Credit and Loans

• Consumers in the UK have credit reports, just like in the United States. These credit reports have payment history on all open and closed accounts. The credit scoring is a bit different, but in general, lenders want to see positive payment history on all accounts before extending tenant loan credit.
  
  

Poor Credit

• Some tenant loan lenders will still extend credit to UK customers with poor credit. These consumers can expect to pay much higher rates and fees than customers who have excellent credit. In some cases, these consumers may face adjustable interest rates, too. Adjustable rates on tenant loans can be detrimental--they can cause monthly payments to increase dramatically.
  
  

Rigid Structure

• There are two types of tenant loans: closed-end accounts and revolving accounts. Closed-end loans are disbursed entirely at closing and repaid over a set number of months or years. Revolving loans offer more flexibility. Customers can take advances when needed, repay when possible and re-borrow again. Most tenant loan lenders will require that customers with poor credit take the closed-end option.
  
  

Benefits

• Tenant loans can help to build or rebuild credit history. Once approved, these loans will report to the UK credit bureaus (like Experian). With solid payment history, customers can use a tenant loan to improve a credit score. These loans can be a bridge to home ownership.
  
  

Warning

• Similar to the United States, there are some unethical lenders in the United Kingdom. These lenders are profit-driven and will extend high-risk credit to vulnerable borrowers. Once a loan defaults, the lender will take aggressive and drastic measures to recoup her losses. Customers should take caution when considering a tenant loan--especially if the lender solicits the loan, not the other way around.