Getting a loan in the UK is not a cinch even if you are borrowing a small amount of money. Every lender charges different interest rates, and therefore, it is always complicated for borrowers to choose the most affordable deal. When it comes to borrowing money, a credit score recreates an essential role. You must have a good credit rating in order to be entitled to more down interest rates.  

Small emergency loans involve easy approval as they are all a type of payday loans that do not include a credit check. The decision is made based on your revenue. But when you have to borrow a large amount of money such as a £10 loan, the scenario is completely different.  

A £10 loan is a personal loan to be settled down over a duration of time. The repayment term could be up to 24 months authorising on your repaying power. As these loans are not subject to collateral, interest rates will be a shade higher. You must have a satisfactory credit score in direct to apply for 24 month loans. it is not that you cannot get approval when your credit score is not up to snuff, but interest rates will be even higher.  

Ways to increase your chances of getting a £10K loan  

Here are the ways to improve your chances of approval for instalment loans: 

• Have a decent credit file 

Not to mention, you will need a good credit score. A decent credit rating increases your circumstances of being approved. If your credit score is not so impressive and yet you have to borrow money, make sure you choose a lender whose criteria include your credit score. You might find a couple of lenders offering bad credit loans, but they must follow a bare minimum credit rating.  

If your score is lower than the bare minimum credit rating, you would be straightaway repudiated. Make sure that the lender you are applying to for a 24-month instalment loan accepts your credit score. Apart form that, you would need the following to increase your chances of approval: 

• Have a great income  

In order to qualify for a business for 24-month loans, you must have a great income source. Just having a good credit rating is not enough when it comes to receiving approval from a direct lender. lenders would carefully peruse your repaying capacity. Your credit score reveals your past payment behaviour. If it is good, it means you managed to adhere to payments in the past.  

But it cannot guarantee that you would continue to repay the debt with responsibility down the road too and therefore lenders check your income sources. Your income must be high in order to prove to your lender that you can repay the debt on time. Lenders want to check whether you will be able to meet your monthly expenses along with debt payments. if so, they will certainly approve your application.  

• Consider a co-applicant 

A co-applicant would be a co-borrower. When you use for a loan with individual else, it becomes a joint loan. It means you both will be responsible to make payments. at the time of applying for a loan, your lender would check credit reports and income sources of both of you. Because it is a joint loan, you both will be responsible to pay it off completely in case your partner fails to settle the dues.  

While joint application could increase your possibility of being approved, it can also increase your risk of falling into debt if one of you struggle to pay half of the payment. The entire burden of the payment will fall on the other applicant. Chances are they are not earning that much money to settle the entire amount of loan.  

What if your credit score is bad? 

If your credit score is already poor, it is quite obvious that lenders would charge high interest rates. They can be extremely expensive. In case you struggle to repay the debt, it would attract late payment fees. as a result, the amount of your debt will quickly accumulate. If your credit score is bad, you can still improve your chances of being accepted by: 

• Arranging a guarantor 

You should arrange a guarantor with a good credit rating. Guarantors are not obligated to repay your debt unlike you refuse to settle your dues. There is a discrepancy between a guarantor and a co-applicant.  

A guarantor is a third-party that enters into a contract to promise to repay the debt in case you fail. This reduces the risk of a lender as they can call on the guarantor to discharge the unpaid balance. Bear in mind that the lender would not immediately reach the guarantor. Unless all means of recovering money from a borrower gets exhausted, they do not call on the guarantor.  

A guarantor could be anyone. They could be your spouse or any relative family fellow. Remember that involving a guarantor is not straightforward because they will also lose their recognition points if you fail to pay off the debt.  

Make sure that you and the guarantor understand the consequences of non-payments. Your relationship could be affected with the guarantor if you fail to settle your debts.  

• Consider collateral 

Arranging a guarantor could be slightly challenging, and qualifying for an instalment loan with a bad credit rating at competitive interest rates is not a cinch. You can arrange collateral. However, it depends on the lender’s policy whether they will let you secure it against an asset or not. 

• Borrow a small amount 

A £10 loan is not a small loan. Of course, your lender would expect you to have a good credit score. In case of a poor credit rating, you should try to borrow a small amount of money. The lower amount will reduce the cost of the debt. As a result, you will find it slightly easier to obtain approval.  

The final word 

If you are looking to take out a £10K loan, you should always ensure that your credit score is stellar and you can easily repay the debt. If your credit score is not admirable, you should consider arranging a guarantor and collateral and borrow a small amount of money.