You may be able to get a doorstep loan even if you have a low credit score.
If you have a poor credit history, you might find it difficult to secure a loan and may find yourself being turned away from lenders. This is because many mainstream lenders may base their decisions solely on your credit file.
It might be that you simply have no credit history at all because you’ve never taken out a credit card or loan before. Or, it could be that you’ve experienced difficulties with paying off credit in the past. This might be a missed credit card payment or late payment on a loan.
Doorstep lenders can typically offer financial assistance where other lenders won’t. This all obviously depends on the lender, and rather than there being a one-size-fits-all rule, the lender will take your individual circumstances into account.
One good thing about doorstep loans is that if you’re able to keep up your repayments, you may be able to improve your credit rating [1]. On the flip side, failing to keep up with your loan repayments can also dent your credit rating too.
Factors to consider
There are, of course, factors to consider when taking out a doorstep loan. Interest rates can be higher compared to other forms of lending [2]. This all comes down to the risk factor. As you might expect, someone with a poor credit history is thought to have higher risks associated with them, and so the interest rate tends to be higher to reflect this.
Repayments may be collected more frequently than some types of lending, potentially on a weekly or fortnightly basis. Doorstep lenders also offer smaller sums of money compared to mainstream lenders. [3]
If you ever run into debt issues in the future, there are places which can help. The Money Advice Service, National Debtline, or StepChange all help people who are struggling to manage their debt.
Source:
[1] Taken from Money Supermarket – Borrowing with poor credit history. Retrieved 9th Feb, 2018.
[2] Taken from Money Advice Service – Home credit or doorstep lending. Retrieved 9th Feb 2018.
[3] Taken from Money Advice Service – Home credit or doorstep lending. Retrieved 9th Feb 2018.
