In the United Kingdom, the financial environment is changing rapidly and people have been suffering major setbacks in terms of hidden clauses and interest rates. Banks have altered their strategy where they are not revealing the interest rate unless an applicant applies for a loan.
Such tactics are being used across numerous financial institutions. It has become the norm for the corporate sector to not take the welfare of the client into consideration.
If you are looking for personal loans that will not damage your credit ratings, here are some tips:
- Do Your Background Research
The first step to finding a personal loan is to do your research. There are numerous financing options available in the market for those seeking a loan. If you are one of those who does not want to damage their credit history, make sure to do your research thoroughly.
Look into the different personal loan options such as peer-to-peer lending, credit unions, secured loans, etc. These options are ideal for those who want a loan, but do not want to damage their credit history.
Secondly, one needs to understand that no matter what they do, a financial institute will take their credit score into consideration. Banks generally seek help from credit reference agencies before granting a loan. Thereby, check with a local credit reference agency about your personal credit score. This will help you to make a strategic decision and minimise the chances of damaging your credit history further.
When doing your research, you should also use a personal loan calculator. A loan calculator will take your expenditure and income into consideration, and suggest an amount you could get as a loan. This will help you to keep your expectations realistic while applying for a loan and will ensure you won’t borrow too much (which would impact your credit score).
- Get a Soft Quote
Once you have done your preliminary research, get a soft quote from a financial institute. Generally, a bank will tell you about the interest rate once you formally apply for the loan.
However, some lenders offer soft quotes which do not require a formal application. They will take your credit history into consideration and tell you if you’re eligible for a loan or not. They also inform you of the approximate interest rate to be offered with the credit history you have. You can then find a personal loan that will cater to your financial needs without affecting your credit history. It is advised to check your own bank if they offer soft quotes. However, certain banks also facilitate non-customers.
- Shop Smartly
Generally, big financial corporations do not offer good rates. Thus, you can look for other options that offer greater value for money. The last thing you would want is to opt for a personal loan that worsens your financial situation and affects your credit history.
If you already have a loan from a particular financial institute, do not reapply there. Chances are that they will offer you a mediocre deal. Your primary goal while seeking financial help is to minimise the chances of credit damage.
- Understand the Terms and Conditions
Before you are ready to sign a deal, make sure you go through the documentation and look for clauses that could cause damage. It needs to be understood that the cheapest rate may not be the best deal for you.
Ensure you extract all required information. In some cases, banks won’t reveal the amount of time required to transfer the funds. This becomes difficult for those who need money immediately. The repayment criterion also varies and has an effect on your credit history.
Read the terms and conditions to make an informed choice that does not hamper your credit score.
Be smart with the choices you make when finding a personal loan. Also, make sure that the interest rate is low and get a soft quote before you formally apply for a loan.