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Have a Poor Credit History but Looking for a Loan?

Money Savings Advice Poor Credit Loans

If you have a poor credit score, your choices for loans will be limited. A poor credit score makes you less appealing to lenders. Fortunately, there are still many poor credit loans available.

It is difficult to get a personal loan if you have a poor credit rating. If you are approved, your interest rates will be higher. You might be asked for a guarantor, who would be responsible for the loan if you can’t keep up with repayments.

Lenders will usually look at your credit file when they decide if you’d make a good customer. They don’t always want the best credit score, often preferring customers that sometimes slip up and miss the occasional payment, but a very bad credit score will have a negative impact.

Read on to find out what to do if you don’t have the best credit score.

Looking for other information on Loans? This guide has info on ‘Poor credit loans explained’. We have also writen extensively about:

We update all our guides regularly. If you are researching loans and we haven’t got an exact guide that helps you, keep coming back as we update daily.


Personal Loan: Why Does Your Credit Score Matter?

A poor credit score is a sign to lenders that you’re an investment risk. It shows that you don’t handle your money efficiently. Having bad credit indicates that you frequently miss your regular bills and payments, or that you’ve desperate to borrow money and have already applied for lots of loans.

Lenders want customers that are able to pay back their loans. They let you borrow money, add their interest and make a profit when you pay your debt back. If you’re unable to repay your loan, the lender is the one that loses out.

Lenders will look at your credit score to evaluate the level of risk. If your credit score is low, the likelihood is that you’ll be more trouble than you’re worth.


On average every consumer in the UK has a £9,000 loan, £7,000 on credit cards, £1,400 overdraft.

Category: Loan Small

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Personal Loan: How Lenders Deal With Bad Credit

If you’ve got a poor credit score, your options are going to be limited. Some lenders won’t even consider having you as a debtor. There are, however, many loans for bad credit online. You’ll need to search around, and there are additional risks.

If you’re looking for poor credit loans, guaranteed approval will be very hard to come by. You’re more likely to have your applications rejected, and the more this happens the worse your credit score gets.

When lenders provide poor credit loans, they’ll usually charge higher interest rates as a way to balance out their risk. This means that borrowing is much more expensive when you’ve got a bad credit rating. You’ll pay more overall for a loan that could cost others much less.

Loan AmountInterest RateMonthly repayments (36-month term)Total Owed
£5,0003.3% – typical bank loan rate£145.96£5,254.56
£5,00019.9%£181.48£6,533.35
£5,00049.9% typical poor credit loan£243.98£8,783.19
Example numbers compiled by Money Savings Advice

You can see the difference that poor credit loans can make – you could be paying £100 a month more over the same term, and owing around £2,500 extra, on a £5,000 loan. If you can, it’s always better to build your credit and then find a lender with a lower interest rate if you need to take out a loan.

If you are limited to poor credit loans, understand the repercussions of that high interest rate.

Some lenders will want different forms of security. They might offer secured loans, like logbook loans that will be secured against the value of your car. Some lenders will ask for a guarantor that they can get their money back from.

Personal Loan: Getting Poor Credit Loans

Each loan application you make can leave a mark on your credit file. The next time you apply, the lender will see the applications you’ve already made. Having a lot of marks on your credit file will only make things even more difficult.

Making lots of credit applications in a short space of time is a clear sign to lenders that you’re desperate for money or have recently borrowed from elsewhere. Lenders can’t see if your other applications have been approved or denied.

When you’re applying for loans with poor credit, you’ve got to be very careful. The poor credit loans direct lenders offer can leave those marks on your credit file.

Some comparison sites, and some direct lenders, will do a soft search first. A soft search won’t leave the same damaging mark on your file, but can be used to check if you’re likely to have your loan approved. A hard search will only be carried out if you decide to go ahead. Using a soft search means that you can look elsewhere if you get an instant rejection.

Poor Credit Loans With Instant Approval

If you have bad credit, the wait for a decision can be even more difficult. It’s also more likely that you’ll need to wait whilst the lender evaluates the risk.

Many lenders offer instant decisions based on the numbers you provide. A computer reviews your income and expenditure, your credit score and other figures, presenting you with an approval or rejection almost as soon as you’ve applied.

