Getting an loan when you have poor credit

Having poor credit can make it hard to get a loan. And not being able to get a loan because of a poor credit score can make life stressful when you need extra cash. Whatever the reason is for your poor credit score, we’re here with to help you get a loan when you need it most.


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Representative 49.7% APR. Representative Example: Amount of credit: £1,200. Interest rate: 0.34% per day for up to 75 days (25.5% (variable) per annum). Representative 49.7% APR (variable). For example, if you borrow £150 for four days, the interest per day would be £0.51 and the total interest would be £2.04 representing four days at £0.51 per day.
Choose Wisely is a trading style of Choose Wisely Limited and is a free to use price comparison website. Choose Wisely Limited is authorised and regulated by the Financial Conduct Authority as a credit broker not a lender, firm reference number 730574 and is registered with the Information Commissioner’s Office number Z3106681.

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Representative 49.7% APR.

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Table of contents

Written by Inez Miedema
Read time: ~5 mins
Published: 7th April 2020 Updated: 9th September 2020

What are poor credit loans?

Loans with poor credit have been designed for people whose credit report is less than stellar. Many people in the UK have what lenders consider a poor credit score, so you are not alone and we are here to help.

Poor credit loans are a viable option for those who have little to no credit history at all. Your credit score is calculated by looking at your lending history, how you managed it and if you have any CCJs or defaults on your previous loans. Your score can be affected if you have failed to manage your credit properly in the past, such as missing repayments.

Poor credit loans tend to have a higher interest rate because of the perceived risk to the lender of the customer not paying them back. However, bad credit loans can be beneficial for rebuilding credit if the repayments are managed responsibly. This is because paying back any money you borrow on time and in full will increase your credit score.

What are the alternatives?

There are several alternative financial products available if you don't think poor credit loans UK is the right solution for you. It's worth exploring these alternatives as they may be better suited to your current financial situation.

  • Short term loans - A short term loan can be classed as a bad credit loan on a smaller scale. These can be a great option for those who have a poor credit history but only want to borrow a small amount of money.
  • Guarantor loans - These are one of the best borrowing options for people with poor credit. You will elect a trusted person who signs onto the loan agreement with you so you can get the funds you need. If you cannot make the repayments, the guarantor will pay off the loan instead.
  • Overdrafts - Getting an overdraft is a relatively easy form of borrowing because they are usually attached to your current bank account. It is essentially a small pot of money that’s available for you to dip into, for a small fee, if you need some extra cash. Once you’ve passed the application process with your bank or special bad credit credit line provider, overdrafts will act as a buffer rather than a borrowing solution. It can be a suitable option if you can pay back the funds quickly to avoid charges increasing over time.
  • Credit building cards - Having poor credit may mean you cannot borrow large sums of money. A credit building card can be a good alternative for small amounts of borrowing that improves your credit score at the same time. Improving your credit record with one of these cards could open up more opportunities for borrowing in the future should you ever need it.
  • Secured loan - If you need to borrow a larger amount of money with poor credit, a secured loan may be the way to go. The risks associated with secured loans are much higher, protecting the lender from loaning funds to someone with poor credit. The loan amount is secured against a valuable asset, usually your home. If the monthly repayments are not met, then you do run the risk of losing the asset you originally secured the loan against.

What are the pros and cons?

Poor credit loans can sometimes have a bad reputation because of the risks involved. There are downsides to poor credit loans such as:

  • Higher interest rates - The interest rates associated with bad credit loans are high, which could mean you end up paying back a lot more than what you originally borrowed. Lenders specialised in these loans charge higher rates because of the perceived risk of lending to someone with a marked credit file. They are worried that some of their borrowers won’t be able to pay back the loan in the agreed amount of time.
  • Extra fees - There may be additional fees involved with a bad credit loan that other unsecured loans don’t carry. Always check the small print in your agreement for any late payment charges as well as returned payment penalties.
  • Small loans - The amount you can borrow on a low credit score is usually small, below £3000. Unless you apply for a secured loan or have a guarantor who backs you.

But there are some positives you can look at as well, such as:

  • Getting access to quick funds - Some lenders can approve your application in as little as 15 minutes, meaning you could receive funds the same day.
  • Improving your credit - Managing a poor credit loan effectively and keeping up with the repayments can end up having a positive effect on your credit rating.

What loans can I get with poor credit?

Here at Choose Wisely, we aim to empower those who need it most to make informed decisions when choosing basic financial products. Anyone with poor credit or no credit history at all can struggle to get a loan when they find themselves struggling with money. Multiple options may be available to you through the lenders on our site, even if you have bad credit.

To see if you are eligible for a poor credit loan with any of the lenders Choose Wisely works with, fill in our online application form. It's quick and easy to do, and funds could be in your bank account the same day pending the lender's approval. We match you with the lenders that have accepted your application in principle. This will reduce the stress, confusion and hassle of finding a poor credit loan.

