Can I get a secured loan with bad credit?

Yes, you may be able to get a secured loan if you have bad credit, but your options could be limited. Each lender uses their own criteria. Some lenders specialise in lending to those with a less-than-perfect credit history, but they may charge high rates of interest. 

5 min read
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Why choose a secured loan?  

There are different reasons why you might wish to get a secured loan. Common reasons include:  

  • Home improvements and renovations – such as a new kitchen, or even an extension   

  • Debt consolidation - which involves taking out a loan to pay your other debts, so you only need to make one repayment to one lender each month 

Bear in mind that if you consolidate your debts, you may be extending the loan term, meaning you might pay more interest in total.  

How much can I borrow with a secured loan if I have a bad credit score? 

With your home as security, you can usually borrow more with a secured loan than with an unsecured loan, and at a lower rate – even if you have a bad credit score.  

Through Ocean, you may be able to borrow between from £10,000 to £500,000. The exact amount you’re offered will depend on your personal circumstances, such as your affordability, credit history, and how much equity you have in your property. The best deals are usually reserved for those with good credit.   

Equity is the difference between the current market value of your property minus what you owe against it (i.e., your outstanding mortgage balance and any secured loans combined).

Is it easier to get a secured loan with bad credit?

If you're a homeowner, a secured loan (or homeowner loan) can be easier to get than an unsecured loan. This is because a secured loan is tied to your home, which means there’s less risk of the lender not getting their money back. With this extra safety net, lenders may be more willing to lend larger sums, with lower interest rates - even if you have bad credit.   

Remember though, if you fall behind with your secured loan repayments, your home could be put at risk.  

With unsecured loans (such as personal loans), on the other hand, lenders don’t have any security. So, they offset the risk by lending smaller sums, usually with higher interest rates.  

However, this doesn’t mean that lenders will ignore your credit history when you apply for a secured loan. Checking up on your past financial behaviour is still an important part of their eligibility checks.   

If you have a poor credit score, this could mean you’ll face higher interest rates than someone with good credit. So, you may prefer to work on improving your credit score before you apply, to give you the best chance of getting a good deal.  

Discover 7 ways to improve your credit score. 

How can I get a secured loan with bad credit?  

The application process for a secured loan is the same whether you have a perfect credit score or a less-than-ideal one. You’ll start by providing some details about you and your property. Then, the lender will check your eligibility for the loan against their own criteria. They will look at your individual circumstances, including your credit history, house value, and how much equity you have, to help them decide.  

Can you get turned down for a secured loan? 

Having a home to use as security doesn’t automatically mean you’ll be accepted for a loan. It depends on your individual circumstances and the lender’s criteria.  

But, by the same token, if you’ve been turned down before it doesn’t always mean you’ll be turned down again. Your circumstances may have changed since you last applied, so your eligibility may have improved. And you might be applying for a loan with a different lender. 

We suggest you use an eligibility checker to find out the chance of acceptance before you apply. This only involves a soft search, so, it won't affect your credit score. 

Should I get a secured loan with bad credit? 

Even if you know you’ll be approved for a secured loan, it doesn’t necessarily mean you should apply. Only you can decide if it’s the right choice for you. 

What to consider when taking out a secured loan with bad credit

Before you apply, consider your individual circumstances and remember to:  

  • fix any mistakes on your credit report before you apply   

  • only borrow what you can afford to repay   

  • consider the length of time you want to pay it back over (the longer this is, the more interest you may end up paying overall)   

  • check the total cost (represented by the APRC) - this includes the interest rate and other costs such as an arrangement fee, broker fee, and exit fee, for example.

Bear in mind that the cost of a secured loan will depend on factors such as the lender, your individual circumstances, how much you want to borrow and for how long, as well as the market conditions at the time. 

Pros and cons of taking out a secured loan with bad credit 

There are several factors to consider before taking out a secured loan, including: 


  • you could borrow more - than with a credit card or personal loan 
  • lower interest rates – compared to unsecured loans 
  • lower monthly repayments - secured loans typically come with longer repayment terms than unsecured loans. Being able to spread the repayments can make them more affordable each month.  


  • your home is used as security – so it could be at risk if you stop making your loan repayments (in the worst-case scenario) 
  • higher interest rates may apply if you have bad credit – compared to someone with good credit 
  • you may pay more interest overall - the longer your loan term is  

Read on for more information about the advantages and disadvantages of secured loans. 

6 alternatives to secured loans if you have bad credit 

If you’ve had difficulty getting finance in the past, and you don’t want a secured loan, there are alternatives:

1. Savings

If you have savings, it might make sense to use these funds instead of taking out a loan with interest.

2. Credits cards

A ‘bad credit’ credit card could help you rebuild your credit history - if you pay on time, every time. But these cards usually come with a lower limit and a higher interest rate than high-street credit cards. 

3. Bad credit loans

You could consider a bad credit loan, as you’re likely to be accepted - even if you have a poor credit history. You could increase your credit score if you make all your monthly loan payments on time, every time. But again, it’ll probably cost you more interest compared to a loan from a high-street lender.   

4. Balance or money transfer cards

If you want to consolidate your debts and move to a lower interest rate, you could consider either a balance or money transfer card. 

A balance transfer card allows you to move one or more of your credit card balances onto it. A money transfer card, on the other hand, enables you to transfer money straight into your bank account. Then you can use the money to pay off different types of debts, from credit cards to loans. 

5. Remortgaging

You could consider remortgaging if you can get a better interest rate on a different deal. Bear in mind that remortgaging may lead to higher monthly repayments and/or a longer mortgage term. The longer your mortgage is, the more interest you'll pay in total. 

6. Debt advice

If you’re in financial difficulty, applying for more credit is not a good idea. We would suggest you contact your lenders straight away to see if they can help. You could also get free impartial advice from organisations like Citizen’s Advice and StepChange.

Read our helpful guides to learn more about loans.

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