If you have a low credit score, trying to find a loan can be difficult. Tight credit requirements can put conventional loans from banks out of your reach, but there are short-term loans for people with bad credit that you can apply for.
Payday/short-term loans are an option for those times when unexpected expenses crop up, from car repairs to dental work and just about anything in between. They’re not something to make a habit of however.
Please note: high-cost short-term credit is unsuitable for sustained borrowing over long periods and would be expensive as a means of longer-term borrowing.
Can I actually get a payday loan with bad credit?
Payday lenders operate with different lending criteria to institutions like high street banks. This is the primary reason they can offer loans to borrowers with bad marks in their credit report. Most payday lenders will focus more on your ability to repay than your credit score, and will consider your employment situation and your income/expenditure when deciding if they will offer you a loan.
The good news is that lenders do want to issue loans. So in many instances, if a lender has to decline a loan application, they may offer you a lower amount, or a different duration.
While regular borrowing using payday/short-term loans isn’t a smart idea, it is worth bearing in mind that lenders will want to start small. Once you’ve proven your ability to repay their loans on time, this is perhaps a stronger signal to them than your credit record.
Compare payday/short-term loans from a range of lenders
Table: promoted deals, sorted by total payable
As well as comparing short-term loans with other types of credit, before you apply for a loan, it’s a good idea to shop around and compare a range of lenders. You can use the tool below to get an idea of how much the loan that you have in mind might cost.
How much do you need to borrow?
How long do you need to borrow for?
Important information: You should always refer to your loan agreement for exact repayment amounts as they may vary from our results.
Payday loans and bad credit: 5 things you need to know
The dos and don’ts of bad credit payday/short-term loans
Applying for one of these loans is simple. You can either go online to a lender website or visit a high street store near you. The applications are usually quick, and when you’re approved, you can have your funds in a matter of hours or within a working day. Just keep in mind these crucial do’s and don’t before you apply to save yourself time and money.
Compare your options. There are plenty of lenders out there who will consider applications from borrowers with diverse credit backgrounds, so having less than perfect credit doesn’t mean you can’t shop around. It’s important to compare a decent range of loan companies and find the one that’s best-suited to your situation.
Review the eligibility criteria. While these lenders do accept applicants with bad credit, they still have criteria that needs to be met. Check the minimum age, income and residency requirements to avoid being rejected.
Only apply for what you can afford. Although lenders can’t offer you more than you can pay for, the repayments may still be difficult if the term is short. You should determine what you can manage and find a loan that works with your budget. Also, though it probably goes without saying, only borrow what you need.
Check for discount codes. Some short term lenders offer promotional codes which let borrowers save money on their loan. You may wish to browse our QuickQuid discount code and Peachy discount code pages before applying with these lenders, for example.
Budget to cover your repayments. When you’re approved for a loan, your repayments will generally start on your next payday so make sure you’ve budgeted to cover the added expense.
Aim to align repayments with your paydays. Many lenders let you decide whether to repay monthly, fortnightly or weekly, so it’s a smart idea to match repayment days up with your paydays.
Repay your loan early if you can. If you find yourself able to, you should aim to repay the loan early. It obviously cuts out the risk that you’ll miss any repayments, but could also save you money on interest. Once your loan is paid off, it will be visible on your credit file, and should be an encouraging sign to future lenders.
Apply without checking the eligibility criteria first. Not only would this be a waste of your time, but any declined applications are likely to be visible on your credit report. Plus, some lenders stipulate that you must wait a minimum amount of time before applying again, so if your circumstances change, you don’t want to have closed the door on any potential lenders.
Apply for the first loan you come across that you’re eligible for. Since there are plenty of lenders who’ll consider your application, comparing them first is a must.
Apply for multiple loans in a short space of time. While it shouldn’t affect your credit score, each application is likely to be visible on your credit file. Multiple applications for credit in a short space of time on your credit report could give the impression of financial trouble, and put off future prospective lenders.
Apply to borrow more than you can afford. This would obviously be dangerous if you were approved for the loan, and if you weren’t, it’s a waste of your time and a rejection on your credit report.
