So is there any such thing as poor loans or is this just a euphemism for people who are looking for a loan and have a poor credit rating?

I’m often curious to know why people looking for loans, particularly those with a poor credit rating looking for poor loans, find themselves on price comparison websites and expecting some form of realistic indication as to what is likely to be offered to them. When in all probability the results proffered would be completely unavailable, out of date, non-existent or worse, completely fictitious!

Take for example one major price comparison website that often advertises on the TV. I’m not prepared to mention their name here for obvious reasons but there is a section on there website that asks about your credit history prior to showing a list of possible results as to what you might expect to be offered.

The credit history referred to however is not checked by the website so they have no idea about your likelihood of obtaining any form of poor loans from the institutions displayed. How can they? They themselves are nothing more than a comparison site, they have no idea as to what ‘criteria’ the lending institution might use and furthermore, they are relying on very limited information given to them by you, in regard to your credit history but neglecting to consider something much more important which is your ‘credit score’ (which, by the way, can be obtained free of charge from ‘Credit Expert‘).

Poor loans are complicated because there are many factors which are used to determine whether you will be offered the loan, particularly if you do have a poor credit history. Let’s take a look at some elements that might be considered when the lender is thinking about offering you a loan, or to be more specific, poor loans.

• Are you a homeowner?
  The starting point for many lenders offering poor loans will be with this question. In the last few years there have been some lenders willing to offer poor loans to non-homeowners but with the current financial status the likelihood for being offered poor loans is somewhat reduced.
• Do you have any equity in your home?
  With the right amount of equity it’s fairly certain that someone, somewhere will be willing to lend you the money you need. However, poor loans require more equity than a loan application from someone with a good clean credit rating. The reason is obvious when you think about it, the risk is much higher because the likelihood is that you have some adverse history when it comes to repaying credit (though not necessarily through any fault of your own).
• Are your problems historic?
  Some lenders will look sympathetically on people whose problems were through no fault of their own, were due to some form of circumstance such as a marriage breakdown or other tragic event, or simply where the problems are historic and not, it must be said, major adverse events.

The considerations above are not exhaustive and are not meant as any representation as to the citeria that lenders will use - but I’m not aware of any lender that does not use them. That said, the actual rate you will be offered for any poor loans application will vary from lender to lender and this is where different institutions come into their own.

A good example to give you in respect of lender’s criteria would be one application I received earlier this year where the client, who shall remain unnamed, had a mortgage with a subprime lender, an arrangement on a very large unsecured loan, and one or two smaller credit defaults more recently. Now many financial advisers’ would simply look at this and pass the case on to a sub prime specialist, or poor loans section within the lending institution chosen.

However, knowing the criteria well, and having established a great relationship with them I was able to place this application with the Abbey on their high street rates. Needless to say this client no longer needs to be pushed down the poor loans route anymore (providing of course that all payments are maintained).

Going back to the point in question, and in contemplation of the questions asked on the price comparison website (in relation to credit history)  it is clearly not the case that the Abbey would have been presented to my client had the adverse entries been disclosed. This is why I get confused about people with known credit problems, and therefore looking for poor loans, as to why they would ever seek information from a website that is unregulated, misleading and dare I say, incorrect.

If you are looking to obtain rates on financials then it is near on impossible to get accuracy directly from a website because the rate you will be offered is determined by the circumstances surrounding your application. If you are chasing the best rates then an adviser can often influence the lender, or simply present your application better than you could do yourself.

Resources:

• Obtain your Free Credit File from Credit Expert
• Loan Quotes for all applicant types including poor loans applicants.
• Mortgage Quotes for all applicant types including poor loans applicants.
• Specialist Debt Advice for people struggling to repay a number of debts.