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Many of us need to borrow money from time to time. Finding that your current account is low on funds or that you've run out of cash isn't anything to be ashamed of, and it certainly doesn't make you a failure. However, it's not always easy to borrow money if you don't have a good credit rating. Here's what it all means, and how you can borrow money if you have a bad score...

What is a credit score?

A credit score is a tool that is used by lenders. It helps them to decide whether or not it's a good idea for them to lend money to you. You'll have your credit score checked if you want to borrow money via a credit card, a loan or a mortgage, for example.

Why is your credit rating poor?

Lots of things can affect your credit rating negatively. For example, not keeping up to date with credit agreements in the past (such as failing to pay back other debt), not paying your gas or utility bills, or not being very financially stable (i.e. not having a permanent job).

Other things that you might not expect can affect it too, such as not being on the electoral register, not living at an address for at least a year, or sharing a joint bank account with someone with a poor credit score.

Why does a poor credit rating matter?
A poor credit rating matters to banks and other lenders because they'll be worried that you won't pay back the money you owe them. Someone with a good credit rating is someone that they feel they can 'trust' with their money, so these kinds of borrowers are offered the best deals and can get their hands on credit cards, loans and mortgages without too much trouble.

However, someone with a poor credit rating is going to cause concern to lenders, as they might be worried that you'll never pay them back or that it will be hard work chasing you up to pay what you owe every month.  

So, what are your options?

If you have bad credit but really need to get a loan regardless, here are some of your options:

  1. A bad credit loan

A bad credit loan is specifically designed for someone with a poor credit history. The good thing about this is that you'll be able to borrow money, but the negative is that the interest rate you'll pay (on top of repaying the actual loan itself) is usually much worse than a standard loan rate.

Bad credit loans can be hard to get hold of and can make your credit score even lower if you struggle to pay it back.

  1. Borrowing from friends and family members

Alternatively, you could borrow money from someone you trust, such as your best friend or grandparent. This is another good option insofar as your credit score is concerned as your 'rating' doesn't officially matter.

However, the draw back is that it can create tension in relationships, especially if you're struggling to pay back what you owe. It can also cause embarrassment and put pressure on people who may end up needing the money themselves one day.

  1. A log book loan

Instead, you could consider the kind of loan offered at Car Cash Point. You might have googled 'cheap logbook loans UK' but not really understood how they work, so, here's what you need to know:

A log book loan doesn't rely on your credit score. Instead, you just nominate something you own (at Car Cash Point, for instance, you use your car) and then you'll be given some money.

This money is a loan, and you'll need to repay it plus interest (as you would with any other loan). The great thing about this option is that you can still drive your car as usual, and at Car Cash Point you only get charged interest daily - so if you're able to pay back your loan quicker than you imagined, you don't get stung having to pay an annual rate of interest.

It's up to you to decide which route to go down, so just be sure that you've thought about it carefully and weighed up the pros and cons of each option.