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Representative  23.3% APR

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Calculate and compare loans: Find out how

What is a bad credit loan?

A bad credit loan is a personal loan designed for individuals with poor, weak, or no credit history.

Because lenders view borrowers with low credit scores as higher risk, bad credit loans typically come with higher interest rates and stricter terms than loans offered to individuals with better credit scores.

Can I get a loan with poor credit?

There are specialist lenders who specialise in borrowing money to people with low credit ratings. Having a low credit score doesn't mean you can’t get a loan; however, your options will be more limited than someone with a good credit rating.

Representative 23.3% APR

How do bad credit loans work? 

If you have poor credit, you may find it harder to be approved for a loan. Bad credit loans are made for people with your credit history, and it’ll be easier to be accepted for borrowing.

  • Pick and apply for your loan

    You decide how much money you need to borrow and for how long. The lender will run a credit check and decide whether to accept you for credit.

  • Receive the funds

    After being approved you can expect the cash to enter your account in a few days.

  • Paying the loan back

    You’ll usually have to pay your loan back in monthly repayments. You’ll have to pay back the money borrowed plus the agreed interest.

What can I use my loan for when I have poor credit? 

A loan can be used for anything. Here’s some of the reasons people typically take one out:  

  • Emergency purchases: If an unexpected, but necessary, cost has come up, you may not have the funds to pay for it. A loan can help you cover this essential purchase 

  • Home improvements: Renovating your house can come with a big price tag. A loan can help make it more affordable 

  • Buying a car: Paying for a car in one go can be expensive. A loan can help spread the cost 

It’s important to remember that if you’re borrowing with bad credit and miss repayments, you risk hurting your credit score even further. So, you should carefully consider your options before taking out a loan. If you’ve managed to build up substantial savings, it could be wiser to use this instead if you’re not confident you’ll keep up with payments. Use our loan calculator to get a rough idea of what the loan will cost you. 

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What are the pros and cons of loans for bad credit?

Taking out a loan when you have bad credit does come with downsides and benefits. Here’s the rundown:

  • Tick

    Pros

    • Gives people with bad credit access to borrowing: It can be harder to be approved for borrowing when you don’t have a good credit score. Loans for bad credit give people with low credit scores the financial lifeline they may urgently need 

    • Fix your credit score: A bad credit loan could give you the opportunity to get your credit score back on track. If you keep up with the payments on your loan, you can prove to lenders you are trustworthy and in time, your score will shoot up 

    • Get money quickly: If you’re in need of cash quickly, then a bad credit loan can be a massive help. Most lenders will get the money over to you in a few days

  • Cross

    Cons

    • High interest rates: Bad credit loans will come with higher rates of interest than standard credit loans. This is because bad credit borrowers are seen as higher risk, so a higher interest rate offsets the risk for the lender 

    • Damage your credit score: If your credit score is already low, you run the risk of harming your credit rating further if you don’t keep up with loan repayments. An even worse credit score will make it very difficult to borrow in the future 

    • Deepen your debt: If you’re using the loan to pay off another debt, you could potentially find your circumstances worse if you struggle to keep up with the loan repayments. If you know you’ll be unable to afford the repayments, then think carefully before borrowing

How much can I borrow with poor credit?

How much you’ll exactly be able to borrow will depend on your provider. Factors that can affect your loan amount include:

Your credit score: If you have bad credit then you’ll be offered a smaller amount than someone who has a better credit score. Your credit rating makes you more of a high risk borrower so lenders will mitigate that by lowering the amount they’ll lend to you.

Type of loan: Loan amounts for unsecured loans normally range between £1,000 and £25,000.  You’re usually able to borrow more with a secured loan because you’re providing your house as collateral. You could borrow up to £100,000 with a secured loan, but again the exact amount will depend on your provider.

Income: Lenders will want to know you can afford to pay back the loan. They’ll look at how much you earn and also your debt-to-income ratio.

You can get an idea of how much a loan will cost you by using our loans calculator. You can use our loans calculator for an estimate of how much the monthly payments will be, and also to work out how much you can afford to borrow.

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What to consider when interest rates are high

The Bank of England's base rate is currently at 5.25% (February 2024), which means it remains at a 15-year high. This has marked consequences for borrowers that you should be aware of, including:

  • Loans become more expensive: As the base rate rises, so does the cost of borrowing. This means that any new loans you take out will likely have higher interest charges, making them more expensive over time. 

  • Bad credit loans have higher APRs anyway: If you're considering a bad credit loan, remember that these typically come with higher APRs than standard loans. With the current high base rate, these loans could become even more costly, making it crucial to evaluate if this is a financially viable option for you. 

  • You need ensure you can afford repayments: It's more important than ever to ensure that you can manage the repayments on any loan you're considering. You can use our loans calculator to get an idea of how much a loan could end up costing you.  

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Read our related content  

Having a bad credit score can make it harder to borrow but it doesn’t mean you’ll be unable to. We have a range of’ loans for bad credit’ guides to help you understand your options. 

How long will it take to receive the money? 

The time it takes to get the money will depend on your provider. However, it usually takes between 24 hours and a week. A key to speeding-up the process is making sure the details you provided are accurate. If you’ve made any mistakes in your application this could cause delays. 

  

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How do I check my credit score?

You can find out your credit score for free with our Credit Monitor service. All you need to do is answer a few questions about yourself and we’ll show you your credit score. It’s important to know your credit score as you have an idea of how lenders see you and your options for borrowing money. When you check your credit rating with us, we’ll also let you know the loans and card deals you’re likely to be approved for. 

Credit monitor

How can I improve my credit score?

