Applying for any sort of finance with a bad credit history can often lead to frustrations, rejections and setbacks for your project. But are you facing the same when it comes to commercial bridging loans? Read on to find out more in our guide to bridging loan eligibility and bad credit.
Are bridging loans available for customers with bad credit?
The easy answer is yes. Commercial bridging finance is always secured against assets, so the property circumstances and exit strategy is more important than your individual credit history.
The main issue you could face is if a poor credit history means a risk to how you’ll repay the bridging loan at the end of the term.
If your exit strategy is selling the property, this means less risk to the lender but other refinancing options like remortgaging can be more of a challenge due to concerns around further credit issues.
Do I need a credit check to get a bridging loan?
Credit checks are often associated with slowing down applications for finance. Since bridging loans are designed to be short-term finance solutions, they usually move a lot quicker than traditional finance options. However, that doesn’t mean you can avoid credit checks altogether. Applications that require more thorough checks might affect the time it takes to process a bridging loan, so it’s worth factoring that in with any application process.
What type of credit issues will lenders accept?
Most lenders can be flexible and help you come up with a solution as long as your credit history doesn’t impact on your exit strategy. This includes the following issues:
No credit history or low scores
Missed or late payments
CCJs
IVAs
Debt management solutions
Defaults
Bankruptcy
Repossessions
Having any of these doesn’t necessarily mean you can’t get a bridging loan but how they might impact repayment will be considered.
What else might affect eligibility?
All lenders have their own criteria to consider before your application can be accepted but there are some general factors such as having assets for the loan to be secured against and a clear exit strategy.
As the exit strategy tops the list for most lenders' eligibility criteria, how you plan to repay at the end of the loan term is the most important thing to think about if you’re going to apply for a commercial bridge loan. That means having a clear business plan and experience in property development (if your loan is for development purposes) can work in your favour, even with bad credit.
For more accurate and helpful advice on your individual circumstances, please get in touch with the team at ASG Finance.