Compare loans for bad credit | Finder UK (2024)

Please note: You should always refer to your loan agreement for exact repayment amounts as they may vary from our results.

Late repayments can cause you serious money problems. See our debt help guides.

Can I get a loan with bad credit?

Yes, you may be still eligible for a personal loan even with a poor or low credit score. However, you may find your options are more limited in terms of the lenders you can choose, as well as the size of your loan amount and the rate you receive.

Depending on your situation, it may be a better idea to try and improve your credit score before applying for a loan. If you need a loan in the near future, there are ways to improve your chances of getting a loan with bad credit.

How to get approved for a bad credit personal loan

Unfortunately, there is no universal secret to getting approved for a loan if you have bad credit. However, there are a few things you can do to improve your chances:

Check your credit score to see where you stand.
By checking your credit score you get an idea of your credit position and where you fall in the credit-active population.
Don’t make too many credit applications at once.
This is a red flag to lenders and may hinder your chances at future credit approvals. If you have done this, try and wait to make any future applications.
Check for “soft searching” facilities. Many lenders are now able to carry out a “soft search” Twhere they tell you your likelihood of being approved and give a personalised quote, without affecting your credit score, and sometimes without leaving a “footprint” that would be visible to potential lenders.

What are your personal loan options with bad credit?

There are various credit options for people with a bad credit rating. Here are some of the main ones:

Specialist bad credit loans.
Some lenders such as those compared above have made a niche for themselves by catering specifically to those with less than perfect credit histories. These loans typically cost more, but eligibility is based more on affordability that credit score.
Secured personal loans.
If you’re able to provide collateral, such as a car, equity in your home or another high-value asset, a lender may be more willing to overlook a few negative marks on your credit file.
Guarantor personal loans.
Do you have a partner, close friend or relative who is willing to guarantee the loan for you? You may be able to qualify for a guarantor personal loan. There are certain bad credit lenders who offer tailored products for borrowers that you may want to consider.
Payday/short term loans.
Are you only looking to borrow a small amount to cover an unexpected shortfall? You could consider a short-term loan. These lenders are less focused on your credit history and more focused on your current financial position and ability to repay the loan.
Credit builder credit cards.
With a credit builder credit card, you start with a low credit limit, but quickly get opportunities for this to be reviewed. This type of card is designed as an interim solution, to help borrowers build or improve their credit record before moving on to different credit products.
Alternative specialist lenders. There are a few innovative lenders such as Drafty, that offer alternative takes on short term loans, to help people avoid expensive unauthorised overdraft fees.

Don’t forget: talking to lenders is also a great idea – you may be surprised at how flexible they can be. Ultimately, lenders do want to lend money – they have to do so responsibly, but it’s in their interests to work with borrowers to find a sustainable credit solution.

Get up to £3,000 when you need it with Drafty

Get ongoing access to a flexible line of credit
No late fees, no early repayment fees
Find out if you’ll be approved without affecting your credit score

Representative Example: Assumed credit limit: £1200. Representative 96.2% APR (variable). Annual interest rate 69.4% (variable).

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Personal loans with no credit history

Lenders are also wary of lending to people without much in the way of credit history. This might include 18-year olds or newly-arrived migrants. If you’re in this situation there are a few things you could do to help your case:

Register on the electoral roll.
Visit your local council’s website to register.
Open a UK current account.
Showing lenders that you can keep up direct debits and utility payments will help show that you are likely to keep up repayments on a loan. Making regular deposits into savings could bolster your case further.
Start small. By borrowing just a small amount, for example using a credit builder credit card, you can demonstrate that you pay back loans responsibly.

What about a broker?

As long as you bear in mind that it’s unlikely to check the whole market, but instead a subsection of lenders with whom it has an arrangement, then a broker can take the strain out of finding a competitive personal loan deal. Brokers find the best rate available to you from their panel of lenders, taking into account your individual circ*mstances. Normally this service is free, because the broker will earn a referral fee from the lender.

What is APR?

If you’re comparing any credit-based products, it won’t be long before you’ll come across the Annual Percentage Rate (APR).

This figure is designed to provide an annual summary of the cost of a loan and takes into account both interest and any mandatory charges to be paid (for example an arrangement fee) over the duration of a loan.

All lenders must calculate the APR of their products in the same way, and must tell you the APR before you sign an agreement, so for consumers it can be a handy tool for comparison.

If you’re looking at bad credit personal loans, expect higher APRs than those you’ll see comparing standard products. This means borrowing will be more expensive but also that it’s easier to be approved if you don’t have a great credit score.

Bear in mind, however, that lenders are only obliged to award this rate to 51% of those who take out the loan – the other 49% could pay more. That’s why it’s often referred to as the representative APR. Depending on your circ*mstances, you may be offered a better or a worse rate than the advertised APR.

Bottom line

Having a bad credit score may make it difficult or more expensive to get a personal loan. If you have poor credit, you could consider getting a guarantor loan but it’s important to keep in mind that the guarantor will be responsible for any missing repayments. If you’re looking to improve your credit score, you can read our guide for some helpful tips.

