People with a bad credit score may consider themselves as unfortunate. But the truth is that the perspective towards bad creditors has changed in the recent times. For such people, the bad credit loans have been designed to assist them to overcome this situation.

Bad credit history may be due to various reasons like- persistent late payments, trouble with collecting payments, missed repayments, writing bad checks, arrears, defaults, CCJs, IVA, exceeding the credit limit on your credit card, charge offs ,too many credit cards with large balances, experienced repossession, divorce and bankruptcy. A Bad credit loan may be the only option for people who have a questionable credit history or those who have yet to establish a credit history.

To measure your credit score Fair Isaac Corporation Scale (FICO) has laid a scale ranging from 300 to 850. The scores are based on a number of factors related to the borrowers’ credit history like late payments, time period of the loan, amount of loan, residence history, negative credit information if any and the repayment history. FICO score of 700 and higher indicates an excellent credit score. A score from 680 to 699 is considered good, while a score from 620 to 679 is a fair credit range. Bad credit starts from 580 and below. It indicates that you are in trouble and warn you to repair your score.

To improve this score an individual can take a few steps like pay off your bills on time, keep the borrowed amount under 35% of the credit limit, try and keep the number of creditors as small as possible and not taking on new debts. The credit score changes every time new information is added or old records are removed from the credit report.

Borrowers apply for bad credit loans for various purposes like debt consolidation, education, home improvement, and wedding or health expenses. There is absolutely no restriction in usage of these loans.

These loans can be endowed in both the secured and unsecured form. Secured bad credit loans require the borrower to pledge collateral. The borrower can apply for a loan ranging from £5000-£75000 at low interest rates for a period of 5-25 years.

However the unsecured bad credit loans do not require the borrower to pledge any collateral. The borrower can apply for a loan ranging from £1000-£25000 for a period of 6months to 10 years.