Who can use loans for poor credit?

Poor credit loans are for anyone who has a negative credit history or doesn’t have any credit history at all. People might have no credit history - also called a thin credit file - when they are young, new to the country or simply haven’t used any credit solutions in their life.

Everyone should know their current credit score to understand if they are eligible to borrow before making any applications for a loan. You can find out what your credit score is for free and learn how you might be able to improve it, by visiting sites like ClearScore or Credit Karma. And in any case, you should avoid e making multiple applications at the same time or in a short amount of time, as this can hurt your credit as well. If you’ve made a loan application and been denied credit by the lender, stop and understand what you can do to improve your credit score before applying again.

Why do I have poor credit?

There are several reasons why you have poor credit. The biggest thing that affects your score is taking out credit and then not sticking to the terms of the original agreement. In other words, if you have borrowed money in the past but missed a repayment deadline or weren’t able to pay back the borrowed amount at all, this impacts your credit record negatively. Having a bad credit score will affect your ability to borrow money or take out a loan in the future.

Other aspects that will badly affect your credit score are declaring bankruptcy, applying for an Individual Voluntary Arrangement (IVA) or receiving a County Court Judgement (CCJ) against you.

as small as making the minimum repayment on your credit cards instead of paying them in full every month may also adversely affect your overall credit rating. This is because lenders may assume you are struggling to clear debts on time.

If you have never borrowed money in the past, then it will be unlikely you have a good credit score. This may sound strange, but when a lender assesses your application for a loan, they want to see evidence that you can pay back what you borrowed—having no credit record of making repayments successfully will almost certainly count against you. As a consequence, you may be turned down by banks and credit card companies even if you can comfortably afford to pay them back.

What should I do if I have a limited credit history?

There are some straightforward steps you can take to improving your credit history if you have little or none to speak of. It can take up to six months to start seeing the results of positive changes to your credit file, but the efforts are more than worth it in the long run.

  • Sign on to the electoral roll - Registering for your local electoral roll means that lenders can use the information provided to confirm your name and address. This is a crucial step in building up your credit history.
  • Get a current account - A UK current account is a good way to show any lender that you can manage your finances responsibly. If your account comes with an overdraft, try not to use it or stay in the lower limits of it to improve your credit rating.
  • Get a credit building card - The bank you have your current account with may also be willing to give you a credit card if you manage your money well. Pay it off in full every month to improve your score.
  • Take out small amounts of credit - Look at phone contracts or store cards. These are usually easier to be accepted for and can help demonstrate your ability to pay your lenders back on time.

When would a bad credit loan be a good idea?

You should only apply for a bad credit loan if you know you are in a stable enough position to pay it back on time every month. Loans for those with low credit often come with higher interest rates, so you need to be prepared to have the funds available to pay the entire amount you borrowed plus the interest as well.

If you know you cannot make the repayments on a poor credit loan, don't apply to receive one. It's important to know when you are in a tricky financial situation, and if this is the case, a suitable alternative such as borrowing from family or friends may be a better idea.

If you're looking to borrow money today, find out which lenders may accept you by filling out a quick non-binding application form on this website today.

Poor Credit Loans FAQs

How can I improve my credit?

You can improve your credit by ensuring you pay your bills on time and don't borrow more than you can afford. Registering on the electoral roll can also help to improve your credit score. You can monitor your credit score by registering with a free credit referencing agency such as ClearScore or Credit Karma. You should not pay for accessing your credit report, this service should be accessed for free.

How long does poor credit last?

Negative information remains on your credit file for up to seven years, including bankruptcies which will remain visible on your credit record for six years.

Do all poor credit loans require a credit check?

All lenders that are authorised by the FCA are required to carry out a credit check as part of a loan application, to ensure that you're in a position to be able to afford the loan repayments. When you apply through Choose Wisely, the checks that are done to show you which lenders are likely to offer you a loan are soft searches, which don’t leave a mark on your file. As soon as you complete a full application with the lender of choice, that lender will complete affordability checks and perform a hard credit check, which is visible on your credit file.

Written by
Inez Miedema
CMO & Take Control Author at Choose Wisely

Inez came on board in the Summer of 2019. Her main focus has been helping as many people as possible find our website through online marketing, writing content and partnership deals. She boasts 6 years of FinTech experience with other brands and has an in-depth knowledge of our customers.

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Important Information.

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

Rates shown are quotes 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 3.9%APR to a maximum of 1575%APR Representative and loan repayment periods range from 3 to 60 months.

[*][†] Once accepted, your loan can be transferred to you in as little as 15 minutes. The time that it takes for the loan to show in your bank account will depend on your lender and your bank.

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.
Your score can be accessed for free via any of the main credit reference agencies such as Credit Karma, Clearscore or Experian.

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