Can I get a secured loan with bad credit?

Can I get a secured loan with bad credit?

author: HaylexCox

By HaylexCox

The simple answer to this question is yes, often you can. But you should think very carefully before you apply.


Secured loans can be easier for people with a history of bad credit to get hold of than unsecured loans. This doesn’t mean that the lender will not carefully consider your credit history, though.

To find out more, read on.

Added security – for the lender

Secured loans are so-called because they’re secured to your house. This provides extra security to the lender, because if you stop making your loan repayments, they have the right to repossess your property to get back the money you owe them.

Because they have this extra safety net, lenders may be more likely to consider your application if you have struggled to manage credit in the past than if you were applying for an unsecured loan.

Unsecured lenders don’t have your home as security, so they are taking more of a gamble lending to you. Because of this, they will look closely at your credit history to work out what type of borrower you are – do you always make your repayments on time or have you defaulted on a pervious loan, for example.

"There are lenders who specialise in people with a bad credit history."

If you have a bad credit history, you might struggle to get an unsecured loan – although it’s not impossible. There are lenders who specialise in people with a bad credit history.

And don’t make the mistake of thinking that if you apply for a secured loan your credit history won’t be considered at all, because it will. While your home can provide security to lenders, they still want to see what type of borrower you are, and this will influence their decision on whether to lend to you.

But you might prefer to take out a secured loan regardless of your borrowing history.

Fitting a kitchen
Secured loans can pay for home improvements.

Why choose a secured loan?

We’ve already mentioned that a secured loan can be more suitable if you’ve struggled with borrowing in the past. However, there are plenty more reasons why people choose to take the secured route.

For one, secured loans typically come with a longer repayment term than unsecured loans. This can make your monthly repayments smaller. They are also likely to come with a lower rate of interest attached.

"Repayments on a secured loan may be more affordable than on an unsecured loan."

The monthly repayments on a secured loan can be more affordable than on an unsecured loan. But because you’re making them for longer, you may end up paying more interest overall.

A further benefit of secured loans is that they can let you borrow more than you could with a credit card or unsecured loan. Again, this is because the loan is secured to your property and this added security means the lender can afford to lend you more.

Family eating
What will you use your loan for?

What are the alternatives to secured loans?

If you have had trouble with borrowing in the past but you’re reluctant to take out a secured loan, find out your alternative options below:

Savings – If you have savings, it probably makes more sense right now to use these to fund your project than to leave them in the bank and take out a loan. This is because the interest on savings right now is so low, it’s almost certain to cost you more to borrow the money than you’ll lose on interest if you use your savings.

Credit card – This is another form of unsecured borrowing and the lender will consider your credit history. However, there are some providers who specialise in people with a bad credit history. These credit cards may come with a lower spending limit or higher interest rate than the average deal on the high street, but they could help you rebuild your credit history.

Bad credit loan – As with credit cards, there are unsecured loan providers that specialise in borrowers with bad credit. It’s likely to cost you more to take out this type of loan, in order to provide security to the lender.

Balance or money transfer cards If you’re thinking of taking out a loan to consolidate your debts, you could consider either a balance or money transfer card. Find out more about these here.

Remortgage - As with a secured loan, when you remortgage the lender has your home to act as additional security. You can find out more about remortgaging here.

Debt advice – If you have consistently struggled with borrowing, applying for more credit is probably not a good idea right now. If you have started to miss payments and receive charges from your lender, contact the lender straight away to see if you can come up with a new arrangement. You could also get expert impartial advice from groups like the Money Advice Service.

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

author: HaylexCox

By HaylexCox

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