Bad credit personal loans

Don't let your credit rating hold you back. Find a bad credit personal loan that's right for you.

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Bad credit is tough to shake. Having negative listings on your credit report can seriously hinder your ability to access loans, but if you’re on the “credit fringe” there are still a variety of options you can consider. Find out what’s available to you in this guide and give your application for credit the best chances of success.

warning icon Warning: late repayments can cause you serious money problems. See our debt help guides.

How can I be approved for a loan with bad credit?

There is no trick to being approved. However, there are a few things you can do to make sure you get the best chance.

  • Check your credit score to see where you stand.
    By checking your credit score you can 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 can 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” – where 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.

Lenders are also wary of lending to people without much in the way of credit history – unfortunately borrowers are effectively guilty until proven innocent. 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 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 can 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.
    Read about guarantor loans
  • 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.
    Read about payday/short-term loans
  • 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.
    Read about credit builder credit cards
  • Alternative specialist lenders. There are a few innovative new lenders such as Tappily, that offer alternative takes on short term loans, to help people avoid expensive unauthorised overdraft fees.

Tappily

Tappily line of credit up to £2,500 as and when you need it

  • Tappily uses read-only access to your current account to provide a flexible line of credit.
  • Avoid unauthorised overdraft fees by setting account balance triggers.
  • Once approved, transfer money into your account within 15 minutes.

Representative example: Borrow £1,200 for up to 75 days at a rate of 124% p.a. (variable). Representative APR 49.7%.

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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.

What about a broker?

As long as you bear in mind that it’s unlikely to check the whole market, but instead 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 circumstances. Normally this service is free, because the broker will earn a referral fee from the lender.

Some brokers or “matching services” can now run soft searches with a range of lenders in seconds, meaning that without any impact on your credit score you’ll be able to get realistic rate quotes for loans you’re likely to be approved for. This can be a smart way to avoid disappointment, protect your credit score and focus on lenders likely to approve you.

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 circumstances, you may be offer a better or a worse rate than the advertised APR.

Frequently asked questions

We exist to help you find better. The offers we've compared on this page are from a range of products whose details we can track; we don't cover every product on the market...yet. Unless we've indicated otherwise, products are shown in no particular order or ranking. The terms "best", "top", "cheap" (and variations of these) aren't product ratings, although we always explain what's great about a product when we highlight it; this is subject to our terms of use. When you make major financial decisions, it's wise to consider getting independent financial advice. Always consider your own financial circumstances when you compare products so you get what's right for you.

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8 Responses

  1. Default Gravatar
    TammyDecember 7, 2018

    Hi am not hear to hit u with a sob story but I’m a single mum to 2 kids on benefits, I don’t hear from the dad or get any help from him, I’m on universal credit, I’m good at budgeting my money because I haven’t got a choice because of ma 2 kids, its a short-term loan I was looking for, for Christmas. Thanks.

    • Avatarfinder Customer Care
      JoshuaDecember 12, 2018Staff

      Hi Tammy,

      Thanks for getting in touch with finder. I hope all is well with you. :)

      I’m sorry to hear about your financial situation. I know how tough it could be to raise kids alone.

      Anyway, if you need a short-term loan, you would need to check a lender’s list of eligibility requirements before applying. You can then discuss with them your options.

      Since you are on benefit, your options could be limited and if you ever find a lender, the interest rate could be higher than the average. For this reason, seek other alternative options before borrowing money. Remember that late repayments can cause you serious money problems in the future.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!

      Cheers,
      Joshua

  2. Default Gravatar
    SelwynNovember 4, 2018

    Am trying to get a loan but due to my adverse credit history i keep getting turned down. Don’s want a guarantor loan.
    Regards.
    Selwyn

    • Avatarfinder Customer Care
      JoshuaNovember 19, 2018Staff

      Hi Selwyn,

      Thanks for getting in touch with finder. I hope all is well with you. :)

      I’m sorry to hear about your situation, Selwyn. It is true that having a low credit score could affect your eligibility for a loan. If you don’t want to get a guarantor loan, you might want to still check the lenders listed on our table and click on the “Go to site” green button to apply. However, if none of them won’t approve you, you might try to look in other places for a lender who might help you.

      What I can suggest is for you to try to improve your score first with the help of a credit builder credit card. After improving your score, then you can try again.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!

      Cheers,
      Joshua

  3. Default Gravatar
    GordonOctober 15, 2018

    Hello, I am trying to help my step daughter get a loan, I am prepared to be guaranteed for her, I have a really good credit rating but can not find a rate for her that is not really high, can you help, please?

    • Avatarfinder Customer Care
      JoshuaOctober 16, 2018Staff

      Hi Gordon,

      Thanks for getting in touch with finder. I hope all is well with you. :)

      In general, the lower the risk on the part of the lender for lending money, the lower the interest rate is. Thus, bad credit personal loans do come with high-interest rate. We also have guarantor personal loans you might want to check. However, the interest rate is still high.

      You can also check this page where personal loans have a lower interest rate, but if your stepdaughter has a bad credit, she might have a hard time getting approved for these loans. If it is possible, you may want to apply for the loan yourself to enjoy a lower interest rate.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!

      Cheers,
      Joshua

  4. Default Gravatar
    ZsuzsannaSeptember 17, 2018

    Miert nem kaphatok egy keves kolcsont a bankomtol??

    • Avatarfinder Customer Care
      JoshuaSeptember 19, 2018Staff

      Hi Zsuzsanna,

      Thanks for getting in touch with finder. I hope all is well with you. :)

      I understand your question to be:

      Why can not I get a little chunk from the bank?

      Every bank has their own eligibility criteria that you need to meet. The bottom line is that if they can see through the documents you presented that you are able to pay them back, then you will be approved. If not, then you need to look for other options.

      On this page, we have listed lenders who provide personal loans to people who have a bad credit. You might want to get in touch with them by clicking on the “Go to site” green button.

      Please review the criteria, details of the loan product and contact the lender directly to discuss your loan options and eligibility.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!

      Cheers,
      Joshua

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