Loans for bad credit
Finding a loan can be difficult if you have a bad credit history. Many lenders see missed payments or past financial problems and may be unwilling to lend.
At Vanquis, we understand know that situations can change. We’ve partnered with ClearScore to support customers who might find it hard to get credit elsewhere.
If you’re looking for a loan but you have bad or inconsistent credit, we may be able to help you use ClearScore to get a loan that’s right for you.
Representative 48.7% APR
A poor credit score can limit your choices when applying for a loan. ‘Bad credit’ is a term used to describe a low or adverse credit score. This can happen due to late or missed payments, financial problems, or having little to no credit history.
People with bad credit may struggle to borrow money. If they do get credit, it often has higher interest rates. This is because lenders use your credit history to help decide whether to lend and on what terms.
ClearScore can help you find personal loans:
- From £1,000 to £25,000
- Over 1 to 5 years
- No impact to your credit score
- Personalised offers tailored to your needs
- Know what you'll repay each month and over what term, upfront
Representative 48.7% APR
*Vanquis Bank acts as a credit broker, not a lender, introducing customers to our partner ClearScore. ClearScore acts as a credit broker and not as a lender. If you take out a loan, Vanquis Bank and ClearScore receive a commission payment from your lender. If you’d like further information about the commission Vanquis Bank or ClearScore receive as a result of your loan, please contact us. We will not charge you a fee for our services. Loans can only be offered to customers aged 18 or over. Credit is subject to status. Terms and conditions apply.
What is a bad credit loan?
You may have bad credit if you’ve struggled with credit in the past or if you have little or no credit history. When lenders know little about your borrowing habits, they may view you as a higher risk. This can make it harder for you to get mainstream credit.
In reality, there’s no such thing as a ‘bad credit loan’. This term is often used to describe loans designed for people who’ve had credit problems in the past.
Bad credit often means more risk for lenders. So, loans for those with bad credit may have lower borrowing limits, higher interest rates, and stricter eligibility checks.
Some lenders, including specialist providers, may consider applications from those with poor credit. Each lender uses their own affordability checks and lending criteria when assessing applications.
Before applying for any loan, it’s a good idea to check your credit score with the main credit reference agencies. This can help you spot any mistakes that may be unfairly impacting your ability to borrow.
What can affect your credit score?
There are several situations that may affect your access to loans, including:
- Late or missed payments on existing credit
- Defaulting on loans or receiving a charge off (when a lender writes off a debt they don’t expect to be repaid)
- Being issued with a County Court Judgment (CCJ)
- Declaring bankruptcy
- Entering into an Individual Voluntary Arrangement (IVA)
- Home repossession
- Having no credit history
If you aren’t eligible for a loan right now, there are many steps you can take to improve your credit score over time.
Secured vs unsecured loans
Personal loans usually fall into one of two categories: secured or unsecured.
A secured loan requires you to use an asset as security for the loan. This asset is known as collateral and is usually worth a similar amount to the money you’re borrowing.
Unsecured loans don’t require any collateral, so you don’t need to put your assets at risk. But it’s important to note that if you delay the repayments on a personal loan, it can damage your credit score. The lender can also take action against you to collect the outstanding debt, interest, and fees. These loans are commonly used for things like home improvements, covering unexpected expenses, or consolidating existing debts.
Our loans expert says…
“Having a poor credit score doesn’t mean you have no options. Many lenders look at more than just your credit history, and there are practical steps you can take to improve your score over time. This includes making repayments on time and keeping balances low. You can still apply for a loan, even if your credit score isn’t perfect. There are options available that can suit your situation.”
Chloe Hewson, Strategic Partnerships Manager at Vanquis.
Who can apply for a bad credit loan?
When you apply for a loan, there are some limitations to keep in mind, such as:
- Age considerations
- Employment status
- Proof of income
- Credit history
- Residence and permanent address status
- What the loan is for (such as debt consolidation, home improvements, car, holiday)
If you have bad credit, your options may be limited and the rates available to you may be higher. In some cases, a lender may not consider you eligible when reviewing your application. However, there are certain lenders who may still lend to you.
If you’ve faced challenges before, understanding adverse credit history can help you see how past issues impact your choices now. There are also practical steps you can take to move forward. Our guide on how to improve your credit score outlines ways to help strengthen your score over time.
How does applying for a loan impact your credit score?
When you apply for a loan, credit searches are recorded on your credit file. But not all searches affect your credit score. There are two types of credit checks: soft searches and hard searches.
