Bad credit loans

aa412

Hi All!

When I was young and stupid I got behind on a payment and had a dispute with my bank which led to 2 defaults (2011 and 2012). When I was in a position to pay them back a couple of years later I was advised that there was no point as my credit file was already ruined unless they could be persuaded to remove the defaults in exchange for payment, which was unlikely.

Fast forward to today I have significant savings and am building my credit rating back up slowly paying everything back in full every month. I have a first direct credit card with a very low limit, a phone contract and some online catalogue accounts, altogether c£3k of which I use 30% monthly on average. I now want to buy a car which I can afford to pay cash for but I want to use this opportunity to further build my credit rating by borrowing part of it (£3000 or less over 1 to 2 years). I ideally want a personal loan to be able to negotiate the best price with a dealer as a cash buyer but I've mostly found car finance loans that pay the dealer direct. With some I even have to use specific dealers and the prices are significantly more than elsewhere.

My questions are:
1) is it worth me using this strategy as in 3 years time the defaults will have both dropped off my file anyway? I have no intentions of applying for a mortgage or any other major debt in that time frame but who knows what could happen in a year or two.
2) are there any recommendations for personal loan providers that do bad credit loans? ( one soft search engine said I had a 50% chance of getting a Zopa loan but my research indicates it's highly unlikely)

Thanks in advance for your advice!

aa412

I should add that I understand that there is no such thing as a universal credit score/rating. I am using these terms in the colloquial sense to mean credit history/ chance of obtaining credit in the future.

[Deleted User]

If you have the cash for the car, use that. Don't go paying interest on a loan you don't need.

Sensible credit card usage will build your credit history.

Anthorn

Deleted_User wrote: »

If you have the cash for the car, use that. Don't go paying interest on a loan you don't need.

Sensible credit card usage will build your credit history.

But that's not the philosophy of the Credit Unions which are backed by the Government and the Department of Work and Pensions in their Credit Union Expansion Project. The Government and the DWP are in fact instrumental in bringing some Credit Unions around to that philosophy. Lastly, it was through one of the recommendations of the Credit Union Expansion Project steering committee that the ceiling on the monthly loan interest was raised from 2% to 3%.


That philosophy is to save regularly while taking out loans which are needed and can be afforded. That philosophy is a sound one: The alternative as suggested in the post I quoted is for example, to spend one's Christmas savings and cancel Christmas because there is no money for it!!


In answer to the OP salvation is most likely at your local credit union but at a price. First of all it's a fallacy that credit unions don't credit check, they do. With a bad credit record you can expect loan interest of 3% per month on the reducing outstanding balance and you can expect to have your income paid directly into the credit union with your loan repayments AND savings deducted with the remainder paid wherever you want: By BACS into a bank account or into the Credit Union prepaid Mastercard are probably the most popular. You might also expect to have your savings within the CU restricted from withdrawals throughout the life of the loan. You might also expect to be offered debt advice or referral to a debt advice service.