We often hear a lot about credit ratings and lending and it can be tricky to understand all about what the terms means. It is really important to understand it and then know how it is significant for borrowing money. There are also some loans where it is more significant than others and it is good to have an understanding of this as well.
What is credit rating?
A credit rating does not really exist and nor does a credit score. A credit report does exist though. This is something which is a document that has a financial history on it. You can look up your credit for free and find out what is on it. It is a good idea to do this and to check that the information is correct. The sorts of information on it will include any regular payments that you make such as loan repayments rent or mortgage, utilities, contracts and things like that. It will also have information about any missed payments, this could be for bills but also for loan repayments. It will have reference to any CCJs that you have as well. It will also have employment details.
How is it significant for borrowing?
When you borrow money, lenders want to be sure that you can repay it. They will therefore want to see whether you have been able to repay money in the past and whether you are capable of making regular repayments. This is because they want to make sure that they can trust you to repay. They will each have their own way to judge you though. Some will award points for different aspects and come up with their own credit score or rating. However, as they are all different, it is very hard to know what you need to do in order to improve. For example, some lenders might be happier for someone to have a missed a few payments because they will make more money if someone does that. However, they are unlikely to want someone who has missed a lot or not managed to repay a loan at all or has no income as that will mean they would be unlikely to repay the loan.
What about short-term loans
Short-term loans are not typical loans and therefore they do not have the same requirements. This means that the lenders make different checks when they are deciding who to lend money to. They will still do a credit check because it is something that they have to do by law. However, they do not judge using the same criteria. In fact, they are every happy to anyone regardless of their credit record. This means that they do not look at the credit history or anything else, but they just make a few checks. They will check to make sure that the borrower has a regular income as they will need this to be able to repay the loan. However, if they have missed repayments in the past, they don’t have any evidence of having loans before or don’t make regular repayments, they will not worry about it. This means that whether you have what anyone might consider to be a good credit rating or a bad one will not be at all relevant here.
Therefore, if you are in a situation where you cannot borrow money elsewhere, due to the fact that you are unable to provide a satisfactory credit report, then you can get a bad credit payday loan as these lenders will not mind. There are different short-term lenders and they provide different types of loans. This can be useful because you may have specific needs that different lenders can address. However, you will find that they all have the same policy with regards to credit checking and therefore you will not need to worry about this when you are applying to them.
This can also be important with regards to the trace left on your credit report. You will find that when a lender does a credit check it will leave a trace on the credit report that this has been done. If you make slots of applications for loans, this will not look good as it will indicate that you are desperate for money. You will also find that if you keep getting turned down for loans, this will also show up and not look good. A potential lender will be very cautious if they see that you have been turned down by a lot of other lenders. They may even decide that they will not lend to you just because of this. However, a short-term lender will not leave a trace like this and they are very unlikely to turn you down for a loan. This means that it could be best to apply for this sort of loan if you want to avoid risking this happening to your credit report.