Can I get a...

Can I get a loan with bad credit?

1 September, 2020

Your credit rating is based on your credit history. If you’re young then it’s likely that you’ve never had credit before and so your credit history will be empty meaning that your credit score is low.

Lenders look at your credit history and rating as a whole when deciding whether to accept you for a loan or not. So just because your credit score is low, doesn’t mean you will be refused a loan. 

There are options for people with bad credit when choosing a loan that best suits your circumstances however, they typically have higher interest rates and more restrictions than others. This is because lenders see you as more of a risk.

There are some ways that you can avoid the higher interest rates but they come at a greater risk to you. 

Guarantor Loans

This is where someone else (given that they meet the lenders qualifying standards) promises to make your payments if you are unable to. 

Secured Loans

With this type of loan you tie your debt to one of your assets e.g. your home or car so that if you stop making your payments the lender can legally repossess the asset to pay off your debt. 

These types of loans come with lower interest as the lender is taking less risk and the risk lands on you (the borrower) or the guarantor.

In summary, you can still be accepted for some loans if you have bad credit but it will depend on the lender and the interest rates will be much higher, or you will have to get a secured or guarantor loan. So it is best to try and keep your credit rating high so that you can be eligible for the better offers. Making sure you make your repayments on time and keep your credit utilisation below 30% is a good way to help build your credit rating back up.

To check if you are eligible for a loan, please click here.

Editorial Disclaimer: This article was updated 18.10.2021.

Opinions expressed here are the author's alone, and not those of any bank, credit card issuer or any other company. This article has not been reviewed, approved or otherwise endorsed by any of these organisations.

NB: The information on this page does not constitute financial advice, please do your own research to ensure that the product / service is right for your individual circumstances.

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