Does a bad credit score mean I can’t get a loan?

Does a bad credit score mean I can’t get a loan?

author: Dan Griffiths

By Dan Griffiths


When you have a poor credit history, it can sometimes feel like all the doors to getting a credit card, loan or mortgage are closed to you.

But that’s not to say it will be impossible for you to take out a loan. There are lenders out there that specialise in lending to people with poor credit, but it’s important you think carefully before you apply.

Personal loans for bad credit

Just because you’ve struggled with managing credit in the past doesn’t mean all the doors to borrowing are closed and locked to you now. After all, one of the best ways to improve your credit history is to borrow and repay in full and on time each month.

If you’re only looking to borrow a relatively small amount, say a couple of thousand pounds, a personal loan might be what you’re after. However, these kinds of loans often need you to have a good credit history, especially those with the cheapest interest rates.

That’s why you may want to look to a lender that offers bad credit personal loans. Although these loans usually have higher interest rates than you could get if you had a good credit history, they’re still a useful step in helping you to repair your credit history if you borrow responsibly.

Of course, if you miss payments on your loan – whether it’s for bad credit or not – your credit history will be damaged further and you may have to pay fees or charges. This is why it’s important to only borrow if you’re confident you can make the repayments.

Ocean personal loans (44.9% APR representative) are available from £2,000 to £5,000, and could be available to you if you’ve struggled with credit in the past.

A homeowner loan may be more suitable

If you’re a homeowner, you may be more likely to be accepted for a homeowner loan.

As this kind of loan is based on how much equity you have in your home, it relies less on your credit history. The lender uses your property as security for the loan, which means they can legally sell your property to raise the funds if you can’t repay the money.

This kind of loan tends to be for higher amounts than a personal loan, so you may be considering this if you want to borrow a larger amount.

Again, being late making payments or missing them altogether will damage your credit history, and in this case, your property is at risk of being repossessed if you fall behind. This is why it’s especially important to only borrow if you’re happy you’ll be able to make the repayments.

Ocean offers homeowner loans that could be suitable for you. Plus, with our Smart Search feature, you could find out whether you’ll be accepted before you apply. Find out more here.

Can you afford it?

Like any type of borrowing, you need to make sure you’ll be able to afford to meet your repayments. A good way to do this is to look at your bank statements for the past few months and see how much money you have left over after all your essential spending. If there’s not much, or you’re left in your overdraft, now’s not the best time to take out a loan.

On the other hand, if you do have cash left over and you’re happy to put it towards repayments, a loan could be suitable for you. And, as long as you make all your repayments in full and on time, your credit history will improve.

While being sure you’ll be able to afford to repay is important, if you’ve struggled with credit in the past, it’s also a good idea to ask yourself whether you’re now confident you can borrow and keep to the repayments. Your credit history may have suffered from you forgetting to make payments, not necessarily because you couldn’t. If this is the case, you need to be certain you’re organised and able to repay on time.

A good way to try to ensure your payments are made on time is to set up a Direct Debit to cover them. This reduces the chance you’ll miss a payment and face damage to your credit history.

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

author: Dan Griffiths

By Dan Griffiths

Does a bad credit score mean I can’t get a loan? Does a bad credit score mean I can’t get a loan?