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Borrowing with Poor Credit history

How to get a loan with bad credit

A low credit score doesn’t have to stop you from applying for loans, find out what options you have

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 Can you get a loan with bad credit?

If you have a poor credit rating you can still apply for loans by opting for a bad credit loan – a type of loan made specifically for those with a poor credit history. Poor credit loans usually charge a higher interest rate than regular personal loans, as lenders take a greater risk by providing funds to those who might be more likely to default.

What types of bad credit loans can you get?

Having a bad credit history doesn’t have to stop you from accessing loans – there are financial products designed for those with a poor credit history:

Guarantor loans

This involves the borrower arranging for a second person to pay off the loan in case they can’t make the repayments themselves. This lowers the risk the lender takes when loaning money to someone with a poor credit rating.  

The guarantor will have to qualify for the following to be eligible:

  • Be 18 years old or over
  • Be working full-time
  • You may need to own property depending on the lender

The Guarantor can’t be your spouse or someone you share your bank account with i.e. a joint account.

Unsecured personal loans

You won’t need to put forward a property or high-value asset to secure the loan. Instead, lenders will base their approval of the loan on how likely it is that you’ll be able to pay off the loan. If you’re unable to make the repayments, the lender may arrange a County Court Judgement against you rather than repossession of assets which would happen with a secured loan.

Lenders may also offer extra perks to an unsecured loan including payment holidays – select months where you won’t have to make your monthly repayment. You might also receive cashback once your loan has been settled. Unsecured loans are flexible, so you’ll have a way to make the repayments suit your needs.

Peer to peer loans

This gives you a way to take out loans without needing to borrow from a bank or building society and instead borrow from either an individual or a group. People who want to earn a return on their money are paired up with those who want to borrow it – at a rate they both agree on.

To qualify for peer to peer loans will need you to ensure the following:

  • There will be an age restriction, usually 21 years old or over but this can vary depending on the lender
  • Earn a regular income (usually a minimum of £15,000 on a yearly basis)
  • Own a UK bank account

How do I find a loan with bad credit?

You’ll need to work out how much you’ll need to borrow and how much time you’ll need to pay it back. It’s a good idea to give yourself a couple of extra months to make up for any potential unforeseen changes in circumstances.

You can use the MoneySuperMarket comparison tool to compare competitive deals of bank loans for bad credit. We’ll take into consideration your low credit ranking by asking you to answer a few questions about your personal finances, so you’ll get a tailored list most suitable for your low credit.

How much can I borrow?

With an unsecured loan, you can access a minimum of £1,000 at up to £25,000.

With a guarantor loan, you’ll be able to borrow anywhere from £1,000 to £10,000 but this will also depend on your credit history and income.

With peer to peer loans, you can borrow a minimum of £1,000 up to £35,000.

You’ll usually have some flexibility in deciding the length of the loan term, but bear in mind that the longer your loan term, the more money you’ll spend on paying off the interest.

Advantages of using poor credit loans

The main advantage of poor credit bank loans is the easy access to funds regardless of your credit rating, but there’re a number of extra perks afforded to poor credit loan users:

  • You’ll have access to flexible repayments where you have a say in deciding the length of the loan term and how much you can afford to pay on a monthly basis
  • A number of charges may be waived depending on the lender, including early repayment charges
  • You may not need a guarantor for an unsecured personal loan
  • Lenders are lenient if you have a CCJ record

Disadvantages of using poor credit

While a poor credit loan is a great source of funds when you need it, it’s best to take into consideration the following:

  • You will be charged a higher interest compared to regular loans or if you were to have a positive credit ranking
  • If you can’t make your repayments, this will further lower your credit rating
  • Short term loans tend to charge especially high interest rates


You have a number of alternative options available if you decide that the poor credit options aren’t right for you:

Secured loans: These types of loans require you to secure a high-value asset such as property or a car. This acts as collateral to the lender in case you aren’t able to keep up with the repayment.

Budgeting loans: This loan gives you access to extra money on top of the government benefits you’re already receiving and is another form of Universal Credit meant to pay for necessary expenses including rent and home maintenance.  

Credit union loans: This is a community savings and loan cooperative where members put their savings together to lend to one another. The funds are also used to run the credit union. It’s usually owned by the members themselves and interest can vary, usually 3% at a maximum.

Things to remember

  1. Lenders will still check your credit rating, but they’ll be more lenient than for regular loans
  2. There are a number of actions you can take to improve your credit score including registering for the electoral roll
  3. The longer your loan term is, the more money you’ll spend on paying off the interest before the actual loan balance
  4. If you miss a repayment, it will negatively affect your credit score
  5. If you try to pay off your loan earlier than the agreed upon date, you may have to pay a fee for the early repayment as the lender is losing out on the interest you’d have otherwise paid

How to manage repayments

Creating a loan repayment schedule lets you keep track of your debt by noting down what days you’ll have to make your payments including any payment holidays. You’ll be able to set up a standing order if your loan payments are fixed which will give you an extra guarantee that the payment is made, and the responsibility falls onto the lender to take payment.

If you need a more time to pay off your loan you’ll be able to extend the loan term, so your monthly instalments are smaller and more manageable – but you’ll pay more interest in the long run.

Compare loans

To compare loans, you can use the MoneySuperMarket comparison tool for a tailored list of options for you. We take into consideration your low credit ranking by asking you a few questions about your financial situation and provide you with the most competitive offers.

Simply tell us what you’re going to use the loan for, how much you’d like to borrow and details about your employment. We make the comparison of perks and extra features easy so you can take out the most suitable loan for you. 

All loans and credit cards are subject to status and terms and conditions. Over 18s, UK residents only. Terms and conditions apply. See for further information.

MoneySuperMarket is a credit broker - this means we'll show you products offered by lenders. We never take a fee from customers for this booking service. Instead we are usually paid a commission by the lenders - though the size of that payment doesn't affect how we show products to customers.

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