Weekly financial updates and articles to help you save and budget yoru finances in an efficient manner.
By James Ball AdminFinancial Team
For people who have a bad credit score or no credit history and need to borrow money, it can be a difficult process. Individuals have found it harder to get a loan especially since the banks have become more stringent about whom they will lend money to. Ever since the credit crunch it can seem virtually impossible to get a loan when you have no credit history, however, it is still possible.
It is hard for a bank to asses you with no credit history. It would be hard for them to distinguish whether you could repay money borrowed, making you too much of high risk for them. There are still options available for people with bad credit or no credit history, and that is with a guarantor loan.
The guarantor loan is perfect for people with a bad credit score or no credit history as they can obtain the loan with the help of a guarantor. Although most people will use a close family member to act as guarantor for the loan, anybody is able to do this. The person you ask would need to have a good credit history so they can act as a guarantor for the loan.
It is imperative the guarantor understands the loan and the position they are undertaking. They would need to be aware that they are guaranteeing the repayment of the loan if the borrower fails to do so. It would be wise for the guarantor to check the borrower's finances: i.e., income, expenses and to make sure he or she is capable of paying the loan before agreeing to act as a guarantor.
The loan will be in the name of the applicant if all payments on the loan are made and on time the applicant can build or rebuild their credit rating with help from the guarantor's good credit standing.
The guarantor loan is an unsecured loan. There is a misconception that an unsecured guarantor loan is more costly than other unsecured loans this is not the case because the loan is evaluated on the guarantor's good credit not the applicant applying for the loan.
The guarantor's property is safe if the borrower fails to pay the loan back, this is because it is an unsecured loan. It has been known for the creditor to take the loan to court and change it into a secured loan to recover funds lost but this would only happen if no other agreements could be reached.
Anybody trying to obtain a guarantor loan will know it is a big risk to ask someone to act as a guarantor for the loan, it must be seriously thought about, and you must make certain you can pay back the loan before any decision is made.
06/04/2018 is when the tax year currently will conclude. this is when you must organize finances and get debts in order.