Loans for Bad Credit

If you’ve had credit problems in the past, you might be concerned that this could prevent you from applying for credit in the future. Perhaps you’ve never applied for credit before, meaning there’s little to show on your credit report. This is known as having a ‘thin’ credit file. While having a thin credit file is different from having bad credit, it can make it difficult for lenders to assess your creditworthiness when you apply for a loan.

At Little Loans, we understand that while you may have had problems in the past, your financial situation could now have improved. If you’re confident you could make monthly repayments comfortably without this affecting your essential outgoings, such as your rent or mortgage, utilities, and food, Little Loans could help you search for a bad credit loan.

It’s always a good idea to do your research thoroughly when considering any credit product, and you may well have some questions about applying when you have a thin file or a bad credit score. We’ve put together some information you might find helpful.

Is it possible to be approved for a loan with bad credit?

While a poor credit history can make it difficult to be accepted for credit by a mainstream lender, such as a high street bank, there are providers that specialise in lending to people who have less-than-perfect credit history.

Bad credit lenders understand that having had credit problems in the past doesn’t necessarily mean you cannot afford to comfortably manage loan repayments in the present.

However, if you are accepted for a bad credit loan you could be offered a more manageable amount at a higher rate of interest than a standard loan.

Who are bad credit loans suitable for?

Bad credit loans could be an option for people who have a poor credit rating or no credit history at all. This type of loan is usually for a smaller amount and for people who need money in the short term to cover an unexpected bill or an emergency.

What if I do not have any previous credit history?

Having very little borrowing history means that it’s difficult for lenders to judge how much risk they will take by lending to you. In these circumstances, a bad credit loan could be one of the options you might choose to consider.

Am I eligible to apply for a bad credit loan?

To apply for a bad credit loan, you need to:

• Be over the age of 18;
• Be a UK resident;
• Have a UK-registered bank account with a valid debit card; and
• Have a source of regular income paid directly into your UK bank account.

Each time you apply for a loan directly with a lender, the lender will conduct a full search of your credit file; this is known as a hard credit check. Too many hard searches in a short space of time can have a negative impact on your credit score. With this in mind, it’s a good idea to check your eligibility before you apply.

Our Eligibility Checker can give you an idea of how likely you are to be accepted for a loan without affecting your credit score. If you decide to make a full application, your lender will conduct a hard credit search as part of the application process.

How much can I borrow?

The amount you can borrow depends on your circumstances. We search for loans from £100 to £10,000; however, the lender will consider how much you can afford to repay each month as part of their decision-making process. You will need to make sure that you can afford the monthly repayments for the amount you apply to borrow.

What are the repayment terms?

How long you have to pay back your loan depends on how much you are approved to borrow. Little Loans can search for loans from £100 up to £10,000, with repayment terms ranging from 3 to 60 months, depending on the loan amount. These are shown in the table below:

How quickly can I receive the money?

If your loan application is successful, the money could be sent to your bank the same day it is approved. However, the time it takes for the money to appear as available in your bank account depends on your bank’s processes, such as if they accept Faster Payments.

What can I use the money for?

Many people apply for bad credit loans when they need money in an emergency – for example, to repair a broken boiler or to cover the cost of a vet’s bill. You should only borrow what you need; you should also make sure you can afford to repay your loan every month without this affecting any other financial commitments you have, such as household bills and rent or mortgage payments.

Do I need a guarantor if I have very bad credit history?

A guarantor is someone who has a good credit score and agrees to make your loan repayments if you cannot. A guarantor loan could be one option to consider if you have very bad credit history. A small number of the lenders on our panel offer guarantor loans; however, you should be confident that you can comfortably afford your monthly repayments before deciding to apply for any type of loan.

Will having a bad credit loan affect my credit score?

Any form of borrowing will affect your credit score. Whether this is a positive or a negative effect depends on how you manage your credit account(s).

Many things can affect your credit score but how you manage your borrowing has a big impact. If you make your repayments on time each month every month, repaying the full amount by the final due date, your credit score could improve. You will need to manage any other credit accounts in the same responsible way, however. If you make a repayment late, or miss a payment altogether, this could harm your credit score.

Making multiple loan applications over a short period of time can also impact your credit score. The Little Loans Eligibility Checker shows you whether you are a good match for our lenders’ criteria before you apply and doesn’t impact your credit rating.

What will happen if I can no longer make my repayments?

If you have taken out a loan and are worried that you are unable to make your next repayment, the best thing to do is to contact your lender at the earliest opportunity. They will want to help you manage your repayments and get your account back on track.

If you feel that you are having difficulties managing your finances, you can find free, independent advice and support at Citizens Advice, National Debtline or at MoneyHelper.

Not sure where to start? Try StepChange’s Money Health Check to find out if debt advice could help you.