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.