Credit ratings can be a real pain in the backside, especially for people who need to get hold of funds in a hurry. Although most companies work out your score based on a number of factors, the basic rule of thumb is that if you’ve defaulted on payments for almost anything in the past, your rating will be less than perfect. Personally, I’ve been unable to secure any form of lending for the last 5 years, thanks to a couple of unpaid mobile phone bills, and though this isn’t really an issue as I can simply pay for things upfront, those without adequate funds could encounter serious issues because of it.
You’ve probably seen all the adverts on TV telling the public to get hold of their credit rating through services like Experience, but this is generally just another expense you don’t need. Plus, unless your score is only slightly off, there’s very little you can do to bring it back up to scratch except wait until the previous defaults have been erased. It is possible to bring the rating up slightly by taking out credit cards and then paying them off quickly, but if yours is bad enough, no credit company will touch you anyway.
With all this in mind, here are my top suggestions for raising funds when it seems all the traditional roads are closed.
- Payday Loans – You’ll have seen these in the national press recently, as thousands of people have been complaining about their high interest rates, but in truth, if you know you’ll be paid soon and you just need some cash to tide you over, they’re really not that bad. Just ensure you always remember to pay them on time and never lend beyond your means.
- Private Lenders – Although most banks probably won’t even give you a basic overdraft, there are some lenders out there who provide the same sort of service, but focused around those with a bad credit history. Admittedly, you could end up paying anywhere from 11% to 30% interest (even higher in some cases), but if your options are seriously limited, it could be the way to go.
- Logbook Loans – This is a relatively new form of lending provided by reputable firms like Mobile Money. For the most part, they provide a pretty safe alternative to risking your neck with debt collectors. Their service works by assessing the value of your car and loaning cash against it. You usually get to keep hold of the vehicle whilst making repayments, which means the impact of this loan shouldn’t be felt too heavily.
- Remortgage – Anyone who owns a property with some level of equity can apply to their mortgage provider for another loan. This will mean 90% of your home will once again belong to the bank, but it could free up thousands of pounds to see you through the rough times.