Bad credit score is often the result of accumulated debts and high debt to income ratio. It symbolises inability of the borrower to repay the loans. Whether it is your fault or not, once your credit report is ruined by red flags owing to nonpayment or delayed loan payment; too many unsecured loans; or multiple loan queries; it would take a lot of time and effort to improve the score.

When you are financially broke and need urgent funds to repair your credit health, you often do not have enough time to work on your credit health. You need fast loans with minimal hassles; however poor score makes you ineligible for further loans from main street lenders. It gets difficult to search for bad credit loans from conventional sources.

Herein it is important to know about how people with poor credit rating can apply for loan. Here is a step by step guide:

1. Assess your credit situation

First of, you must assess your credit situation. You should pull out your credit report for analysing your current debt to income ratio. With credit report in hand you can make a sum of total monthly obligations and find out the exact gap between your current income and requirements. With evaluation of your needs correctly you can make a more informed decision.

2. Contact a loan broker

As bad credit makes you ineligible to borrow loans from main street lenders, you must use professional help to locate safe loans for people with bad credit. Rather than going to conventional lenders you must contact dedicated loan advisors who specialise in helping out bad credit borrowers. Unlike main street lenders, private online players work for borrowers with credit limitations. Whether you have low history or no history, you could be rest assured to avail a tailored loan advice for your credit situation.

3. Consider the available options

As you contact a loan broker for available loans, you must keep in mind that there is no fit-for-all loan deal. You must always choose the one that is best suited to your needs. It is important to not borrow more than what you need. Your age, current employment status, loan profile and credit history would play a significant role in determining loan eligibility.

Cash advance loans like payday or doorstep loan
For short cash lapses up to £1000 you can opt for payday loans or doorstep loans. These are very small loans and should be availed when you need fast funds for a few weeks. Payday loan is offered for less than 30 days; while doorstep loans are more flexible and you can avail these weekly repayment loans for a couple of months.

Short term loans
For moderate loans up to £10000 you must apply for short term bad credit loans. Unsecured bad credit loans come at high interest rate, it is thus important to evaluate each loan term carefully. A broker can help you avail 3 month, 6 month or 12 month loan according to your repayment ease.

However to borrow at low rate you may consider applying for homeowner loans which are cheaper and secured loans. You can raise high ticket loans with the help of home equity. Homeowner loans are home equity loans which are offered as second charge to a home owner with current mortgage. The loan is offered as a percentage of balance equity they own. These are independent of your current mortgage and can be raised with lesser hassles and low interest rate.

4. Ensure that you borrow affordable loan

An additional loan with bad credit is always an additional financial burden on your shoulders. You must strictly ensure that you borrow according to your repayment capacity. It is advisable to evaluate the monthly surplus you can use for repayment of additional loan. When you borrow loans according to the instalment burden you can bear, it is more convenient to repay the loan on time.

5. Have a backup plan

Besides the ease of payment, have a repayment back up. With bad credit nonpayment of loan can worsen your credit situation. It is important to have a backup plan for emergency situation.

6. Save and work for better credit

It is always fruitful to go frugal and save more with poor credit health. When you begin to save additional amount every month cutting down your coffee, alcohol, cigarette or more, you can keep the amount aside for unprecedented expenses. With a reserve fund for emergency, it would not hamper your timely repayments despite additional cash hassles.

7. Repay and Sustain

By repaying a bad credit loan, you can gradually build good history. While a small loan for bad credit cannot improve your score drastically; it can however ease your credit health to some extent. This could be first welcome step towards better credit rating.

Author's Bio: 

Maria smith is a financial advisor at Best Short Term Loans. She has majored in Debt and Credit Management and has been serving FinTech industry for the past five years. Currently she writes articles and blogs for borrowers struggling to avail personal loans with poor credit. To find more tips and information on short term loans for bad credit you can visit: http://www.bestshorttermloans.uk/homeowner-loans/