Having credit score less than the perfect is very common in the UK; the majority of households with limited income have it. The poor credit score makes you more prone to be trapped in the lending scam because you have limited options to borrow the required money at the earliest. Although the credit score is vital for qualifying for a loan at direct lending agency or Govt. financial institution but many borrowers have confusion in determining their credit score by self because there are three major credit ranking agencies that calculate credit score at their own way.
Know All The Three Credit Ranking Agencies Better:
Equifax, Experian and CallCredit are the three major credit ranking agencies in the UK. Different lenders use different credit score agency to decide to which borrowers they can lend. Before applying for any amount of short-term or long-term loan, it is must have an idea for a current credit score.
Equifax, the oldest credit reference agency started in the USA in the late 1800s, has become the first choice of the UK’s direct lenders. Over 77% lenders use Experian, 55% lenders use Equifax and 34% lenders use Callcredit. These credit reference agencies have different maximum credit scores. Experian’s maximum score is 999, Callcredit’s is 710 and Equifax’s is 700. Some people ask ‘can I get a personal loan with 500 credit score?’. Here, it becomes must to know which source he used to calculate his credit score. The 500 credit score can be said average if it has reference to Equifax or Callcredit but it will be considered less than perfect if it has reference to Experian.
Possibilities of Being Trapped In Scam Loans:
The different lenders use their own ways to determine the borrower’s credibility by using different tools and credit ranking agencies. The lenders assess the borrower’s urgency of cash loan; therefore, they offer high-interest-rate deals. If a borrower, because of previous borrowing experience, tries to negotiate, the deal is modified according to the borrower’s expectations but with hidden pitfalls like high late payment penalty, processing fee, upfront fee, early repayment charges, advance check, direct excess to a bank account for withdrawing the dues etc. Some lenders offer long-term loans to earn more and to keep the borrower trapped for longer. Despite the regulations of FCA, direct lenders offer different APRs on same amount loan for same repayment period; getting the best genuine deal becomes a challenge for the first time borrower.
6 Ways to Avoid Scam Loans with Low Credit Score:
Some direct lenders with short-term business interest take undue advantage of your borrowing need because they know that you have limited options. To experience the safe stress-free borrowing, you must be vigilant to get the genuine loan deal; and, the offered interest rate is not the only criteria to judge the offer.
- Make sure a lender wants to see credit history. Even the lender dealing in no credit check personal loan should be interested in your credit report as per FCA’ guidelines. If the lender is not curious about past repaying habits, it is suspicious. Any company saying that it doesn’t care for credit reports is a warning sign. All the credible lenders essentially check borrower’s credit report.
- Not all the credit checks by direct lenders are equal; some are categorised as hard credit checks and others are categorised as soft credit checks. The hard credit check reflects on the credit report making the bad credit worse. The soft credit check doesn’t reflect on a credit report. Therefore, choose the direct lenders using a soft credit check to determine your credibility.
- The credible lender always looks for the proof of ability to repay, whether by checking the bank account or asking for income proof. If the selected lender is not asking much about your income to be sure of repayment of credited money despite knowing about the less than the perfect credit score, it is suspicious.
- Check the reviews on social media platforms. There are multiple online review sites, and most of the unsatisfied borrowers comment about the particular lender to make the other borrower beware. The response by the lender to the comment posted by unsatisfied borrower also gives you a fair idea about the lender’s approach and standards. It will help you avoid direct lenders interested only in a one-time deal.
- If a direct lender approaches you, be wary. Do intensive research about the lender’s credibility. To make sure, visit FCA’s register that has all the details of genuinely registered lenders. Deal only with lenders specified in that registered; lender’s location doesn’t matter much because of the online process.
- Too much flexibility also makes the lender suspicious. Each lender has own rules and regulations. If some seem too flexible, avoid dealing with. Any lender forcing you for an instant decision should be taken with suspicion.
Compare every word of a proposal without any doubt. Don’t hesitate to ask but never sign a bad credit loan deal unless you are sure of getting the best-priced deal from the authorised lender.