Compare bad credit loans
What is a bad credit score?
Having bad credit basically means you have a low credit score. If you’ve never taken out credit before, or have a history of late or failed repayments, then chances are you have a bad credit rating. This means that you may find it hard to get a personal loan unless you target your search at loans for bad credit. If you want to compare bad credit loans, the Choose Wisely bad credit comparison table above is a great place to start.
Have you got a bad credit rating?
Like many of our customers, you might have got to the Choose Wisely bad credit loan comparison table by searching for 'payday loans' or 'quick loans', but before you start applying, it's worth checking if you really need a bad credit loan. There are cheaper options available if you have a good credit score. You can find out more about credit scores and how to find out your credit score by visiting our guide to borrowing with bad credit. We have other comparison tables available for people with a fair credit score or a good credit score. Or you can read on for more information about your bad credit borrowing options.
I’ve never had a loan, why do I have bad credit?
Everyone has a credit file, even if you've never taken out a loan or credit card before. If you've ever had a phone contract, paid household bills, or signed up for a bank account, then your payments and account balance will have been recorded in your credit file. If you've always paid bills on time, then you might expect that you'll have a good credit score. But your credit record is used to work out how likely you are to pay off debt on time and in full. So if you've never applied for a credit card or taken out a loan, it's difficult for a lender to work out if you can be trusted to repay credit. This means that you could have a squeaky clean financial past and still struggle to get a personal loan, because of a poor credit score.
How do I borrow with bad credit?
Of course, if you need a loan badly, you should step back and think about whether borrowing is the right answer. If you're getting a loan to pay a regular bill, it's better to speak to the company and ask them if they can be flexible about repayments. Consider cutting back on other costs like meals out, holidays and shopping trips until you feel like you're back in control of your money. If you're struggling with debt, we have links to helpful charities in our guide to borrowing with bad credit.
Confident that you can pay back on time and in full? We've put together a list of all your borrowing options, so you can choose wisely and get the right deal for your circumstances...
Family and Friends
It could mean an awkward conversation, but your cheapest borrowing option may well be your mum and dad. If your parents, family or close friends have some spare cash lying around, you could do a deal and get a quick loan on the cheap. Just make sure you draw up a contract so you know what will happen if you struggle to pay them back. If they can't offer you money, they might be willing to act as your guarantor for a guarantor loan application.
If you have a poor credit history but are now back on a firm financial footing, guarantor loans are an option worth considering. You will need someone to back you up with your application - this person is described as a 'guarantor'. This can be a friend or family member but they will need to have a good credit history and in some cases will be required to be a homeowner. In return you can benefit from high acceptance rates and a reasonable APR compared with other bad credit options.
Bad Credit Credit Cards
If you have bad credit, then it may be difficult to get approved for a credit card, but some companies offer cards for people with a poor credit history. These cards are usually cheaper than applying for a payday loan, but it's worth comparing all your options before deciding whether to apply. Every card or loan application that you make will be recorded in your credit file, so your chances of a successful application will drop each time you apply.
Peer to Peer Loans
If you haven't heard of peer to peer lenders, you're not the only one - they've not yet broken into the mainstream. However, they could be a great place to go for bad credit borrowing, with relatively low APRs on offer if you're approved. These types of loan are not for people with a very bad credit score - with peer to peer loans, you will be matched with a 'real person' rather than a company. As with any loan, you'll need to be confident that you're able to pay back on time and in full.
With so few companies offering peer to peer lending, there isn't yet a comparison table, but it's worth looking at short term specialist The Money Platform and guarantor loan provider, Guarantor My Loan, which will both consider applicants with poor credit.
High Cost Short Term Loans
High cost short term loans, commonly known as payday loans are, as their name suggests, designed to be repaid over the short term. They're one of the most expensive ways to borrow, so it's important to avoid using this type of small loan as a long term solution. However, while they're very expensive, high cost short term loans are highly-regulated by the Financial Conduct Authority. This means you should know exactly how much you'll be paying from the start and you'll never have to pay back more than 200% of the value of your loan.
When you're comparing payday loans, look at the total amount repayable to see how much you'll need to pay back if you're offered the advertised APR. Use the OPTIOSCORE and reviews to work out if the company has good customer service and effective tools to help you manage and pay off your loan.
Doorstep lenders will literally deliver cash right to your door, but this personal service means they're one of the most expensive ways to borrow. Before you consider a doorstep lender, make sure you've compared all your other options, including other very bad credit loans. If you apply for a doorstep loan, be aware that it can take some time for the application to go through - this is not a 'quick loan'. You can compare doorstep loans using the Choose Wisely Doorstep Loans comparison table.
If you have your own car and it's under 10 years old, then a logbook loan is an option. These loans are more expensive than alternatives like guarantor loans and taking out one of these loans means you're signing away ownership of your vehicle until the last repayment has been made. You'll still be able to use the car, but a logbook lender will hold onto the V5 certificate (the 'logbook') so that they can sell off the vehicle if you fail to pay off the loan. You can compare logbook loans on the Choose Wisely Logbook Loans comparison table .
Other Bad Credit Loans
We've covered the main types of bad credit borrowing above and you may have seen that there's no way to avoid a credit check. People often search for 'bad credit loans no credit check', but this isn't an option for bad credit loans in the UK. So what if you're on benefits, unemployed or have previously struggled or failed to pay off a loan? It's probably a better idea to go to family or friends in these circumstances, or find a way to cut back. But if you're reading this, you'll know that isn't always an option. Taking on more debt won't help if you're already struggling, but there are charities which may be able to help or offer advice, listed in our guide to borrowing with bad credit.
If you're certain that you'll be able to make the repayments and you have a good plan for staying out of debt, then there are loans available for people in your circumstances. Choose Wisely has gone through the bad credit loans market and identified lenders who specialise in loans for people on benefits, the unemployed, people who've previously had a CCJ or defaulted on their payments. You can compare benefit loans, compare unemployed loans, compare CCJ loans or compare default loans now in our customised comparison tables.
Am I guaranteed a loan?
No. Every time you apply for a loan your details will be checked against a list of 'acceptance criteria' - factors like your income, whether or not you own a home, if you're a UK resident and so on. If you don't match the lender's criteria, they won't offer you a loan. You can usually find the acceptance criteria on a lender's library page. When you've identified a lender that you're interested in applying to, find them in the bad credit lender library. There, you can read reviews from their customers and find out more about whether you'll be accepted.
If you're not sure which lenders you should apply to, you can use the Choose Wisely eligibility checker to automatically create a list of suitable lenders, based on your details. It only takes a few minutes and it could save you money and time.
What happens if you can’t make your repayments?
If you’re struggling to meet your repayments then contact the lender immediately. They may be able to ease your situation or at least provide you with some advice. If you still feel you need support there are a number of debt charities that can help you out. You can find more information in the Choose Wisely guide to borrowing with bad credit, below.
If you've got a poor credit history but are now in a stable financial position, there are a number of providers that will lend to you. The bad credit loan comparison table is a great place to start your search. If you have any doubt about being able to make the repayments, then don't risk applying for a loan.