Practical tips to help you improve your credit rating and avoid expensive high interest loans
If you’re looking to borrow a small amount of money over a short period of time, then take a look at our 2020 guide.
Many people shy away from extending their overdraft for fear of increased charges.
However, if you are only looking to access a small amount of money over a short period of time, speaking to your bank about extending your overdraft can offer an ideal solution.
Assuming that you do not go over your agreed limit, you will be able to access a far cheaper alternative to a payday loan.
Warning – Avoid charges, they can be even worse than a payday loan! We cannot emphasise strongly enough that you should under no circumstances go over your agreed limit as charges can often be as much as £6/day or £35 per item!
If you have an existing credit card with some available space, this may offer another great method of accessing short-term cash.
There are even a small number of new credit cards available to borrowers with a bad credit rating.
If you are after quick cash, these will probably not offer a suitable option as applications can often take up to a month and even then there is no guarantee the application will be successful.
Approach with Caution – Credit card debt is one of the main contributors to debt problems in the UK and according to the Money Charity, in April 2013, the nation’s total credit card debt stood at £55.3 billion. Therefore as with all debt, you should always seek to repay credit card balances at the earliest possible opportunity.
There exists a small possibility that if you are currently receiving income-based benefits (income support, pension credit or jobseeker’s allowance for example), you may be able to get an interest-free loan of up to £1,500 from your local council.
These loans are only intended for use with essential items such as rent, furniture, clothing or debt repayments. The majority of loans are available for up to 2 years with repayments being calculated on an individual basis.
How to apply: Apply at the Jobcentre or download the form on Gov.uk.
Please Note – Councils are very strict on who they offer financial assistance to. Contact your local council to find out its procedure.
For a variety of reasons (often pride or embarrassment) borrowing from family or friends is often the last option that we explore.
However, as uncomfortable as we often imagine it will be, this option can often be the best one available as it can bring borrowing costs down to almost nothing.
If 1-4 are not suitable, then an unsecured loan may be a good option?
For more information see “What is a guarantor loan?“
We also suggest keeping a regular check on your credit rating. Paying a visit to Checkmyfile by clicking here will offer you a number of options to access the UK’s only multi-agency credit report.
We do guarantor and no guarantor loans, affordable unsecured loans for people with bad credit.