Loans for bad credit

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What is bad credit?

Bad credit usually refers to a history of failures to keep up with payments on credit agreements. You might have bad credit because you owe money or you have a record of not paying bills back on time, for example. When applying for some level of finance, loan or even a new mobile phone contract, companies will look at your credit status to work out whether you’re likely to make repayments on time in the future.

There are a number of reasons why you might have a low credit score, including:

  • Bankruptcy
  • Defaults on payments
  • Too many ‘hard’ credit searches on your credit profile – a hard credit check happens when you apply for a loan, finance agreement or credit card and the lender looks into your credit history
  • County Court Judgements
  • An individual voluntary arrangement (IVA), debt management plan (DMP) or a debt relief order (DRO)

You might also have bad credit because you haven’t had the time or opportunity to build up much of a credit history. Perhaps you’re too young, you’ve emigrated from another country or you’ve never had a credit card or opened a bank account before.

If you have bad credit, you’ll find it difficult to borrow from lenders, get a credit card or apply for a mortgage as lenders will think you are ‘high risk’. They might also think you’re a bad investment as the chances of them getting repayments back will be low.

How can I get a bad credit loan?

If you have a poor credit rating, or simply no credit rating at all, it can be difficult to get a loan approved. However, there are some options available to you such as a bad credit loan or a loan for debt consolidation. Some lenders offer personal loans to people with bad credit but at higher interest rates and with poorer lending options.

Although your options may be limited, we compare a range of providers who offer loans for those with a bad credit history. We’ll also show you the likelihood of acceptance without affecting your credit score.

What are the pros and cons of taking out a bad credit loan?

If you don’t have a good credit report but need to take out a loan, it’s very important to weigh up all of your options. Weigh up the advantages and disadvantages of a bad credit loan first before making a decision.


  • Quick access to money – some lenders will be able to transfer funds to your account quickly. Perfect if you need access to some quick cash.
  • It may improve your credit score – keeping up-to-date with your repayments can have a positive effect on your credit report. This will put help if you want to apply for more credit in the future as you should see better interest rates.


  • Commitment to monthly repayments – like all loans, you’ll have to pay back the amount you borrowed in monthly instalments. Remember, if you miss these repayments, you can risk damaging your credit score further.
  • High interest rates – unfortunately, if you’ve got bad credit then you can expect lenders to charge you a higher interest rate. This means that the overall amount you pay back on a loan will cost you more.
  • Extra fees – it’s worth checking the terms and conditions for any penalties like late repayment fees and returned payment fees.

Applying for a bad credit loan

Understanding your financial situation

Everybody's financial situation is different, so it's important to think through a few factors before you apply for a loan:

  • How much you can afford to pay back each month
  • How much you need to borrow
  • What's your credit score is like
  • Be aware of interest rates and how much you'll need to pay back.
  • In some cases, the more you borrow, the lower the interest. Be careful not to borrow more than you can afford to pay back.
  • The repayment term also affects the interest rate. A longer loan term may mean lower monthly repayments. But the interest rates and total repayment cost could be higher.

What you'll need to apply for a poor credit loan

Before you start to look for a suitable loan, there are a few things you'll need before applying:
  • Your current U.K. address
  • An email address and contact number
  • Your annual income
  • Your general outgoings
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Why have I been refused credit in the past?

When you apply for a loan, lenders will take a number of factors into account before deciding whether to accept your application. Some of the of the reasons you might be rejected are:

Poor credit rating - this is probably the most common reason for a lender to reject your application. A bad credit rating shows the lender that you may be going through financial difficulties. Although this may not be your fault, it does suggest to the lender that you might struggle to pay back the loan. Unfortunately, this can lead to your loan application being rejected which can further harm your credit score.

Too many loans - if you have too many loans and you’re looking to apply for another, the lender can take this as a sign that you’re going through financial instability. This can suggest that you may not be able to pay back the loan.

Your employment history - this is an important factor in credit scores. If you’ve been in and out of work or have changed jobs frequently, lenders might think this shows you’re in financial difficulties.

Low income/irregular payment – a low or irregular income may affect whether you’re eligible for a loan.

Your credit history - if you’re from another country or you’re too young and haven’t had time to build up a credit score, unfortunately this can count against you.

Assets for a secured loan - if you’ve decided to apply for a secured loan, but you haven’t been able to offer up enough collateral such as your house or car as security, then a lender might reject your application. If this has been the case, an alternative to a bad credit loan could be an unsecured loan.

