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Bad credit

If you have a less than perfect credit score it can be difficult to borrow money, bad credit loans could enable you borrow.

I want to borrow:

£

Over how long?

Loans displayed from 9 companies with term lengths between a minimum 1 year and maximum 6 years with a maximum 49.9% APR. How our loans calculator works.

How our loans calculator works

Our loans comparison shows how much each loan is likely to cost per month and in total. The amount we show is based on these assumptions:

  • The representative APR is the interest rate you'll be given
  • The loan amount you entered is the exact amount you'll borrow
  • You won't make any late or early repayments
  • You won't fail to make any of your loan repayments
  • You won't repay the loan before the end of the term
  • You won't make any overpayments or underpayments

Our comparison shows how much each loan should cost you, but the amount could be different if the way you repay it varies from the above assumptions. The amount could also be different if the lender offers you a different interest rate to the APR.

Warning: Late repayments can cause you serious money problems. If you fall behind on your mortgage or debts secured against your home, it may be repossessed. For more information see our debt help guides.

uSwitch Limited is a credit broker, not a lender, for consumer credit products. Our services are provided at no cost to you, but we may receive a commission from the companies we refer you to. For some loans a broker fee of up to 12.5% may be added to the cost of the loan.

Our providers

1plus1 Loans
1st Stop
1st Stop Personal Loans
AA
Amigo
Aspire Money
Bamboo Loans
cahoot
Central Trust Ltd
Fluent Loans
George Banco
Guarantormyloan
Hitachi Capital (UK) PLC
HSBC
Likely Loans
M&S Bank
Masthaven Bank Ltd
Monevo
Nationwide
NatWest
Norton Home Loans
Optimum Credit Ltd
Paragon Bank PLC
Post Office
Prestige Finance Limited
RateSetter
Sainsbury's Bank
Santander
Shawbrook Bank Limited
Step One Finance Limited
Suco
Tesco Bank
TFS Loans
Together
TRUSTTWO
UK Credit Limited
United Trust Bank
West One Secured Loans Limited
Zuto

What are bad credit loans?

Bad credit loans are personal loans designed for people with a poor credit score. They are usually unsecured loans. Bad credit loans can be an expensive way to borrow money because the interest rates are often high.

You may have a bad credit score if you:

  • Have never taken out a loan or any credit product before
  • Are not on the electoral register
  • Have missed or defaulted on payments
  • Have a Court County Judgement (CCJ) or Individual Voluntary Arrangement (IVA)
  • Are or have been bankrupt

You can improve your credit score but it takes time. Your credit history dates back 6 years, so recent good behaviour does not automatically wipe out the bad.

If you need money before you’ve had a chance to improve your credit score, you may want to look for loans for people with bad credit.

Bad credit loan lenders may ask you to provide a guarantor. The named guarantor is liable to pay your loan if you cannot.

Some lenders offer secured loans for bad credit. A secured loan is where you offer something valuable, like your car, to the lender, which they’ll take if you cannot repay the loan.

When used responsibly, bad credit loans can help you build or rebuild your credit rating. This will give you more borrowing options in the future.

Loans for poor credit are not the same thing as payday loans.

What’s the difference between payday loans and bad credit loans?

Payday loans are short-term personal loans with extremely high interest rates, for example 1,355%.

Payday loan providers may offer fast loans or instant loans, and some may not even check your credit file.

Payday loan charges are capped overall, meaning you will never pay back more than twice what you initially borrowed.

People with bad credit often apply for payday loans because their loan applications have been rejected by traditional lenders.

But some banks and building societies do offer loans for people with bad credit. These loans are a more long-term solution than payday loans, and their interest rates are lower.

That said, low APR loans for bad credit, do not really exist. The average APR for bad credit loans is around 49%.

To put that in perspective, the best personal loan rates for those with good credit are around 3%.

Is a bank loan for bad credit right for me?

A bad credit loan may be a good choice if you:

  • Have a bad credit score or no credit history
  • Need a loan for a short time
  • Know you will be able to pay it back on time every month
  • Have been rejected for a normal personal loan
  • Are from overseas and UK banks have no information about you

The cheapest loan rates are not usually available for those with bad credit. You’ll most likely be rejected if you apply for low interest personal loans when you have a bad credit score. A rejection could damage your score even further.

If you have never taken out a loan, credit card or mortgage, you will have very little credit history. You have no proof that you can repay money that you owe.

Loan lenders may be unwilling to offer you the best loans because they do not know if you can stick to a payment plan.

How much can you borrow using a loan for bad credit?

Loans for bad credit are usually between £500 and £25,000.

Lenders will look at your credit file before they approve your loan application. They do not see the same credit score you do and have their own scoring system.

A higher credit rating means better rates and more loans available to you.

Bad credit lenders also take into consideration your income, outgoings and existing debts to assess whether you could afford the loan repayments The best loans are usually given to those with higher incomes and lower debts.

How much will a bad credit loan cost you?

The average Annual Percentage Rate (APR) for bad credit loans is around 49%. This is much higher than normal personal loans because the lender most likely thinks there’s a chance you will not repay the money.

The costs of a bad credit loan are usually covered by the APR. It's the amount of interest you have to pay on top of the principal loan repayment and includes any additional fees.

Borrowing money when you have bad credit can be very expensive. When searching for bad credit loans online, be sure to check the APR as it has a huge impact on your monthly repayments.

Some interest rates on personal loans are variable. This means your payments are not fixed and can change from month to month. While the APR may be lower, variable rate loans are unpredictable. If you want the certainty of a fixed amount, a fixed loan may be a better option.

What are the risks with loans for bad credit?

Bad credit loans are among the most expensive ways to borrow money. If you take out a bad credit loan because you’re in financial difficulty you may not be able to pay it back on time. The more you miss payments, the worse your situation will become.

You could face penalties or extra charges if you do not keep up with repayments. A lender could even take out a county court judgement (CCJ) against your name.

You may be forced to file for bankruptcy if there is no way for you to repay the loan.

What are the advantages of a bad credit loan?

The main advantage of bad credit loans is that they are design for those who would not normally be able to borrow money.

You can use a bad credit loan to build up your credit score. To do this, you must make all the payments on time and in full.

If you can afford to, you could initially take out a small amount with a bad credit loan. Once you have proved you can repay it and your score improves, you could borrow more money at a lower rate. Remember, lots of loan applications may make you seem desperate for credit and could affect your credit rating.

How we calculate Rep. Example, Total repayable and Monthly repayments

The calculations on the table are designed as an indicator, and may not be exactly what you end up paying. This is because different suppliers have slightly different ways of calculating these figures. However, they will be very similar to the final amounts, usually within a few pounds of the final total and you will always see the final repayment amounts before signing the credit agreement.