Can you get a loan with bad credit?

Can you get a loan with bad credit?

author: Bryony Pearce

By Bryony Pearce


So you’ve got your eye on a new car, some home improvements or a wedding to pay for, but is your bad credit score holding you back from securing that much needed cash injection?

If you’ve had problems managing credit in the past, this will have had an impact on your credit rating – but don’t let this lead you to think that you won’t qualify for a loan.

All is not lost, and this certainly doesn’t always mean you won’t be able to find a personal loan that’s suited to you. There are lenders out there who specialise in lending to people who may have struggled with credit in the past, just take a look below. 

Options that might be available to you

Unsecured loans

Unsecured personal loans are loans offered to individuals without the requirement of an asset to secure the debt to. Therefore, the risk associated with not paying back the debt in time is lower than compared to a secured loan. So what are the drawbacks?

Sometimes unsecured personal loans can be more difficult to obtain if you’ve got a poor or thin credit history, and if you were to be successful with an application the loan may carry a higher interest rate.

Although there could be a higher interest rate to pay, a personal loan can provide the money you need. Plus, they carry the added benefit of boosting your credit score if the monthly repayments are made in full and on time.

Keep in mind that Ocean is a specialist in finding loans for people with all types of credit histories. We can find personal loans from £100 to £15,000, so don’t rule out a personal loan based on a less-than-perfect credit score alone.

Secured loans

Secured loans require an asset (usually your house) which the loan is secured against – and this could become the property of the lender should you fail to make your repayments. Secured loans may be easier to obtain if you have a bad credit history, as lenders have the security of knowing that the loan is secured against your home.

So, if you’re a homeowner and 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 losing 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 lifetime of the loan. Ocean compares homeowner loans from £10,000 to £250,000 from a panel of lenders to find you a deal suited to your circumstances.

How do you improve a bad credit score?

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 lower 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 bad 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’re a responsible borrower.

Besides ensuring you keep up to date with any outstanding debt repayments, there are two simple things you can do to start improving a bad credit score today.

Make sure you’re on the electoral roll

Firstly, make sure you’re registered to vote and that your name is on the electoral roll. Lenders check the roll as a precaution against fraud since it shows them the address at which you’re registered to vote.

Separate your finances

Secondly, where possible, disassociate your finances from anyone with a bad credit rating. If, for example, your partner or flat mate has struggled in the past to make credit repayments, having a joint account means their poor credit rating will have a negative impact on yours. Something as simple as setting up separate bank accounts could boost your chances of being accepted for a personal loan.

Things to remember

If you’ve got bad credit, before you consider taking out a loan, it’s important to think about why your credit history is less than perfect 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.

If you work hard to improve your bad credit score and were to fall behind on repayments for any future loan, it may hinder your chances of being accepted for credit going forward, so always try to bear this in mind.

By missing payments you could find that you’re hit with costly interest and charges, leaving you in a worse position than you started. That’s why you should only consider taking out a loan if you’re confident that you’ll be able to afford the repayments. For more information about getting a loan with bad credit, visit our guide.


Disclaimer: All information and links are correct at the time of publishing.

author: Bryony Pearce

By Bryony Pearce

Can you get a loan with bad credit? Can you get a loan with bad credit?