Managing your loan repayment

Once you have your loan, it’s important to know how to manage it. As the person taking out the loan, it’s your responsibility to make sure you make the repayments on time, every month, until it’s paid off.

When you take out a loan, you’ll agree with the lender how long the repayment period will last. This will usually be 1 to 5 years. You’ll get the loan amount in one lump sum and you’ll normally have to repay it bit by bit every month until you’ve paid it off.

The final amount you pay back won’t just be the amount that borrowed from the lender. The full amount you repay will usually include some interest and depend on a number of things, including:

  • How much you’re borrowing
  • How long you’ve agreed to pay the loan back for
  • The interest rate
  • Whether the loan is fixed or variable rate

Make sure you know what the date for repayment is each month. If you suffer from bad credit, missing payments could mean you have to pay additional charges and could also put more negative marks on your credit report.

Loan repayments will be taken from your account each month. The most common ways to pay are:

  • Direct debit – this is set up by the lender using your account number and sort code. This is usually a fixed agreement and should only be changed on the agreed date by the lending company.
  • Continuous payment authority (CPA) or recurring payments – the lender can take the money that you owe them at their discretion.
  • A standing order – this is set up by you. You pay a fixed amount to the lender out of your account at agreed intervals, e.g. once a month. You can change or cancel a standing order at any time.

Of the three, a direct debit may be the best option as it puts the lender in control to take the payment regularly. Remember to make sure you have enough money in your account each month to make the monthly payments. With a direct debit in place you’re more likely to make the payments, so you’ll avoid any black marks on your credit report. Need some more help working out how to manage your loan repayments? Give our loans calculator a try!

Will comparing loans affect my credit score?

If you're refused a loan, it can have a harmful effect on your credit report. This is because when you apply, loan companies will carry out a hard credit search to get a complete view of your credit history. The search will help them see if you're a good investment to lend to and whether you have the credit history to back up the repayment.

The good news is, there are other ways you can get credit that don’t involve having a loan refusal mark your record. Comparing a range of loans through a comparison site like means you can view all the options available. All you have to do is type in a few details and we’ll carry out what’s called a soft search.

This soft search will have no impact on your credit score. We’ll only do a hard search once you’ve chosen a provider and have a better idea if you'll be accepted for the loan or not. This is a smart way to avoid having lots of loan refusal applications on your report, which could damage your credit score even more.

Understanding credit checks

To understand credit checks, you’ll first need to know what a credit report is. Credit reports are produced by agencies such as Equifax or Experian who gather information about your credit history, things like previous loans you may have had or credit applications you’ve made. Once complete the report can be viewed by a financial company so they can get an idea of your financial history and behaviour. This will give them an insight into whether you’re a reliable candidate to loan to, as well as how likely you are to repay the loan back on time.

Have a good financial history? Then you’re more likely to be approved! A sketchy history of credit repayments? You may find it difficult to borrow and will have to go with a loan with a higher interest rate. Luckily, together with our loans partner Monevo, we’re able to bring you a wide range of lenders to offer you our best loans deals.

Improving your credit score can do your credit report a world of good. Take a look at our handy tips and start improving yours today!

What’s the difference between a soft credit check and a hard credit check?

Soft credit check

A soft credit check happens when a broker or lender takes an initial look (check) of your credit report without examining it fully. These types of checks on your credit report are only visible to you, so they’re not marked against you in your credit history. You can run as many soft credit checks on your report as you like, as companies will not be able to view them.

Hard credit checks

A hard credit check happens when a company needs a full check of your credit history. These searches are recorded on your report for you and companies to see. By looking at the hard credit checks on your report, companies will be able to see how many times you’ve applied for credit in the past.

Comparing bad credit loans with us and Monevo will only ever leave a soft credit check on your report. Please note, a hard credit check will be needed to successfully apply for a loan. This will happen once you choose a loan from our list of providers and click to visit their site.

Why use and Monevo for loans for bad credit?

We’ve teamed up with the personal loans experts Monevo to offer the best possible deals on loans. Monevo's service will offer:

  • A free service with no obligation to apply once you’ve got your rate
  • Eligibility checks with no impact on your credit score - lending partners run a soft search on your credit file which doesn’t affect your score



Get a quote
No effect on your credit score

Compare quotes to see your exact monthly payments without affecting your credit score

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