Borrow money and miss repayments. This is possibly the worst thing you could do in terms of your credit report and your ability to borrow.
Take out a payday/short-term loan for non-essential spending. If you can avoid taking out a payday loan by deferring spending, then you’re likely to save yourself money in the long run.
Use payday/short-term loans as a regular source of credit. These loans aren’t suitable for sustained borrowing. Read more about alternatives to payday loans at the government’s moneyadviceservice.org.uk
Amanda's emergency car repair
Amanda’s car broke down on her way to work. She took the morning off to visit the mechanic, who estimated her repair costs at around £200. As a shift worker, she had already missed out on that morning’s pay and her paycheck wasn’t due to come until the following week.
She needed her car repaired to get to work, but with her low credit score, she felt like she had limited options.
Instead, Amanda looked at how much a bad credit payday loan would cost her. There was room in her budget for the high fees, and since she was going to be paid soon, Amanda knew she could afford it. By the next day, she had enough to pay for the repairs and was able to pull extra shifts to make up the difference.
What type of loan can I get with bad credit?
Your borrowing options may be slightly more limited if you have bad credit but you do still have options. If you find that your bad credit is preventing you from taking out a loan, the below could help:
Guarantor loans. If you have a family or friend that is willing to stand as your guarantor and pay back your loan if you are unable to do so, then this could massively increase your chances of borrowing. You would pose less of a risk to a lender if you have a guarantor to back you up. This type of loan is an option for bad credit but also if you are unemployed or on benefits.
Doorstep loans. This type of loan should be avoided at all costs, please refer to our debt guide to find out more about debt management. Doorstep lenders lend cash regardless of your credit score and are often delivered straight to your door, but these loans have a much higher interest rate than other types of loans.
Logbook loans. If you have bad credit but you own a car then you might find securing your loan against your vehicle could improve your chances of being approved. However, with logbook loans you officially pass ownership of your car over to your lender until you repay your loan. This type of loan is high risk and should be avoided if possible.
We compare payday/short-term loans from
Yes, it’s normal for lenders to check your credit file when you apply. However many short-term loan companies say they are primarily interested in checking income vs. expenditure to make sure a loan is affordable.
This varies from lender to lender. While you’ll normally hear within minutes of application whether or not you’ve been approved, sometimes the lender will need to give you a call to check over some additional details. Once approved, the funds can normally be transferred within a matter of hours if your loan is approved during the working day. If getting the funds quickly is important, factor this into your comparison of lenders.
This depends on the lender and your individual credit score. Poor credit history could affect which lenders are willing to offer you a payday loan but check out the providers listed above to find out who accepts bad credit loans.
Whilst your options may feel slightly limited if you have bad credit, are unemployed or on benefits you do still have options. You may still be able to qualify for a guarantor loan and, whilst it is not recommended, you will find some lenders who offer doorstep loans.
Usually payday loans won’t affect your credit score if you pay them back in time. However, if you default on your loan or miss payments then this will negatively affect your credit record.
Yes. There are a number of lenders that offer instant loans even if you have bad credit. Payday loans are designed to be fast so once you have been approved for your loan you’ll find that some providers can make payments within the hour.
You can find out your credit score by using a credit rating calculator. These are available online for free. It is important that you are aware of your credit rating before applying for a loan.
You can still get a loan if you don’t have a bank account but it is likely to cost you more than the average short term loan. The type of lenders that are willing to offer cash loans often charge higher interest rates and/or fees.
If your payday loan has been declined, you could try a loan broker or borrowing from family friends.
Here at finder we are dedicated to making your life decisions easier. Personal loans can be hard to grasp at the best of times. We provide clear, educational information and comparisons about payday loans so you are informed before you buy. We are 100% free and independently owned, on the side of the consumer.
There are a number of ways to build up your credit. If you’re looking to build up your credit rating with a credit builder card then check out our guide here.
Chris Lilly is a publisher at finder.com. He's a specialist in credit-based products including business and personal loans, mortgages and credit cards, and is passionate about helping UK consumers make informed decisions about their borrowing. In his spare time Chris likes forcing his kids to exercise more.
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