Can I get a £2,000 loan with bad credit?

Ailsa Adam July 12, 2023

A £2,000 loan is a personal loan that you can use for a variety of reasons. They are generally ideal for funding unforeseen expenses and when you are to fill the gap in your savings for planned costs like a holiday trip. It is not a small sum of money, which is why lenders are not as convenient as approving a payday loan when it comes to a £2,000 money loan in the UK.

You cannot ignore the importance of having a credit score, but it does not mean that you are not capable of applying for these loans in case of a less-than-decent credit score. If a lender refuses you the loan, they will not disclose the reason that led them to do so, but you can ask them the credit bureau they consulted to obtain your credit report. Chances are, peering at it will help you comprehend what went wrong.

How important is a credit score for a £2,000 loan?

Perusing your credit report is part of affordability checks. Under no circumstances will an authorised lender loan you without taking a look at your credit file. There are two types of checks that a lender can make – soft and hard.

The former inquiries do not show up on your credit file and are usually applicable for a small sum, say, £100. Payday loans are subject to soft credit checks. As £2,000 is a larger sum and paid down over a period of months. A lender will not make a lending decision without a hard credit check.

What other things will a lender look at to sign off on?

Just a decent credit score is not enough to give your application a green light. Your financial circumstances will be perused to ensure that you will not have trouble keeping up with instalments. A lender will look at the overall picture of your finances, and hence they will try to know:

  • How much do you earn and spend every month? They will try to analyse the record of incomings and outgoings of the previous three to six months.
  • How stable is your income?“As a full-time employee, you should have been working in your company for at least a year.” If you have just switched your job, they will check the stability of previous companies.
  • How much money do you owe at the time of applying for these loans? The more you owe, the harder you will find the repayment.
  • How long have you lived in your current location? Frequent moving is not admired at all, even if you are a tenant.

What are your options when you need a £2,000 loan?

“As you know, they are a personal loan; you can take them out from your bank or a private lender.” You can use the money the way you want and will be liable to pay it down in fixed monthly instalments. However, a personal loan is not just an option to borrow £2,000. You can use the following alternatives as well:

  • Guarantor loan

You can seek a guarantor loan as your credit history is not so good. This option is quite relevant when you are refused a loan without a guarantor. The guarantor must have a good credit score. Finding a guarantor is challenging as people know the risk involved.

The default by you will result in lowering the guarantor’s credit points as well. To field this situation, you should apply with a co-applicant like your spouse. If your significant other has a good credit score, you are likely to get the nod.

  • Credit cards

Credit cards seem to be the most convenient option when you need £2,000s. However, it is possible only when it has a bigger limit. You will have to pay off the full balance within the grace period to avoid interest. “If you use a personal loan or a guarantor loan, you will pay down in instalments.” In fact, you can borrow a larger sum, say, a £3,000 loan with a bad credit score.

  • Bank Overdraft

Bank overdraft is also an alternative when you need an instant injection of cash, but this could prove to be very expensive because interest rates will be charged per day basis. They are much higher than the interest rates of credit cards.

Use overdrafts only when you need money very urgently. If you can put off the purchase or you have another alternative, you should avoid using the bank overdraft.

  • Friends and family

You should turn to friends and family if personal loans are not approved. Credit cards and overdrafts are genuinely very expensive. When you borrow money from your friends and family, let them know how you will pay them. Make sure your relationship is not ruined because of your inability to repay the debt.

How can you get a £2,000 loan at a lower interest rate?

The following tips will help you get a £2,000 loan at an attractive interest rate:

  • Do research about interest rates, APRs, and monthly payments. A pre-approval letter from lenders paves the way for comparing a deal.
  • Do not borrow more than you need. If you can make do with less money, stick to that point.
  • Borrow only when it is absolutely urgent, and there is no way to deal with the situation.
  • Reduce the money you currently owe. If possible, get it off your credit report.
  • Whittle down your expenses to prove your repaying capacity.
  • Ensure you provide all personal and financial details correctly, as they play a role in deciding the loan size.

The bottom line

“Yes, you can get a £2,000 loan with a less-than-decent credit score, but you might end up paying a higher interest.” It is recommended that you borrow from a reputed direct lender like HugeLoanLender. In order to get money at the most competitive interest rates, you should always try to do up your credit rating.

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