Soft searches are usually carried out first as part of an eligibility check. They allow lenders to assess whether you’re likely to be accepted before you make a full application. While soft searches are recorded on your credit file, they aren’t visible to other lenders and won’t affect your credit score. This means you can check your eligibility without risking harm to your credit rating.
If you choose to continue with a full application, the lender will then carry out a hard search. This type of search is visible to other lenders and will stay on your credit file. A hard search can impact your credit score, regardless of whether your application is accepted or declined.
Submitting multiple full loan applications at once can harm your credit score because each application leaves a hard search on your credit file. Checking your eligibility first using soft searches helps you compare options without affecting your credit rating.
What are the alternatives to bad credit loans?
Although a poor credit score can limit your options when trying to borrow money, there are alternatives available. If a loan isn’t right for you, a credit builder credit card could be an option.
Often called credit cards for bad credit, these are for people with low credit scores or limited credit history. They often have lower credit limits and higher interest rates.
Making at least the minimum payment on time can help improve your credit score. But only paying the minimum means you’ll pay more interest overall and take longer to clear the balance. The more you can repay each month, the less you’ll need to pay in interest.
As with all financial agreements, you should consider your individual circumstances first.
Frequently Asked Questions
Will applying for a ‘bad credit loan’ affect my credit rating?
Eligibility checks won’t affect your credit score, as these are ‘soft’ searches. However, if you go on to make a full application, a ‘hard’ credit check will be carried out. Hard checks are recorded on your credit file, and too many in a short time can affect your score.
Failing to keep up with loan repayments will also have a negative impact. So, it’s important to borrow responsibly.
How can I check if I have bad credit?
It makes sense to check your credit score before you apply for a loan or credit card. The simplest way to do this is to check your credit report. There are three main credit reference agencies (CRAs) in the UK – Equifax, Experian and TransUnion. You should check the details on your report with .
Can I apply for a bad credit loan if I’m self-employed?
Yes, you can apply for a bad credit loan if you’re self-employed. Lenders will usually want to see that you have a regular, reliable income, even if it doesn’t come from an employer. This could include recent bank statements showing consistent income.
Each lender has their own criteria, so requirements can vary. Showing a regular income and the ability to afford repayments could improve your chances of approval.
How much can I borrow with a bad credit score?
The exact amount will depend on several factors, such as your income, expenses, and current debts, plus how affordable the repayments are for you and your overall finances.
Are there any hidden charges or fees?
Checking your eligibility with ClearScore is free and won’t involve any charges. If you decide to take out a loan, any fees or costs will depend on the lender and the specific offer, and these will be clearly shown upfront before you proceed.
Always review the full terms carefully and make sure you can manage the repayments. Missed payments can increase the total cost of borrowing and may affect your credit score. Missed payments may also impact your ability to obtain credit in the future.
How quickly can I access the funds?
This depends on the lender and the type of loan. Some lenders can transfer funds within a few hours, while others may take a few days or, in some cases, longer. The exact timing will vary based on the lender’s process and any extra checks required.
When you check your eligibility with ClearScore, each offer will show when you should receive the funds. This allows you to choose an option that suits your needs.
Do I need a guarantor for a loan?
Not always. Many loans are available without a guarantor. When you apply for credit, lenders look at your credit report to assess how reliably you’ve managed borrowing in the past. If your borrowing history and credit score is strong, you’re more likely to be approved on your own.
If you have a limited borrowing history and/or a low credit score, some lenders may ask you for a guarantor. This is usually a trusted friend or family member (not your partner or spouse) who will make payments if you can’t.
Borrowing without a guarantor means:
- You’re fully responsible for the loan
- No one else’s credit history is affected
- You may see a wider range of loan options
When you use ClearScore to explore the loans available to you, you can see whether you need a guarantor before applying.
Can I pay off the loan early?
In many cases, it’s possible to overpay or repay a loan early, which could reduce the amount of interest you pay. However, this depends on your lender, the type of loan you’ve taken out, and the terms of your agreement.
Some lenders may charge early repayment fees or apply other conditions, so it’s important to check your loan terms. Contact your lender directly to understand your options and any potential costs before making an early repayment.
What is a hardship loan?
A hardship loan is emergency financial help from the Jobcentre for customers who can’t get Universal Credit. This might be due to penalties or issues like suspected fraud. They aim to help individuals with essential living costs. The government manages these payments, and they are not commercial loans. You won’t be able to use ClearScore to find hardship loans.
How can I refinance a car loan with bad credit?
If you’re looking to refinance a car loan with bad credit, try speaking to several brokers and lenders, as criteria and decisions can vary. Using different brokers increases your chances of finding a lender who can offer a deal that fits your needs.
What are you looking for?
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I want to understand my options if I have no credit history.
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