Home > Credit and Store Cards > Getting Credit When You Have a Bad Record

Getting Credit When You Have a Bad Record

By: Sarah Clark (ILEX) - Updated: 18 Sep 2012 | comments*Discuss
Credit Pay Day Loan Doorstep Loan Apr

When money is tight, it can be hard to find extra cash for the little things (and big things) that tend to crop up just when we can’t afford to pay for them. To help short-term cash flow problems, and see us through harder times when there’s no chance of getting credit for a new washing machine, there are companies that have been set up to help people with poor credit get their hands on extra cash or goods.

Are they worth the hassle, though, and do they actually exploit the people they set out to help?

What’s a Pay Day Loan?

This type of short -term lending has become more popular in recent years, with companies advertising short-term, high-cost loans for small amounts. Pay day loans are simply that, an emergency stop gap for a short-term cash flow crisis. They are just designed to see you through until the end of month. It’s just as well, because some of the APRs quoted by the companies offering this type of finance are eye-watering. Examples range from 1,200% to almost 2,700%.

Although they are only intended to last until your next pay day, some companies will allow borrowers to extend the debt into following months – and if you’re tempted to do this, stop right there. You run a risk of getting into serious debt if you allow the money (sometimes as much as £1,500) to accrue that level of interest over a period of weeks or months.

The attraction of most of these companies is that they don’t always do a credit check and they transfer the money the day the loan is agreed. It can seem like the perfect solution – but not if you can’t afford to pay it all back when you agreed.

If you have to take out a short-term loan like this, shop around and don’t be tempted by the companies that advertise the most – it’s the customer that’s paying for the annoying TV advertising campaigns. There are lesser known UK pay day companies that have rates as low as 67% APR (although rates can and do change) so research before you commit to a massive amount of interest.

Doorstep Loans

Another short-term loan option, especially if you have a poor credit rating, is a doorstep loan or ‘home credit’. You borrow a small amount of money, which you will have to repay weekly when an agent visits to collect your money.

Agents are paid commission on the amount they collect, not on the amount they sell, so the theory is that you shouldn’t be pressurised into taking out a loan for more than you can comfortably afford to repay. Loans start from small amounts – as low as £50 – and can be repaid over an agreed period, often to a maximum of 52 weeks. The APR for this type of loan is also very steep – for example, with Provident you would pay 272.2% APR if you borrowed £200 over 52 weeks, meaning you would pay back a total of £364, almost double what you borrowed! If you chose to borrow the smallest amount, £50, over 13 weeks, it would be at a staggering 1,068% APR, costing you a total of £70 to repay.

Shop around online for a good deal, and make sure that you know exactly what you’re paying when you take out this type of loan.


The most well known rent-to-buy store is probably Bright House, which offers goods to people with bad credit records under hire purchase agreements where they can pay for their purchases weekly. Of course, there’s a high price to pay for this service in that the APR is usually very high and the prices of the goods will be higher than they would be if you bought from a ‘normal’ store.

Latest reports show that the current economic situation has been great news for Bright House, who have seen their revenue rise 21% to £50.5million since 2008.

Companies like this offer consumers branded household items on easy payment terms with the bonus that they don’t ask for any deposit.

Bright House has been featured by the BBC’s Watchdog in the past, and some of their contracts have been subject to investigation by the Office of Fair Trading. There have also been complaints of harsh tactics if customers get into difficulties with repayment, or hard sell techniques in-store.

The type of Hire Purchase agreement offered by a rent to buy store is governed by the consumer credit act just like any other credit agreement, so legally, the goods don’t belong to you until you’ve paid for them in full. If you default, the shop can also apply for a return-of-goods order through the county court if you’ve paid more than a third of the value. A court can decide that you don’t have to pay the agreed instalments and reschedule them based on your circumstances.

You might also like...
Share Your Story, Join the Discussion or Seek Advice..
Why not be the first to leave a comment for discussion, ask for advice or share your story...

If you'd like to ask a question one of our experts (workload permitting) or a helpful reader hopefully can help you... We also love comments and interesting stories

(never shown)
(never shown)
(never shown)
(never shown)
Enter word:
Latest Comments
  • Sman
    Re: What If A Market Trader Rips you Off?
    Hi I paid a deposit for replacing all my windows The installer was recommended by the manufacturer in this case…
    18 March 2018
  • Melber
    Re: Utilities: Service You Should Expect
    Does my utility company have a legal duty to treat all customers in my area equally? If so what law applies.
    17 March 2018
  • Lady lush
    Re: Buying by Telephone or E-mail
    Hi there I have recently placed a order online purchasing some hair products. This was done on the 24th February 2018 . I then…
    16 March 2018
  • Chris
    Re: Buying a Used Car: Your Rights
    My partner bought an 04 reg Ford fiesta at the beginning of February. It was clear after a couple of weeks it had some problems,…
    15 March 2018
  • ConsumerRightsExpert
    Re: Buying a Used Car: Your Rights
    CMD - Your Question:I bought an approved 62 plate (30k miles) BMW X1 from my nearest BMW dealer in Inverness 28 months ago, cost…
    14 March 2018
    Re: Buying a Used Car: Your Rights
    I bought a car from a garage on the 19th jan this and on satd. Just gone white smoke was seen coming from the engine. I took it…
    14 March 2018
  • ConsumerRightsExpert
    Re: Buying a Used Car: Your Rights
    hardworker1 - Your Question:No im not in the trade, this is only printed on the receipt I received via email, I never signed…
    13 March 2018
  • CMD
    Re: Buying a Used Car: Your Rights
    I bought an approved 62 plate (30k miles) BMW X1 from my nearest BMW dealer in Inverness 28 months ago, cost £16k. I have since…
    13 March 2018
  • ConsumerRightsExpert
    Re: Buying a Used Car: Your Rights
    DJF - Your Question:Hi, I bought a 2014 Volvo V40 D2 partly because of Volvo’s reputation for reliability, with ~37k miles from…
    12 March 2018
  • Spike
    Re: When Am I Not Entitled to a Refund?
    Purchased a door mid August last yr. Had it fitted but found many faults. They ended up changing the complete door only…
    11 March 2018
Further Reading...
Our Most Popular...
Add to my Yahoo!
Add to Google
Stumble this
Add to Twitter
Add To Facebook
RSS feed
You should seek independent professional advice before acting upon any information on the ConsumerRightsExpert website. Please read our Disclaimer.