenes when our team are considering the kind of application that some may call bad credit loan applications, than first meets the eye.

We hope this helps you to understand – what is a bad credit loan and what would be involved should you make an application for a George Banco Loan.

If you would like to make an application for a loan please click here and then go to our simple online loan application form.