Frequently asked questions

Yes, lenders tend to focus on your affordability and credit history when considering your loan application.
This is to avoid fraud and to guarantee the guarantor named in the paperwork really is the guarantor.
This would only be the case with a homeowner guarantor loan. A non-homeowner or tenant guarantor loan is not a secured loan, so it’s not tied to your home as collateral. If the borrower defaults, the guarantor will be called upon to continue paying off the loan.
See Also
Personal Loans – Low Interest Loans
As with most unsecured loans, most lenders could request a county court judgement (CCJ) or a “charging order” on a homeowner’s property if both the borrower and guarantor default on the loan. The charging order means the lender could obtain their outstanding debt from the sale or remortgaging of the guarantor’s home. However, lenders rarely resort to this action and will usually work with the borrower and guarantor to devise an alternative method of paying off the loan.
Your guarantor must be between 21 and 75, be financially independent from the borrower and have an excellent credit rating.

Will you be approved?

Check your personalised rates and likelihood of acceptance.

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Introduction

As an expert in personal finance and lending, I can provide you with information on various concepts related to loans and credit. I have extensive knowledge and experience in this field, and I can help you understand the options available to you, even if you have bad credit.

Can I get a loan with bad credit?

Yes, it is possible to get a personal loan even with a poor or low credit score. However, it's important to note that having bad credit may limit your options in terms of lenders, loan amounts, and interest rates. In some cases, it may be beneficial to work on improving your credit score before applying for a loan. However, if you need a loan in the near future, there are still ways to increase your chances of approval.

How to get approved for a bad credit personal loan

While there is no universal secret to getting approved for a loan with bad credit, there are a few things you can do to improve your chances:

Check your credit score: By checking your credit score, you can get an idea of where you stand and understand how lenders may perceive your creditworthiness. This will help you determine the best course of action.
Avoid making too many credit applications at once: Making multiple credit applications within a short period of time can raise red flags for lenders and may hinder your chances of future credit approvals. If you have already made multiple applications, it's best to wait before making any further applications.
Look for "soft searching" facilities: Many lenders now offer "soft search" facilities where they can provide you with a personalized quote and let you know your likelihood of approval without affecting your credit score. This can be a useful tool to explore your options without committing to a hard credit check.

Personal loan options with bad credit

There are several credit options available for individuals with bad credit. Here are some of the main ones:

Specialist bad credit loans: Some lenders specialize in providing loans to individuals with less than perfect credit histories. While these loans may come with higher costs, eligibility is often based more on affordability rather than credit score.
Secured personal loans: If you have collateral such as a car, home equity, or another high-value asset, you may be able to secure a personal loan. Lenders may be more willing to overlook a few negative marks on your credit file if you can provide collateral.
Guarantor personal loans: If you have a partner, close friend, or relative with a good credit rating who is willing to guarantee the loan for you, you may be able to qualify for a guarantor personal loan. Some lenders offer tailored products for borrowers with bad credit.
Payday/short-term loans: If you only need to borrow a small amount to cover an unexpected expense, you may consider a short-term loan. These lenders are often less focused on your credit history and more focused on your current financial position and ability to repay the loan.
Credit builder credit cards: Credit builder credit cards are designed to help borrowers build or improve their credit record. These cards typically start with a low credit limit but offer opportunities for the limit to be reviewed based on responsible borrowing and repayment.
Alternative specialist lenders: There are innovative lenders that offer alternative takes on short-term loans, helping individuals avoid expensive unauthorized overdraft fees.

It's also important to note that talking to lenders directly can be beneficial, as they may be more flexible than you expect. Lenders want to lend money responsibly and may work with borrowers to find a sustainable credit solution.

Personal loans with no credit history

Lenders may also be cautious about lending to individuals with little or no credit history, such as 18-year-olds or newly-arrived migrants. To improve your case, you can consider the following:

Register on the electoral roll: Registering on the electoral roll can help establish your identity and address, which can be beneficial when applying for credit.
Open a UK current account: Showing lenders that you can manage direct debits and utility payments by having a UK current account can demonstrate your ability to make regular payments and improve your creditworthiness.
Start small: Borrowing a small amount, such as using a credit builder credit card, can help establish a positive credit history by demonstrating responsible borrowing and repayment.

Using a broker

If you find it overwhelming to search for a personal loan on your own, you may consider using a broker. A broker can help you find a competitive loan deal by searching a subsection of lenders with whom they have arrangements. They take into account your individual circ*mstances and find the best rate available to you. Brokers may also run soft searches with multiple lenders, allowing you to get realistic rate quotes without impacting your credit score.

Understanding APR

When comparing credit-based products, you will come across the Annual Percentage Rate (APR). The APR provides an annual summary of the cost of a loan, including interest and any mandatory charges over the loan's duration. It is a useful tool for comparing loan products.

It's important to note that bad credit personal loans often come with higher APRs compared to standard products. This means that borrowing may be more expensive, but it also increases the likelihood of approval for individuals with less-than-perfect credit scores. However, lenders are only obliged to award the advertised representative APR to 51% of borrowers. Depending on your circ*mstances, you may be offered a better or worse rate than the advertised APR.

Conclusion

Having bad credit may make it more challenging or expensive to obtain a personal loan. However, there are options available, such as specialist bad credit loans, secured personal loans, guarantor personal loans, payday/short-term loans, credit builder credit cards, and alternative specialist lenders. It's also important to consider improving your credit score and exploring options for individuals with no credit history. Brokers can assist in finding competitive loan deals, and understanding APR can help you compare loan products effectively. Remember, lenders want to lend money responsibly and may work with you to find a suitable credit solution.