If your credit score isn’t in the best shape, the good news is there’s always room for improvement. Here are some tips on how to improve your credit score

  • Register to vote

    Registering on the electoral roll is a something simple you can do to boost your credit rating. This improves your credit score as it confirms your address for lenders.

  • Check your credit report for errors

    Mistakes on your credit file can hurt your credit rating. So, make sure to have a thorough check of your credit report and contact the credit reference agency to get any errors fixed.

  • Pay your bills on time

    By paying your bills on time and in full, you’re showing lenders that you’re a responsible borrower. If you’re seen as a safe pair of hands, it’ll be easier to get approved for credit in the future and your score will improve also.

  • Don’t make too many loan applications at once

    It’s best to space out loan applications, because every time you apply for credit it leaves a mark on your credit file. Too many credit applications can bring your credit score down. 

     

  • Keep your credit utilisation ratio low

    Try not to use more than 50% of your credit limit. By not maxing out your credit limit, it shows that you’re borrowing responsibly.

  • Close unused credit card accounts

    Unused credit card accounts could be dragging your credit score down. Cancel credit cards that you’re not using.

Is it best to get a credit card or a loan with bad credit?

It can be hard to know whether a credit card or a loan would be best for your situation if you have a poor credit score. Here are some things to consider:

  • A credit card for bad credit can help to improve your credit score, providing you pay off your balance in full and on time. Moreover, there are certain cards that are designed for people with bad credit that you will be more likely to be eligible for.

  • A bad credit loan can allow you to get access to funds even with a poor credit score, and if you prefer a structured repayment plan, making fixed monthly payments can make it easier to budget and manage your finances.

However, it should be noted that with a bad credit credit card or a loan, you are likely to have more limited access to credit and will be subject to a higher APR.

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Kate Hughes

Our expert says

"

Always check your credit report before going for this kind of loan for two reasons. First, many of us aren’t familiar with our own credit files and yours might not be what you think it is – for good or bad! If it’s better than expected, cheaper, mainstream options may be open to you. But if it’s worse, piling up more debt may not be the answer and a debt charity like StepChange may be a better place to get help sorting out your finances before going looking for more credit.

"
- Kate Hughes, Money & Savings Expert

How to compare bad credit loans with MoneySuperMarket

Find the right loan for you and see which rates you’ll be guaranteed to get.

  • It doesn’t take long

    Tell us a little about yourself, your finances and the loan you want

  • We browse the market

    We’ll search through loans from a wide range of lenders on the market

  • Choose your loan

    You’ll be able to sort loans by the overall cost and the likelihood you’ll be accepted 

That depends on your own specific circumstances. In some cases, if you own your home, you might find it easier to apply for a secured loan.

If you have poor credit and are struggling to find personal loans, guarantor loans might be easier – but they depend on having a friend or family member to vouch for you.

It’s very easy to check your eligibility for loans online, and it’s just as easy to apply for a loan. Certain providers might approve you quickly, though most people with poor credit will be subject to more thorough credit checks – which can often take 24 hours or more. You’ll be notified on whether you are successful either by phone or email.

Yes it is possible to apply for a small loan for bad credit. Typically the smallest loan you could apply for through MoneySuperMarket is likely to be around £1,000. 

Any loan that doesn’t require the borrower to have a ‘guarantor’ is a no-guarantor loan. So this would apply to unsecured personal loans and secured loans, for example. If you have a bad credit history and a low credit score it can be difficult to be accepted for a personal loan. There are specialist bad credit lenders. But if you are accepted for a loan, you’re likely to only be able to borrow a small sum and the interest rate will be high.  

If you’re a homeowner you might be able to borrow a secured loan. But remember your home will be at risk of repossession by the lender if you can’t keep up with your repayments. 

You can apply for a loan with no guarantor even if you have bad credit, but if you’re rejected for the loan this could further damage your credit score. When you search for a loan with MoneySuperMarket we’ll show you your chances of being accepted for different loan deals before you apply – so you’ll know where you stand. 





If you have bad credit and you want to take out a loan, it’s important to think about if you’ll be able to pay off the loan. If you don’t keep up with the loan repayments, your bad credit score can get even worse.

What is considered a poor credit score will depend on the credit reference agency you use. There are three main credit reference agencies - TransUnion, Experian and Equifax - and they all use different scoring systems.

But generally speaking, any score at the lower end of CRA’s spectrum will be a bad credit score. Here at MoneySuperMarket, our Credit Monitor service uses the TransUnion scoring system. TransUnion classes ‘very poor’ credit scores in the range of 300 – 600, and ratings of 601 – 660 are considered ‘poor’.

Yes, your credit score will improve if you pay your loan back on time. By keeping up with your loan agreement, you’re showing lenders you are a responsible borrower and in turn, your credit rating will rise.

You can get instant approval on a bad credit loan, however it’s important to remember that a reputable lender will carry out a credit check.

If you don’t repay your loan, you face being charged extra fees as well as interest on top of missed repayments. Being unable to pay back your loan will damage your credit score even further and make future borrowing extremely difficult. The lender can also issue you with a county court judgment (CCJ).

No reputable lender will offer you a loan without a credit check.  The Financial Conduct Authority requires all lenders to carry out a credit check on loan applicants.  

You work hard to earn your money, and we don’t think you should waste a penny of it paying over the odds on your household bills. That’s why at MoneySuperMarket, we’re on a mission to save Britain money.

  • Whip your credit score into shape with Credit Monitor

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You might be wondering if we work with all the companies in the market, or if our commercial relationships with our partners might make us feature one company above another. We’ve got nothing to hide, and we want to give you clear answers when it comes to questions like these, so we’ve pulled together everything you need to know on this page.

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