Bad Credit Loans

A bad credit rating doesn't have to be the end of the road. Although getting a loan with bad credit is difficult, it's not impossible. We're here to help you find the right bad credit loan.

Why use Choose Wisely to find a loan if you have bad credit?

Choose Wisely is a free to use financial comparison site. We are here for you and the millions of people that are being shut out of mainstream finance.

  • Extensive panel of specialist lenders
  • Check your eligibility before you apply
  • Compare with no impact to your credit file

Table of contents

Written by Mark Grimley
Read time: ~5 mins
Published: 4th October 2023

What is considered bad credit?

The term 'bad credit' is used to describe a credit score that's below average.

Your credit score is used to measure your creditworthiness. Your score is based on the information in your credit report and indicates how likely you are to manage and repay a loan or credit card effectively.

There are three leading credit reference agencies in the UK that give you a unique credit score: Experian, Equifax, and TransUnion. A fair credit score for each is:

  • Experian: Between 721 - 880 out of 999
  • Equifax: Between 380 - 419 out of 1000
  • TransUnion: Between 566 - 603 out of 710

A score below these means you may struggle to get a loan from a bank or building society. But don’t despair - there are things you can do to improve your credit score.

You may make your situation worse by applying for several loans over a short period. Lenders perform what’s called a ‘hard search’ on your credit report each time you apply, leaving a mark on your credit report for up to 24 months. Having multiple marks on your credit report is likely to put some lenders off, as it can suggest you’re desperate for credit.

To give yourself the best chance of being approved for a loan, you should:

  • Update any incorrect information on your credit report
  • Register to vote - this helps to prove your fixed address
  • Use less than 30% of your credit limit on any credit cards
  • Pay off any existing debts as quickly as you can
  • Build a long credit history by keeping current accounts, credit cards and other credit accounts open
  • Make repayments on time
  • Avoid withdrawing cash on a credit card

Can I get a loan with bad credit?

Yes, it’s possible, but it can be harder to get a loan if you have a poor credit history because loan providers may consider you a high risk to lend money to.

There are specialist lenders who offer loans if you have a poor credit history that may be able to help..

Personal loans for bad credit usually have a higher APR than standard loans, making them more expensive, and the amounts you're able to borrow are usually lower.

For the best chance of being approved for a loan, check your credit score and work on improving it to get access to cheaper loans in the future.

What makes a bad credit score?

There are many reasons you may have a bad credit score, including:

  • You've never used a credit product before
  • You've recently moved to the country
  • You're not registered to vote
  • You've been declared bankrupt
  • You've mismanaged credit cards or loans in the past
  • You've had a CCJ filed against you
  • Someone you're financially connected to has misues credit products
  • Where can I apply for a loan with bad credit?

    Loans for people with bad credit aren’t usually available from mainstream banks and building societies. You’re more likely to find a lender who specialises in bad credit loans online.

    A website like ours helps you to compare loans by looking at the annual percentage rate (APR) and how much each loan will cost you. Choose Wisely works with an extensive panel, of hand-picked, specialist lenders to cater for a variety of needs and personal circumstances.

    You can also use our soft search eligibility checker before applying for a loan to compare loans you’re eligible for without harming your credit score.

    Are loans bad for your credit score?

    Over time, taking out a loan can help to improve your credit score, providing you never miss a payment.

    You may find that applying for a loan does temporarily reduce your credit rating because of the hard search left on your credit report. As long as you manage your loan correctly, your score will bounce back and improve even further.

    On the other hand, if you make late repayments or default on your loan, you could harm your credit score. It could then become more difficult to get accepted for credit products in the future.

    If you're currently having problems repaying a loan, contact your lender as soon as possible. They may be able to help you by giving you longer to repay your debt and reduce your repayment amounts. The worst thing you can do is bury your head in the sand and stop communicating with any of the lenders you’ve borrowed from.

    Check out Money Helper for additional support and advice if you’re struggling with your debts.

    How much do bad credit loans cost?

    They can be expensive because of the high-interest rates they charge - around 49.9% on average, but you may be quoted a higher rate based on your credit rating.

    If you have a really poor credit score, you may need to get a very bad credit loan. The APR for these loans can be even higher, from 59% upwards.

    The cost of your loan will also depend on its length. The longer you take to repay your loan, the more expensive it becomes.

    They may also charge expensive unavoidable fees for things like admin. The cost of these fees will vary and will depend on the provider.

    What loans can I get with bad credit?

    In theory, you could get any loan if you find a provider willing to lend to you. The best bad credit loans will depend on your circumstances; here are the main types of loans available to you:

    Unsecured loans

    An unsecured loan typically charges lower interest rates than credit cards, although the interest rate may be higher if you have a poor credit score.

