If you have a poor credit history and are in need of a loan, then there might be a way to do it - just make sure to weigh up all of your options first, and avoid taking out a payday loan.
There are several loans and credit cards on the market, and many nowadays cater to all kind of circumstances and situations.
Even if you have one or two negative marks on your credit history it can be enough to stop you getting access to many of the best deals on the market, so bear in mind that any loan you get will not be competitive against the best rates on the market.
Getting a loan with poor credit is certainly more difficult to do than if you had a perfect credit history, but it isn't impossible and there are ways to make it possible.
There are some things you can do to improve your credit history as well (see 'Improving your credit history to get a loan' below) and enhance your chances of being approved for a credit card or loan.
If you have a poor credit history then there are four main options for taking out a loan, that do not involve using a payday lender.
Unsecured loans are some of the cheapest lending options available, but they are mostly designed for people with a good credit rating. The unsecured loans market is highly competitive and many banks, and other loan providers, will try to entice new customers with attractive rates.
When doing an online comparison have a look for 'bad credit' loans as some providers specialise in applications from people with less than perfect credit histories.
Unsecured loans usually allow you to borrow quantities of around £1,000 to £5,000, and are not really made for smaller amounts. Usually you get the money in one go and you have to start paying it back monthly over a few years, so you should have a plan in place for how to pay it back.
If you have a poor credit history, then a secured loan provider is more likely to overlook it than an unsecured loan. A secured loan is secured against property, so the provider can mitigate the risk of your poor credit history by having your home or car as insurance if you fail to pay it back.
As a result, there's more of a risk for you. If you fail to pay you could lose your home. Some secured loan providers will allow you to use your car, but the rates on these loans are generally higher than the leading rates on secured loans.
Like unsecured loans, secured loans are for large amounts, rather than small sums of cash. You can even get much larger amounts of money, in the tens of thousands, with a secured loan, but the rates are usually worse than secured loans.
Credit unions are perhaps one of the safest borrowing options available if you have a poor credit history. The only drawback is that they usually only lend to members who have been saving money with the credit union for at least a few months.
Look for your local credit union and consider joining and setting up an account to save into. Even if you need a loan quickly, joining a credit union can prove to be helpful in future especially if you have a poor credit history.
Credit unions are often more forgiving than high street banks and still offer rates that can compete with the leading deals on the market.
Bank overdrafts can be very expensive, but if you have a long relationship with your current account provider, you might be able to ask for a short term option to borrow for free or for a small charge for up to a month or so using your overdraft facility.
It's worth asking if you need cash at short notice and have a poor credit history.
Credit cards are generally more flexible if you have a poor credit history. Lenders will limit the amount you can borrow depending on their terms and how poor your credit history is.
There are several bad-credit credit-cards on the market and they are tailored for people with a poor credit history. That doesn't mean you are guaranteed to be approved, but your chances are probably better than if you were looking for an unsecured loan for example.
The bad credit credit cards usually come with a far higher APR than usual, and a lower spending limit to reduce their risk.
Bad credit credit cards give you access to credit and can help improve your credit file.
One of the first things you should do before applying for a loan when you have a poor credit history is to take steps to improve your credit score.
While it may seem counter-intuitive, getting a credit card or loan and paying it back on time every month will improve your credit score. That's because your credit history is a record of all of your interactions with credit products.
So for example if you apply for several credit cards, it will show up on your credit report and could indicate that you are desperate for credit, and therefore lower your score. If you regularly pay your debts on time and in full, then it shows that you are reliable and could improve your score.
There are other simple ways to improve your credit history, such as registering on the electoral roll. This lowers your risk of fraud in the eyes of lenders, and should be the first thing you do before applying for any credit.
You can also consider putting your name on some of the household utility bills.
Your phone, gas and electric bills contribute to your credit score if you have a yearly contract. Simply paying them every month improves your trustworthiness and your credit score.
Payday loans are extremely expensive and come with risky terms and conditions that could leave you in far more debt than you intended. Even if you have a poor credit history and you're struggling to find a loan, you should look at all of the above options first and avoid a payday loan altogether.
If you fail to pay your payday loan on time, the interest rate, which is already multiple times more expensive than the average loan, compounds and you will end up owing far more.
It can add up quickly within a few days, and there are charges for failing to keep up and could spiral out of control.