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Can I get a loan with bad credit?
If you’ve had problems managing credit in the past, it may be more difficult to be accepted for a loan, but that’s not to say you won’t be able to find one that’s suitable for you. There are certain lenders that specialise in lending to people who may have struggled with credit, so there could well be options available to you.
Options that might be available to you
In general, unsecured personal loans are more difficult to obtain if you’ve got a poor credit history and often carry a higher interest rate. Lenders will look at the problems you’ve had with credit in the past and assume that you might be more risky to lend to. And, because personal loans are not secured against an asset, it is harder for lenders to reclaim the money should you struggle to repay.
On the other hand, homeowner (secured) loans may be easier to obtain if you have had credit problems in the past, as lenders have the security of knowing that the loan is secured against your home. So, if you are a homeowner and you’re confident you’ll be able to make all the monthly repayments, this sort of loan might work for you. However, it’s really important to remember that taking out any form of credit is a big commitment and falling behind on your payments for a secured loan could mean you lose your home. This is why it’s vital that you carefully review your outgoings before applying to ensure you can afford the repayments – not just now but over the life of the loan and bearing in mind that your circumstances could change.
Ocean compares homeowner loans of between £10,000 and £250,000 from a select panel of lenders to find you a deal suited to your circumstances. You can find out more here.
Keep an eye on your credit history
Your credit history plays a key role in the types of credit you’re eligible for. The better you’ve managed credit in the past, the more attractive the rates you’re likely to be offered on most forms of credit, including mortgages.
So long as you continue to make all your repayments on time and in full, taking out a loan will gradually improve your credit history. This is because your credit history will show your payment track record – every repayment made on time acts like another “tick”, helping to demonstrate to lenders that you are a responsible borrower.
Things to remember
Before you consider taking out a loan, it’s really important to think about why your credit history is damaged in the first place. If you’ve found it difficult to repay what you’ve borrowed in the past, ask yourself whether your circumstances have now changed for the better. Were you to fall behind on repayments on this loan, it could seriously hinder your chances of being accepted for credit for some time. Not only this, but you could find that you’re hit with costly interest and charges for missing payments. That’s why you should only be considering taking out a loan if you are confident that you’ll be able to afford the repayments.
For more info about getting a loan with bad credit, visit our bad credit loans page.