Bad
credit has the potential to make anyone’s financial life surprisingly
complicated. Nevertheless, there are credit facilities available that don’t take
credit scores into account. Or at least, instances where credit ratings are not
considered principle lending criteria.
But is it possible to successfully arrange a bridging loan with bad credit? To what extent could a poor credit history affect an applicant’s eligibility for a bridging loan?
When
Credit Checks Are Considered Unnecessary
If
you have explored the available options with a bridging loan calculator and decided to apply, you may be
wondering how your credit score will affect your application. With most
conventional financial products – credit cards, bank loans, mortgages and so on
– credit ratings can single-handedly determine the outcome.
The
long and short of it being that if you don’t have a decent credit score, you’re
counted out of the running.
With bridging loans, it’s a little different. More often than not, the primary concern on the part of the lender is the applicant’s capacity to cover the cost of the loan with acceptable collateral. In which case, their credit history is inconsequential. The lender protects their money by entering into an agreement, wherein the borrower’s assets become their rightful property in the event of non-payment.
As
such, bridging loans like these are considered low-risk on the part of the
lender, making credit checks largely unnecessary. If the borrower’s assets
cover the total value of the loan today, their general financial history is
irrelevant.
Are
Credit Scores Ever Considered by Bridging Specialists?
Policies
vary significantly from one lender and product to the next. To suggest that all
bridging specialists have eliminated credit checks from the equation would
be misleading. There are still plenty of specialist lenders who carefully
evaluate prospective borrowers’ credit status.
Where
credit checks are implemented, the result could have a dramatic impact on the
outcome of the application. If a poor-credit borrower’s application is
accepted, the lender may grant the loan at a higher rate of interest with elevated
overall borrowing costs. A second lender may reject the application outright.
Nevertheless,
a third lender may choose not to impose any credit checks whatsoever, due to
the borrower’s ability to cover the loan with viable assets. Hence, if you are planning to apply for a
bridging loan with poor credit, it simply makes sense to target your efforts
exclusively on the more flexible and accommodating lenders.
Finding
the Best Deal on a Poor Credit Loan
Right
now, the market for poor-credit lending facilities in the UK is growing at its
fastest ever pace. Spurred by growing demand among a huge market of poor-credit
applicants, specialist lenders are diversifying their portfolios to accommodate
clients accordingly.
Bridging
loans and secured loans in general have become increasingly accessible for
applicants with imperfect credit histories. Once again, it’s usually the case
of eligibility being determined exclusively on the provision of collateral.
Given
the size and complexity of the market – along with some lenders’ proclivity to
continue carrying out credit checks – the best advice is to work with an
independent broker. A whole-of-market comparison is really the only way
to find the best deal – particularly when focusing exclusively on lenders who
don’t carry out credit checks.
Fire out a bunch of applications at random and the answer is yes, your credit history could affect your eligibility for a bridging loan. By contrast, submit your applications a little more mindfully and there is no reason why you shouldn’t qualify for an affordable bridging loan with competitive borrowing costs.