CLOSE HOME CONTACT FAQ'S OUR LENDERS BLOG HOW IT WORKS

How to Get Credit Again After a Financial Downfall

We are a resilient bunch, if something knocks us back or down, we dust ourselves off, get up, and get going again.

As they say, you need to “get back on the horse”.

And the same can be said about experiencing financial difficulties and money issues. We need to dust ourselves off, and get back in there.

Any one of us could experience a period of financial duress, it could be a few months of just being short of cash due to a cut in work hours, to a full blown financial crisis, such as being made redundant, or facing an illness which means we need to come out of work for a period of time.

Then to add to this “financial crisis” and the stress of trying to deal with paying the main bills, rent/mortgage, council tax (you may be eligible for a concession), putting food on the table, keeping the electricity and lights on, the gas and heating on, you may also have credit card payments, a car on finance, and other loans to pay.

If you prioritise your bills and accounts, credit cards and loans and the such take a back seat to your priority bills and living expenses.

This means by paying these accounts late, your credit score will be reduced or drop, which for many is like being kicked whilst you are down.

It adds insult to injury.

If you could pay the accounts on time, you would pay the accounts on time.

Fortunately for many people, a financial crisis is a transient thing, it happens and passes.

It may happen over time and build up, such as some one over extending themselves, and then the financial crisis is relieved by going Bankrupt, or doing a Debt Relief Order, entering into an IVA/Individual Voluntary Arrangement, or a Debt Management Plan, or paying off the debts over time as your financial heal improves.

But the damage to your credit score and credit history has been done.

So Where to Now St. Peter?

How to get back on the horse as they say, and get your credit file and credit score back on-track?

Dusting Yourself Off and getting Credit Again

Once the financial crisis has passed, and you are beginning to stabilise yourself financially, that is the time to begin to think about your credit and credit score.

If you miss payments, are in arrears with accounts, and also over-extending and in debt, your credit score will drop, and it may drop a lot.

High credit scores are good, low credit scores are bad; at least in trying to a loan they are bad.

There are loans for those with low credit scores, they are called bad credit loans, and we will look more at them later on.

It is once the crisis has passed that we can then look at clearing and cleaning up what has happened, and rebuilding our credit scores.

The first step is to pay off what accounts you may owe now. This means to concentrate on getting out of debt.

This can be by setting up a repayment plan when you can afford one that gives you a light at the end of the tunnel, such as a Debt Management Plan, that way you know in (insert time frame here) you will be debt free and have zero balances.

It may also be going Bankrupt to be discharged of the accounts.

Either way, you want to start with a clean slate, no debt.

Once this has been achieved, next is to obtain a copy of your credit history and credit score.

You need to see the damage done, and also get a baseline to begin with.

Next is the rebuilding process.

Review your credit history for any errors and omissions.

If there is an account that is reported incorrectly, have it corrected.

If an account or information is missing, have it corrected. Remember that not all lenders report to all the credit bureaus, so an account may not be reported, however, you can contact that creditor and inquire as to who they report the accounts to.

Get on the Rental Exchange if you are a tenant.

Being on the Rental Exchange gets you credit for paying your rent on time, it also benefits landlords as well.

Are you on the Electoral Roll? If not, get on the Electoral Roll.

Banks and lenders use the Electoral Roll to verify your address, and to verify you are who you say you are and live at the address you give. This solidifies your identity when applying for a loan.

Consider a Guarantor Loan if you need a loan and want to rebuild your credit.

Guarantor loans are loans that are granted on the basis of two things:

* Affordability

* You have a guarantor

A guarantor is someone who knows you and signs with you for the loan. The guarantor knows you will repay the loan, and as a guarantor states they will make the payments for the loan should you default.

Guarantor loans can be a good way to rebuild your credit.

Unfortunately, there are many of us that will experience a financial difficulty or crisis at some point in our lives.

Fortunately, it can be dealt with, and we can get back on the credit horse to ride again.

