In the recent past, Britain has seen a steep rise in its mobile workforce. This has prompted a sharp increase in the number of people hunting for a rented accommodation. Besides work, a number of other reasons like unavailability of council homes, divorce etc. may be attributed to the increase in the number of tenants in the UK.
If you are a tenant it is very obvious that you will not be able to offer a home as collateral for a loan. In other words, you automatically become ineligible for a secured loan unless you forward something else like stocks, car or jewellery as security and your lender accepts them too.
In a situation where your lender is not so understanding and you need to borrow money urgently, what do you do? To cater to the financial needs of tenants a different category of loans by the name of unsecured loans was propounded.
Unsecured loans are a form of credit that is especially meant for people who cannot offer collateral. Since, there is no security provided to the lender, his risk increases several times. To offset his risk therefore, the lender levies a high rate of interest.
But unsecured loans also come with several advantages. Firstly, absence of collateral eliminates the need for valuation, thus saving you the cost of valuation, arrangement, solicitor's and conveyance fees. What's more you save time also and paperwork becomes a lot less hassle prone. Consequently, an unsecured loan has a swifter approval process.
Your credit score plays a very vital role in the process of getting your unsecured loan approved. A bad credit score increases your chances of facing a loan refusal, whereas a splendid credit history may be rewarded with a low rate of interest. Basically the point is that your lender needs to be convinced about your repayment ability. Once that is done, the rest may just be a cakewalk.
However, if you are refused a loan on account of your poor credit score, don't lose hope. There are a lot of lenders that lend money to poor credit holders and that too at easy terms.