    Repayments are made monthly, and the interest rate will be fixed. Short-term and payday loans work in a similar way but are offered for days, weeks or months rather than years and tend to charge higher interest rates.

    Secured loans

    You may be able to get cheaper interest rates and borrow larger amounts when you borrow with a secured loan because you're guaranteeing the loan with your home. The disadvantage is that your home is at risk if you fail to repay the loan.

    Secured loans can be a good option for those with poor credit, but make sure you can afford the loan repayments because you'll risk losing your house if you cannot repay the money you've borrowed.

    Guarantor loans

    A guarantor loan is where someone else, like a family member or a friend, agrees to pay for your loan if you cannot make a repayment. With this type of loan, the guarantor's credit score is checked as well as your own.

    Think carefully before signing up for a loan like this because if you can’t repay what you owe, your loved one will be forced to pay back what you’ve borrowed, risking your relationship with them.

    Loans for unemployed

    credit report has no record of whether or not you’re employed; however, having no regular income can impact your ability to repay a loan, making it harder to get approved. you're unemployed and need a loan, there are a few options to choose from. The most common type of loans for unemployed people include;

    Short term loans

    Every loan provider will have their own definition of how long a short-term loan is, but generally speaking, these loans are repaid within 12 months. Short-term loans have higher interest rates than others and are better suited for those who only want to borrow small amounts.

    How much can I borrow with bad credit?

    The maximum amount you can borrow will depend on the lender. You can typically only borrow up to £10,000 if you have bad credit, but some providers will allow you to borrow more depending on your circumstances.

    The type of loan you apply for will also influence how much you can borrow. If you're looking to get an unsecured loan for bad credit, it’s unlikely you’ll be able to borrow large sums of money. With a secured loan where your home is used to guarantee the loan, you may be able to borrow up to £25,000 or more.

    What are the pros and cons of bad credit loans?

    • If you keep up your repayments, your credit score could improve
    • Fill out a simple application, and you'll usually get an instant decision
    • You'll be able to access money fast once you're approved
    • You'll pay higher rates of interest
    • Potential for expensive fees
    • If mismanaged, your credit report will suffer
    • Your home is at risk if you take out a secured personal loan

    Bad credit loans FAQs

    Can I get a bad credit loan online?

    Yes, and it's one of the best places to compare bad credit loans. When searching online, compare the APR of loans and the total repayable amount to find the cheapest loans available. Make sure the Financial Conduct Authority (FCA) regulates providers by checking their register before applying.

    Can I improve my credit score?

    Your credit score is constantly changing based on how you manage your credit products, meaning it's possible to improve your score over time.

    Some things you can do to improve your credit score include:

    • Updating any out-of-date information on your credit report
    • Contacting the credit reference agencies if you spot any incorrect information on your credit report
    • Registering to vote
    • Using less than 30% of your credit limit on any credit cards
    • Paying off any existing debts as quickly as you can
    • Building a long credit history by keeping current accounts, credit cards and other credit accounts open
    • Making repayments on time

    What is the easiest loan to get approved for?

    There is no right or wrong answer to this because the approval process will depend on a lender's eligibility criteria and your personal circumstances.

    To find the best loan for you, use the Choose Wisely eligibility checker to find the loans you're most likely to be accepted for.

    How do I get a loan with poor credit?

    To see if you're eligible for a loan, you can compare loans on the market using a comparison website like ours. To make sure you're only applying for loans you're likely to be accepted for, use the Choose Wisely eligibiliy checker.

    When comparing loans, look at the total amount you have to pay and the APR of the loan because these demonstrate how much you'll have to pay back over the whole term, including interest and fees.

    Why does bad credit make it more difficult to get a loan?

    When you apply for a loan, lenders evaluate how likely you are to repay the money you borrow from them. If you have a poor credit score, lenders view you as riskier to lend to.

    If your credit rating is too low, you'll be considered too much of a risk and will be refused a loan. If you are approved for a loan, you'll likely pay higher interest rates and be limited to the amount you can borrow.

    Written by
    Mark Grimley
    Head of Partnerships & Take Control Author at Choose Wisely

    Mark joined Choose Wisely in 2015. He continues to work in close contact with the providers, brokers and journalists operating in the world of consumer credit.

    Important Information.

    All of the information in this guide is correct at the time of writing.

    If you complete a loan search application on the Choose Wisely website, the rates shown may vary based on your personal circumstances, are subject to status and are available to those aged 18 and over. Rates available range from a minimum of 13.9%APR to a maximum of 1721%APR Representative and loan repayment periods range from 3 to 60 months.

    If you need financial advice you can visit stepchange, speak to citizens advice, call the national debtline or speak to

    If you've been declined, please refer to your credit report to gain an understanding of why before making further applications.
    You can access your credit report for free from Credit Karma, Clearscore or Experian.

    Warning: Late repayment can cause you serious money problems. For help, go to