A guaranteed loan is something of a misnomer. There’s no such thing, and all reputable lenders will run a credit check on your finances before agreeing to lend.
A credit check allows companies to assess how you have handled borrowing in the past, including whether you’ve kept up with repayments and whether you’ve over-stretched with borrowing.
If you’ve taken good care of your finances, then you’re likely to have a high credit score which in turn is likely to improve your chances of getting a loan.
You may have heard of a guaranteed acceptance loan. This essentially means that if your credit file is in good order, the company will lend at the stated terms – but there will still be credit checks first.
How do lenders decide who to accept for a loan?
Lenders will check your credit file and score with one or more of the main credit reference agencies – Experian, Equifax and TransUnion. Your file details your financial history and your score essentially gives you a risk rating, this helps lenders determine whether they’ll accept your loan application.
The better or higher your credit score, the more likely your application will be accepted, and the greater the chance of receiving the best rates.
Lenders will base their decision on what they can see on your credit report, which can go back six years and includes.
Your credit score. This gives an overview of how you manage your finances. Find out more about what makes a good credit score
Your payments. Ongoing and historic, including missed and late payments and defaults
Your available credit. This shows how much capacity you have to borrow - from your existing credit cards and bank overdraft, for example, and can indicate whether your finances are stretched
Your hard searches. Recent applications for credit will be noted. Too many in quick succession could make lenders wary, although they’ve also become smarter at realising that customers will shop around for a loan
A credit score allows potential lenders to assess your financial situation and credit-worthiness, before making a decision on whether or not to lend to you.
Our credit monitor service uses credit information and scores from TransUnion. With credit monitor you can check your score as often as you like for free, and access handy hints and tips on how to improve your rating.
How can I find out which loans I can get?
If you apply for a loan with MoneySuperMarket, we’ll ask you a few straightforward questions first to help determine your chances of being successful.
Our eligibility checker will conduct a soft search on your details that won’t affect your credit score in any way. That way you’ll know where you stand before you apply.
We’ll show you the loans you’re most likely to be accepted for from across the market. However, it is not a guarantee. When you make the final application, the lender will run a full credit check on you – and this is what they’ll use when making their final decision.
What loans am I more likely to be accepted for with bad credit?
If you have poor credit there will be some loans that are more suitable for you than others. In all cases you’re likely to find yourself paying higher interest rates and being offered a lower borrowing limit. Some loans may be more suitable for bad credit, including:
A secured loan, where you put up some collateral, usually your car or your home, gives lenders more faith to lend because even if you default on repayments they can seize the assets
A guarantor loan is an option for borrowers with poor credit. This is where a family member or friend of the borrower guarantees to step in if they fail to keep up with repayments. It gives the lender confidence because in the worst case scenario they will look to recoup the debt from the guarantor
Unsecured personal loans may be more difficult to get if you have bad credit because there is no security for the lender. If they are available, potential borrowers will usually face higher interest rates to cover the risk. Our guide to loans for bad credit explains more.
How can I improve my chances of getting a loan?
Your credit score plays an integral part in whether or not you’re accepted for a loan. It means taking steps to improve your score should improve your odds of getting a loan.
That said, there’s no quick-fix. The best way to grow your score is to prove, over time, that you’re a responsible borrower. This means keeping up with repayments, so it can be a good idea to set up direct debits to avoid missed bills.
If your credit score is low because you’ve never borrowed before, have just turned 18, or recently moved to the UK, then you could start to build a credit profile with a credit builder credit card.
It’s also worth checking your credit report to make sure there are no errors, and if you do spot mistakes, contacting the company in question to correct your file.
What are the alternatives to getting a loan?
If you’re looking to borrow there are alternatives to getting a loan. Whether they are better than a personal, secured or guarantor loan will depend on your personal circumstances and what you are looking to achieve.
Overdraft. If your current account has an authorised overdraft, then you could go into the red for a period – which is essentially borrowing money from your bank. The risk is that the interest rate on overdrafts can be high. Our guide on choosing between a loan and an overdraft explains more.
Credit cards. Credit cards can give you the ability to make purchases or shift balances from elsewhere, sometimes at low or 0% interest rates for a set period. Credit cards can be a good short-term option, but unless you keep up with repayments – ideally by clearing the monthly balance – interest rates can quickly rack up.
If you are struggling with debt there are charities set up specifically to help. These include StepChange, Citizens Advice and National Debtline. There is no need to pay for debt advice and these charities can help you negotiate with your creditors and set up a realistic repayment plan.
Compare loans with MoneySuperMarket
Comparing loans is quick and simple with MoneySuperMarket. We’ll ask you a few questions about your finances and then search our panel of lenders to find the deals you’re most likely to be accepted for. This won’t affect your credit score.
It’s a quick and easy way to compare the deals available, see where you stand and find the loan you need.