Key Things to Keep In Mind When You Seek Long Term Loans

By: jennys

Even the smartest of people can make credit mistakes and ruin their score. So you are not alone if you are struggling with credit rating and need respite from accumulated debts. However with too much of outstanding bills in form of loan instalments and credit card balance, you may seek long term debt management solution.

Whether you need long term instalment loan against a property or need a personal loan to consolidate the debts would depend on several factors. So letís explore what are these factors and what you should keep in mind when seeking long term loans with bad credit situation:
1. Past credit history
Before availing a loan your past credit history matters. The lender would raise a credit check and request your credit report so as to ascertain how diligent you were in repaying your past dues. Depending on your past repayment record, your future repayment probability is adjudged and it impacts the loan terms.

2. Loan default or late repayments
Every financial move is recorded in the credit report. If you fail to repay a loan instalment or default a payment it would be marked red in the credit report. Every red flag in your report hurts chances of availing a loan.

3. Credit card balance
Credit cards have made life easier. Humans love to splurge when shopping and credit cards have just added convenience to the same. However having convenience of spending without having anything in the bank account also has given life to debts. Many people realise the length of credit balance after they find themselves rolling over balance to next month. The cost of rolling over credit balance could be more than a personal loan at times.

4. Types of loan
The mix of loans you owe such as secured or unsecured would also define your credit health. The more the unsecured loans you have, the more risky is your profile.

5. Credit utilisation
Your debt to income ratio and credit utilization help lender gauge your debt appetite. The higher is the credit usage, the riskier borrower you are.
All these factors outline your credit rating. When you apply for loans the lender requests your credit report to make a loan profile and assess your loan repayment capability. When you apply for long term loans, the importance of these factors magnifies as lender is going to take the risk for more time. There are more formalities involved and thus it takes more time to process a long term loan.

Things get a little more complicated when you seek long term loans for people with bad credit profile or the ones with special credit situations such as unemployment, a medical ailment and so on.
Herein you would require using a loan brokerís help to make the process hassle free and faster. When searching for loan broker, keep following things in mind:

1. Always contact a loan broker regulated by FCA which is a financial watchdog in the United Kingdom. The regulated brokers follow FCAís consumer guidelines and ensure that you deal with legitimate finance company.

2. Stay away from brokers who claim that they can search for no credit check long term loans. It is illegal to avail a loan without a credit check in the UK. The credit check helps lender know about your repayment capability and you as the borrower also benefit at the same time. This simple check ensures that you are availing a loan that is affordable. With bad credit situation successful repayment of loan is the most important aspect. At the most, you should just be wary about not making a hard check on your credit report. You can ask the broker to ensure that the lender conducts a soft credit check. Eliminating credit check is just not advisable.

3. If a finance company contacts you out of the blue, you should be wary about using their service. There are several companies who are always on a hunt for prey. According to FCA a financial company cannot cold call you. The first contact should be made by you, the borrower. They follow up after you start the process.

4. When you contact a loan broker you should clearly state your concerns related to borrowing. Additionally it would be fruitful to seek a loan advice from the broker and find out what is the best deal. They would not only search the most pocket friendly loan but would also share a repayment plan according to your repaying capacity.
Knowing all these points I hope you are fully ready to contact a loan broker and choose the best loan for your credit situation.

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The author is a financial expert and has worked as Credit counselor for more than five years. Currently he shares his professional advice for people with special credit needs. He is expert blogger on instant loans, short term and long term loans for unemployed people in the UK.

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