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What type of loan can I get with bad credit?
Your credit history influences the types of credit you qualify for, and having a poor history of managing credit means you’re more restricted when it comes to taking out loans and credit cards.
However, that’s not to say you won’t be able to find a loan if you have struggled to manage credit in the past. Providing you’re in a stable financial position and you’re confident you can keep up with the repayments, there may be borrowing options you could consider.
If you own a home, but you’ve got a damaged credit history, you may find that a secured loan – also known as a homeowner loan – is more suited to your circumstances than a personal loan. As the loan will be secured against your home, your credit history has less of an impact on whether or not you’ll be accepted.
Ocean secured loans are available from £10,000 to £250,000 and we scour our panel of lenders for the most suitable deal for you. But remember, falling behind on repayments could mean you lose your home. You should only ever consider taking out a loan if you’re confident that you’ll be able to afford the repayments – especially when they are secured against your home.
If you’ve got a patchy credit history, you may find it more difficult to get a personal loan. As this type of loan is not secured against anything, lenders may be reluctant to accept your application as they won’t have that safety net if you will fall behind on your repayments.
However, even if you’ve got a less-than-perfect credit history, there may be personal loans out there that you can access. These will probably be at a higher interest rate than advertised and, if you’re a homeowner, you’ll find that secured loans may still provide you with a more competitive deal if you’ve had problems with credit in the past.
A credit card for bad credit
Depending on how much you need to borrow, you may be able to use a credit card instead of taking out a secured loan.
Some lenders – like Ocean (credit card 34.9% representative variable) – specialise in credit cards suited to people who may have struggled with their borrowing in the past. Although the interest rates can be higher than average and the credit limits are usually lower, when used responsibly they can be a good way to borrow for the short-term and can even help to gradually improve your credit history. So long as you make at least the minimum repayment each month – although we recommend clearing as much of the balance as possible to keep interest charges at a minimum – and don’t go over your limit, your credit history will slowly begin to recover.
Only borrow what you need
Although this is always important, it’s especially vital to only borrow what you really need if you’ve had problems with credit in the past. This is to make sure you don’t overstretch yourself by borrowing too much and then find you’re unable to repay it at a later stage.
Missing payments can damage your credit history, and if you’re already managing with a shaky credit past, more negative points against you could make it difficult for you to find any provider willing to lend to you in the future. You should only ever borrow if you really need to – if you can hold off for now, it might be better to work on improving your credit history first so you can access better deals at a later date.