Can you get a guaranteed loan?
Is there a way of guaranteeing a successful loan application? If not, how do you maximise your chances of being approved? Our guide explains
Is it possible to be guaranteed a loan? Our guide explains what it means when you’re pre-approved for a loan and what to expect in the application process.
What is a guaranteed loan?
In theory, a guaranteed loan is a loan that you would be guaranteed to be accepted for. But while pre-approved loans exist, it is not possible to find a ‘guaranteed’ loan.
All reputable lenders will run a credit check on your finances before agreeing to advance you 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.
Do guaranteed loans exist?
No, guaranteed loans do not exist. You should be wary of any lender suggesting it offers guaranteed loans. No reputable lender can promise you a loan on any terms. The Financial Conduct Authority legally requires lenders to carry out credit checks.
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 managed credit well in the past then you’re likely to have a high credit score which in turn is likely to improve your chances of getting a loan.
How can I find out which loans I can get?
If you apply for a loan with MoneySuperMarket, we’ll ask you a few questions 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 (a hard credit check) on you – and this is what they’ll use when making their final decision.
How do pre-approved loans work?
When you’re pre-approved for a loan, it means as long as all your details remain the same the lender will lend to you – if you pass its other checks. These checks are fraud checks and that your application details are correct. Here at MoneySuperMarket, we offer pre-approved loans which can take out the stress of applying for a loan. Pre-approved loans can help make you feel more confident when applying and you’ll only have one hard credit search on your credit report.
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. But if your credit rating is low you're likely to find yourself paying higher interest rates and being offered a smaller loan.
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 as security against the debt. It 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
How can I improve my chances of getting a loan?
Your credit score plays an integral part in whether you’re accepted for a loan. It means taking steps to improve your score should improve your odds of getting a loan. Your credit score won’t improve overnight, so getting your credit in shape should be looked at as a long-term process.
Here are some ways to boost your credit rating:
Register on the electoral roll: A quick way to fix your credit score is by registering on the electoral roll
Credit builder credit card: Your credit score might be low because you haven’t borrowed before. Credit builder cards are specifically designed for people to build up their credit history
Make payments on time: By making credit card repayments on time you show lenders that you’re reliable and this boosts your credit score. Failing to make payments on time will damage your credit rating
Correcting mistakes: It’s worth checking your credit report to make sure there are no errors, and if you do spot mistakes, contact the company in question to correct your file
Keep old accounts open: If you can, keep your oldest credit card accounts open. Having longstanding credit accounts can be looked on favourably by lenders as this shows you have a long credit history
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. Some alternatives to loans include:
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.
Other useful guides
If you’re looking to learn more about loans, we have a broad range of useful guides:
Compare loans with MoneySuperMarket
Comparing loans is fast and easy 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 impact 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.
MoneySuperMarket is a credit broker – this means we’ll show you products offered by lenders. We never take a fee from customers for this broking service. Instead, we are usually paid a fee by the lenders – though the size of that payment doesn’t affect how we show products to customers.