Bad credit scores no longer a deterrent in the loan market

Whenever a lender looks at your loan application, credit score is his first concern. No body will be ready to give you money without an assurance that you'll repay the amount. And credit score is the primary indicator of your creditworthiness, DTI and personal circumstances being the secondary ones. Most credit reference agencies use FISCO scores to produced by a software developed by Fair, Issac and Company.

Often, the rate of interest charged by the lender is inversely proportional to the credit score of the borrower. The FISCO scores range on a scale of 300 to 850, with higher scores indicating lower level of risk involved for the lenders. The following are the levels of credit scores.

Over 700- Excellent credit score

Between 600 and 700- Credit worthy

Between 500 to 600- Low adverse credit

Between 400 to 500- Medium adverse credit

Below 500- Heavy adverse credit

But, what if you have an adverse credit because of arrears, defaults, CCJs and bankruptcy? There are sub-prime lenders in the UK loan market to lend you bad credit unsecured loans. Though the rate of interest charged on such loans is very high, the reasons for the same are obvious. You neither have any security to offer as collateral to the lender, nor can you assure him through a good credit score. In such a situation you won't mind paying a high interest rate in lieu of the amount you get.

Bad credit unsecured loans have acquired a good market share and they are one of the most salable products. This can be supported by the figures released by Halifax, HBOS and Alliance and Leicester Banks that proved that bad debts increased to alarming heights last year. More bad debts mean more people applying for bad credit unsecured loans either for consolidating their debts and improving their credit scores or for fulfilling their urgent financial requirements.

Though bad credit scores don't get you huge amounts, they do act as a saviour in times of need.


The author is a business writer specializing in finance and credit products and has written authoritative articles about personal loans, unsecured loans , bad credit unsecured loans. He has done his masters in business administration and is currently assisting Go4UKLoans as a finance specialist.