When you’ve got a poor credit rating, some lenders will take longer to decide if they can offer you a loan. You may be asked to give further information, extra proof of income or a reason for borrowing the money. This personalised approach is safer, and a sign of a responsible lender, but can cause problems if you need the money in the near future.

Luckily, it’s possible to get poor credit loans with instant approval. Look for lenders that offer this service and you could have money in your bank within a couple of hours.

Computer algorithms will be used to make an approval decision. You’ll see if you’re approved for a loan almost as soon as you submit your application.



Personal Loan: Instalment Loans for Bad Credit

You’ll be expected to pay your loan back in instalments. If you have poor credit, this may be a sign that you’ve not kept up with past repayments.

Before borrowing, check the repayment schedule. All lenders should provide a list of repayment dates, along with the amount that you’ll pay back. As well as showing your monthly instalments, they should provide information about the total cost of your loan.

Your payment schedule is important. If you start to miss payments, you’ll do further damage to your credit score. This will make it even more difficult to borrow money in the future.

Check that you’re happy with the repayment schedule of your instalment loan for bad credit. If you can make your repayments on time, your credit score will start to improve. You’ll also avoid getting into trouble with your creditor.

Personal Loan: Payday Loans for Poor Credit

It’s often easier to get small payday loans with bad credit. Lenders are more likely to approve these loans because they’re small but expensive. They don’t have to risk as much money, but they could get double back.

Payday loans can be tempting if you’ve got a poor credit rating, but you should be aware of the risks. Many of these loans must be paid back within 1-3 months of approval, so there’s no room for mistakes.

These short-term loans can help in an emergency, but your debt can quickly mount up. Before you apply for payday loans you must be sure that you can make the repayments.

Personal Loan: Improving Your Credit Score

If your credit score is low, you’ll probably pay more for your loan and have fewer lenders to choose from. Improving your credit score is the key to expanding your borrowing options.

If you don’t need money straight away, you can improve your credit score in as little as 2-3 months. Consider a credit builder card, or make sure that you keep up with existing bills like your mobile phone contract.

Your credit rating is fluid, always changing in response to your good and bad money moves.

Quick Loan FAQs


Your credit score is an important tool in the loan application process. A good credit score opens doors, improving your chance of approval. With a bad credit score, your options are going to be limited. Applying for a loan can be particularly scary if you know that your credit rating’s poor.

Category: Loan Main

Guarantor loans have risen in popularity through recent years. Despite feeling new, these loans fall back on old traditions of vouching for the people you know. To apply for one of these loans, you’ll need someone that trusts you to manage your money.

Category: Loan Main

A logbook loan is secured against the value of your vehicle, a logbook loan provides a way to borrow even if your credit score is poor. Lenders are more likely to approve applications because your vehicle is offered as security.

Category: Loan Main

Quick loans can be very helpful. If you need money quickly or want a fast decision, it’s great to have that option available. But, be aware that quick loans often come with higher interest rates.

Category: Loan Main

Though they may be tempting, fast loans are often more trouble than they’re worth. Dangers include getting yourself deeper into debt, ruining your credit rating and opening yourself up to potential fraud and loan sharks.

Category: Loan Main

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How Can Money Savings Advice Help You With Getting a Loan?

Here at Money Savings Advice, we have partnered with some of the UK’s leading loan broker companies. They have already helped thousands of people get the best loan that suits their needs, and they can do the same for you.

Choosing an independent loan broker means they won’t proceed with an application unless they are sure it is in your best interests. They are also regulated by the FCA, which gives you an additional layer of protection.

If you would like to speak to one of these loan brokers who can help you get a loan, then click on the below and answer the very simple questions.

Len Burgess

Len Burgess is a professional financial writer who over the last five years has written hundreds of articles for all financial sectors. Len founded Money Savings Advice with the aim of helping consumers navigate their way around the financial world by providing easy to understand financial information and matching consumers with the best financial advisor based on their personal information.

Len Burgess

Len Burgess is a professional financial writer who over the last five years has written hundreds of articles for all financial sectors. Len founded Money Savings Advice with the aim of helping consumers navigate their way around the financial world by providing easy to understand financial information and matching consumers with the best financial advisor based on their personal information.

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