Can You Get a Guaranteed Loan with Bad Credit?

Getting a loan with bad credit already feels like a difficult task. In such a case, if you get to know about a guaranteed loan option for poor credit applicants, doubts arise.

Many borrowers like you have doubts about whether they can actually get a loan with assured approval or not. Well, in place of extending this confusion to others, know the right answer right here.

Can You Really Get a Guaranteed Loan with Bad Credit in the UK?

Rationally speaking, there is nothing like guaranteed loan approval. Especially, with a bad credit score, you should never expect that. It is just a promotional phrase that lenders may use to attract borrowers.

No lender can ever guarantee approval, as that is subject to an affordability assessment. Only after checking the repayment ability of an applicant can funds be approved. In fact, with strong repay ability, you can get collateral-free unsecured loans with bad credit online.

However, due to tailored deals offered by direct lenders, approval chances improve. It means, interest rate and repayment plan offered to you are as per your borrowing ability.

Why Can’t UK Lenders Guarantee Loan Approval?

UK lenders cannot guarantee loan approval as that is not practically possible. An applicant has to go through a detailed credit check process to prove affordability.

A borrower needs to have a regular income, stable employment and a low debt-to-income ratio. Only if these factors are in favour can lenders approve funds.

The ethical lending rules bind all loan companies. No approval decision can be generated without a rational credit check process.

Can You Still Get a Loan If You Have Bad Credit?

Yes, you can. Getting a loan is not impossible even if you have a bad credit score. It is the mention of the word ‘guaranteed’ that is controversial and needs clarity.

As you have read above, if you prove your creditworthiness for a loan amount, you can apply and get approved.

What Do Lenders Look at Besides Your Credit Score?

Several affordability factors are considered while performing the detailed credit check. They decide whether you can repay the amount you have applied for or not. Your application is reviewed as per the following factors.

Do lenders check your income?

Yes, they do. Your income is, in fact, the strongest factor to get the funds approved in a bad credit situation. Regular income is the first condition to prove affordability.

You need to have ample proof of your income. Measurable income, and that is regular too, is your first strong pillar for loan approval. Always apply with accurate income figures and supporting documents to boost your chances of getting funds.

Does employment status matter?

Yes, it does matter, as every employment type has a different mode of earning. A salaried person gets a regular job, and hence income, but the employer may fire anytime. Therefore, showing salary slips from the last employer is vital. 

A self-employed applicant does not work under the conditions of a boss or an employer. But income may not be as regular as that of a salaried person. 

A freelancer enjoys flexible working hours but also deals with irregular and insufficient earnings.

All employment types are acceptable. But for loan approval, a provable and regular income is a vital condition. You cannot overlook it, and if you do, rejection is possible.

Can regular repayments improve your approval chances?

Yes, a recent payment record with timely paid bills and instalments boosts your approval chances considerably. This includes the following factors.

• Timely paid utility bills
• Timely paid loan instalments
• No record of missed payments
• Low credit card balance

Why is affordability more important than a single credit score?

Affordability is the driving force behind your credit score performance. You may have a bad credit history. But if you have improved payment behaviour, your credit score improves.

This is why lenders focus on your income and employment stability. If a bad credit applicant has improved their financial behaviour, lenders consider it more important. Credit score does not remain the most important factor.

What Counts as Bad Credit?

Bad credit denotes poor payment behaviour that can be the result of the following financial circumstances.

• Credit card defaults
• Missed loan repayments
• Defaults
• County Court Judgements (CCJs)
• Debt Management Plans (DMPs)
• Individual Voluntary Arrangements (IVAs)
• High credit utilization
• Bankruptcy
• Multiple recent credit applications

What Types of Loans May Be Available If You Have Bad Credit?

You can avail funds using any of the following types of bad credit loans.

• Personal loans – These are for personal use of funds, and you can borrow based on your individual repayment ability. These have a higher rate of interest.

• Bad credit loans – These are specifically available to poor credit people. The interest rates are higher, but tailored deals help make the loan affordable.

• Guarantor loans – A borrowing option that includes another person who can guarantee your repayments. If you fail to make the repayments, the guarantor pays the instalments.

• Secured loans – It is a secured form of loan for which you need to provide security like a vehicle or property. Due to pledging assets, the interest rate is lower.

• Credit Union loans – These are offered by member-owned credit unions at a lower rate. But the borrowing limit is small.

How Can You Improve Your Chances of Loan Approval?

Follow the tips below and practically boost your loan approval possibilities.

• Check your credit report – Read your credit report in detail to make sure it is error-free. All credit accounts should be updated with the latest information.

• Reduce existing debts – Try to pay off as many debts as possible. It strengthens your creditworthiness for the new loan.

• Apply for a real need – Apply for the loan only if you have a realistic need, such as medical expenses or car repair. Borrowing for a weekend getaway can cause rejection.

• Get registered on the electoral roll – Having your name on government documents authenticates your identity. It becomes easy to verify you.

Should You Be Careful of Websites Offering Guaranteed Loan Approval?

Yes, you need to be careful of websites that advertise bad credit loans as ‘guaranteed loans’. The warning signs may include –

• Claims of affordability assessment
• Mention of guaranteed approval commitments
• Promotional content showing urgency to apply
• Asking for an upfront fee

What Are the Alternatives to Searching for Guaranteed Loans?

Here are the dependable alternatives to loans with a guaranteed approval commitment.

• Specialized bad credit lenders
• Budgeting loans (if applicable or relevant)
• Credit Unions
• Option to improve credit profile before applying
• Free debt advice

Conclusion

The bad credit loans with guaranteed approval are not practically available. Therefore, always follow the right way to apply for a loan. Prove a strong repayment ability using a regular income and stable employment.

This may even help you get very bad credit loans from direct lenders. There is no shortcut to financial solutions for a bad credit situation. Follow the right method and borrow as well as improve your credit score.

FAQs

Can I get a guaranteed loan with a CCJ?

No, a guaranteed loan is not practically available. But if you prove creditworthiness, you can get a loan with a CCJ. However, the interest rates are high.

Can I get a guaranteed loan with no credit check?

No, that is not possible. A detailed credit check is the first condition if you want to access funds. Even applicants with a good credit score have to go through a detailed check.

Can unemployed people get guaranteed loans?

No, guaranteed loan approval is not available even for employed people with a good salary. In case of unemployed, you need to show some form of regular income for loan approval. From a side hustle to unemployment benefits.

Can I get a guaranteed loan if I receive benefits?

Yes, you can. Some lenders, including Cashloans2go accepts benefits as income. Universal Credit, unemployment benefit, Personal Independence Payment (PIP), and Carer’s Allowance are all accepted.