Leave your comment

<strong>What is Our Criteria For Applying?</strong> 
Every lender on our website has their own specific criteria by the basics are mentioned below and you must have a guarantor to be eligible. Simply select the lender of your choice and you will be taken directly to their website where you can apply. You will be required to submit your details including:<li style=”text-align: center;” data-mce-style=”text-align: center;”>Name (must be over 18 as the borrow, 21 or 25 as the guarantor)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Residence (your chances will improve if your guarantor is a homeowner)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Employment status (must be employed or on a pension)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Income (earning at least £600 per month and able to make repayments)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Monthly expenses (not have too many loans open or in major debt)</li>
 
You will then be asked to include the details of your guarantor and as mentioned above, this is usually someone who you know and trust and wants to help you with your personal finances. Ideally, a guarantor with good credit will maximise your chances of being approved based on the idea of ‘if someone with good credit trusts you, well we can too.'<strong>How Much Can I Borrow From Guarantor Loans?</strong>Guarantor Loans gives applicants the chance to borrow £500 to £15,000 depending on the lender. Some lenders we feature like Buddy Loans only have a maximum loan value of £7,500 and TFS Loans is the only lender that stretches up to £15,000.Factors that can influence the amount you can borrow revolve around having a good guarantor. One that is a homeowner, with solid employment, income and good credit rating will maximise your chances of borrowing the largest drawdown possible.The lenders featured on Guarantor Loans see a homeowner as someone who has already gone through the rigorous process of credit checking and affordability and if they can afford a house, they should be able to act as a guarantor for you.By comparison, having a guarantor that is not a homeowner offers slightly less security and means that amount you can borrow is slightly less too.Higher amounts may be available to those who already have a better than average credit rating, are homeowners themselves and a repeat customer with the lender who has already paid their loan on time. To apply directly with your lender of choice see <a href=”https://www.paydaybadcredit.co.uk/direct-lender/” data-mce-href=”https://www.paydaybadcredit.co.uk/direct-lender/”>direct lenders</a>.<strong>What Does The Guarantor Have To Do?</strong>Upon completing an application, the lender will typically send you a <a href=”https://www.handbook.fca.org.uk/handbook/CONC/4/2.html” data-mce-href=”https://www.handbook.fca.org.uk/handbook/CONC/4/2.html”>pre-contract loan agreement</a> and SECCI (Standard European Consumer Credit Information form) which will highlight the terms of your loan. You and your guarantor will be required to review the terms of the loan, including the loan drawdown, fees, repayment dates and responsibilities – and this can be signed via an online verification process using your email and mobile phone.The lender will usually carry out an individual phone call with you and your guarantor to ensure that you both understand the responsibilities and what is required of you – notably that if you cannot make repayment, your guarantor will be required to pay on your behalf. Further to some additional credit and affordability checks, funds can typically be transferred within 24 to 48 hours (or sometimes on the same day).<strong>Are Guarantor Loans Available For Bad Credit Customers?</strong>Yes, even if you have a history of adverse credit, <a href=”https://www.gov.uk/county-court-judgments-ccj-for-debt” data-mce-href=”https://www.gov.uk/county-court-judgments-ccj-for-debt”>CCJs</a>, bankruptcy or IVAs several years ago, you can still be eligible. The idea is that you are using your guarantor and their financial history to ‘back you up’ and give your loan extra security. However, it is noted that your guarantor should have a good credit score and consent to co-signing your loan agreement.<strong>How Soon Can I Receive Funds?</strong>Guarantor Loans works with lenders that can facilitate funds within 24 to 48 hours of approval, or sometimes on the same day.When your funds are successfully transferred, most lenders working with Guarantor Loans will send the full amount to the guarantor’s debit account first. This is a standard security measure carried out by lenders to ensure that the funds are going to the right person and confirms the involvement of the guarantor. The guarantor usually has a ‘two week cooling off period’ where they can decide to pass on the money to the main borrower or they can change their mind and return the funds with no extra charges.