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Are you stuck with a bad credit score? If you answered yes, you must be apprehensive about your future options for obtaining further borrowing. You need not be concerned that you won’t get further loans in future due to an excessively poor credit report. Guarantor loans can help you realize your dreams and achieve your financial goals despite being a risky borrower. A guarantor loan is specifically aimed at people with a poor credit score, as long as they are aged 18 years or older, in full time employment and can get someone to stand by their side and guarantee their monthly payments towards their loan. Because your friends or family members know you more than your credit score, they may trust you financially and help you get back on feet again. Now let’s see how guarantor loans works and how they can be of benefit to you.

A UK guarantor loan – How do they work?

The applicant who has an adverse credit record and who has never borrowed any money from any financial institution before and is not trusted as a good borrower. As there is no credit record available for a person who hasn’t ever borrowed money before, the lender does not understand him financially. There arises the need for a guarantor. The applicant has to look for some one who can act as an endorser for him. The endorser must have a very good credit record. Though you can ask anyone to become your guarantor, yet it is more sensible to ask your family members or friends.

The co-signee will be required to vouch for the applicant and hence, he must be totally understanding of the role that he is participating in getting his friend a guarantor loan. The most rewarding part of using a guarantor is that the borrower can enhance his credit profile through the guarantor’s good credit score by regularly making the monthly payments on the loan.

What are the benefits of using a guarantor loan?

There are numerous benefits of using a guarantor loan in the UK. The varied benefits have made guarantor loans incredibly popular as a sub-prime lending solution throughout 2010. Check out a few such benefits of guarantor loans.

• No credit check: The biggest positive of using a guarantor loan is that there is no credit search involved in acquiring a loan.

• Chance to boost your score: The next benefit of using a guarantor loan is that you, as an applicant, get the chance to enhance your credit score using your guarantor. You’ll only get approved for the loan if your guarantor has a good score and if he can keep afford the monthly payments on the loan, the creditors will report this to the credit reporting agencies. This will increase your low credit score.

• Borrow a large amount: Those who have never thought of borrowing such a huge amount with a poor score can do so with the help of guarantor loans. Unlike payday loans, if your guarantor has a really good score, you can secure loans of about £5000.

Therefore, you need not worry about your prospects of getting a loan if you’re a bad credit borrower. Look for a trusted guarantor and get yourself a UK guarantor loan. Consider the benefits of using such a loan before applying for it.

If you are after a smaller amount ie between £50 and £500, you can now get payday loan advances using a guarantor.  This means you can get a payday loan even if you have been turned down everywhere else.