Can I get bridge loans for bad credit? This is a common query made by borrowers applying for bridging loans for property development purpose. The answer is; yes you can get a bridging loan even though you have a bad credit score.
Why? How? To know the details, you have to scroll down and keep reading, as we have documented the specifics below.
What are bridging loans?
A bridging loan is a short-term financing solution that is mostly taken by developers who are in need of urgent funding to complete the project or by homeowners who want to bridge the budget gap when buying a new house, typically in a situation where they are yet to sell their old house.
There are other reasons as well, for which one might apply for a bridging loan. The duration of a bridging loan is usually 12 months or less.
What types of credit issues are acceptable for bridge loans?
The credit issues that are considered by the lender or finance company acting as the mediator for bridge loans are:
- Low credit score
- No credit history
- Defaults
- IVAs
- CCJs
- Bankruptcy
- Missed mortgage payments
- Repossessions
- Debt management schemes
Why credit score is not the primary criteria when applying for bridging loans?
When one applies for traditional financing like bank loans, mortgages, property financing, credit cards and likewise, the credit score plays a significant role in all of it.
The credit is used to map out the patterns of behaviour that may pose a high loan risk, or to judge whether the borrower will be able to pay back the loan with interest.
However, in the case of bridging finance, the lender takes more interest in the security that the borrower pegs against the loan, which is a non-negotiable clause.
Once that is settled, the lender can rest assured that the money borrowed is safe, as any default in payment will give authority to the lender to use the security to suffice the repayment.
That’s why; bridging loan lenders are not much concerned with the credit score of the borrower.
What role does the credit score play in acquiring the bridging loan?
The credit score might not be the primary deciding factor when taking out a bridging loan, but they do get checked by the lender.
The finance companies that provide bridging loans check the credit score of the borrower for a wider risk assessment.
Usually, the credit score is checked to gain insight on the recent financial activity, to investigate if there are any serious financial issues, extreme debt markets or any other type of fiscal mismanagement.
Even with all of that, it is usually not a deal-breaker when getting bridge loans for bad credit score.
On a concluding note, the flexibility of the terms and interest of you bridge loans for bad credit, hinges significantly on the finance company that helps you in getting the loan.
In that context, UK’s Property Finance Partners are one of the leading providers of bridging loans with the industry best rates and scalable loan terms. Swing by them, and experience how the professionals solve your credit problem by leveraging their years’ worth of expertise.
