How To Get a Loan with Bad Credit

In the thimbl guide to bad credit loans, we’ll explore the following topics:

• Can I get a loan if I have bad credit?
• How to get a loan with bad credit
• The best loans for bad credit
• How to increase your chances of being considered for a loan with bad credit
• Ways to improve your credit score
• Alternatives to bad credit loans
• Credit cards for bad credit

Can I get a loan with bad credit?

A history of bad credit won’t necessarily prevent you from being considered for a loan.
There are a number of direct lenders in the UK who specialise in loans for people with bad credit.

If you do decide to apply for a bad credit loan, you could find that, if successful, you’re offered a higher rate of interest. It’s important to be aware of how this will affect the overall cost of your borrowing. The higher the interest rate, the more the loan will cost.
When searching for any type of loan, bad credit or otherwise, you’ll need to make sure that the repayments are affordable for you without affecting your essential monthly outgoings.

How to get a loan with bad credit

If, after careful research, you think that a bad credit loan could be suitable for you, you can choose to start your search with either a credit broker or apply directly with a lender.

A direct lender can check your eligibility for their product(s) only, which may or may not be the right fit for you. Each time you apply directly with a lender, a creditworthiness assessment will be carried out, which will include a hard search or Open Banking. Making many applications for credit could result in multiple hard searches, and this could damage your credit score.

Many borrowers prefer to use the services of a credit broker, as it could save them time, not to mention the hassle of having to research and compare different lenders. A credit broker will do the hard work for you by assessing your financial situation and needs, before scanning a large selection of lenders for a loan that could be a suitable option.

Loans for people with bad credit

Bad credit loans come in a variety of forms.

• Short-term, personal loan for bad credit
  Short-term, personal bad credit loans are usually available with a range of repayment terms, varying between a couple of months and a number of years.


• Payday loan
  A bad credit payday loan typically comes with a month-long repayment term. This could be ideal for those who need to borrow a sum of money that they know they can afford to pay off in full, plus interest, within a month.


• Guarantor loan
  With a guarantor loan, you’re expected to make the repayments each month, but a guarantor – usually a trusted family member or friend – agrees to step in and make the repayments if you’re unable to, due to an unexpected change in your finances.

What are the best loans for bad credit?

There isn’t really a ‘best’ loan for bad credit, because a bad credit loan that suits one borrower might not be a good fit for another.
The ‘best’ bad credit loan for you will be one that is affordable and fulfils your needs regarding the amount of money and repayment terms available.
When searching for the best bad credit loan for you, you may wish to think about the following pointers.

• Whether the lender is authorised and regulated by the Financial Conduct Authority (FCA)
  You can check to see whether a lender appears on the FCA register by using the FCA Firm Checker tool.


• Annual Percentage Rate (APR)
  The APR is how much the loan will cost you over a year and is displayed as a percentage. The APR includes the interest rate and any standard fees. The higher the APR, the more expensive the loan.


• Range of repayment terms
  A loan with a shorter term will cost less in interest, although your monthly repayments will be higher. A longer term will enable you to spread the cost of borrowing, but you will pay more interest.


• Available loan amounts
  Make sure your chosen lender offers the amount of money that you need to borrow.


• Lender reviews
  The lender’s reviews can tell you a lot about the service they provide. You can usually find customer reviews on sites such as Trustpilot and Feefo.

How to increase your chances of being considered for a loan with bad credit

1. Choose your lender wisely
   If you have bad credit, look for a lender that specialises in bad credit loans.


2. Check the eligibility criteria
   Eligibility criteria will differ from lender to lender. For example, some lenders have an upper age limit restriction on applications, while others do not. Make sure you meet your chosen lender’s criteria before you make a full application.


3. Use a credit broker
   Take the guesswork out of looking for a loan by using a credit broker to search for you instead. With just one application form, a credit broker can present your application to a panel of multiple lenders at the same time.


4. Be mindful of your current spending and repayment habits
   When carrying out a creditworthiness assessment, some lenders – especially those who specialise in bad credit loans - may use Open Banking. Open Banking provides lenders with an insight into your recent financial activity and how you manage your money. This helps the lender understand your current financial situation, rather than relying on your credit history alone.


5. Improve your credit score
   The better your credit score, the greater the chance you could have of being considered for a loan, although please be aware that acceptance can never be guaranteed, regardless of your credit score.

Ways to improve your credit score

1. Pay your bills and any existing credit commitments in full and on time.
2. Register to vote.
3. Check your credit report for errors.
4. Where possible, avoid financial association with somebody who has a low credit score.
5. Do some research into a credit builder credit card.

Alternatives to bad credit loans

• Do you have savings?
  Not everyone is fortunate enough to have savings to fall back on, but if you do, you might wish to make this the first port of call. Using your funds rather than applying for a loan will save you money in the long term, as you won’t be charged interest.


• Speak to friends & family
  Discussing our financial situation with family and friends can be uncomfortable, but it’s worth having a conversation in case a loved one is in a position to help tide you over.


• Look into a credit card
  If you’re unsure whether a bad credit loan is right for you, you might be interested to learn about credit cards for bad credit. When used in conjunction with other credit boosting methods, credit builder credit cards could help you do just that.

The thimbl Credit Builder Credit Card

The thimbl credit card comes with a manageable starting credit limit between £200 and £2,000 and has been designed for people who want to build and improve their credit score.

Here’s how it works.

1. Use your thimbl Credit Builder Credit Card to make a purchase that you can afford to repay.
2. Make at least the minimum repayment amount each month. If you clear your balance in full, you won’t be charged interest.
3. Your repayment history will be shared with the credit reference agencies (CRAs). In time, you could notice an improvement in your credit score.

Check your eligibility for a thimbl credit card in just 90 seconds

You can check your eligibility for a thimbl Credit Builder Credit Card if you:

• Are between the ages of 18 and 70; 
• Are a UK resident with at least 1 year's UK address history;
• Are employed, with a monthly net income of at least £800; 
• Have an active credit account that has been open for a minimum of 12 months; and
• Do not already hold a Zable credit card.

Lendable Ltd is unable to consider applications from anyone who has declared bankruptcy or is on an individual voluntary agreement (IVA).

Zable is a trading style of Lendable Ltd. If you choose to make a full application, a creditworthiness assessment will be carried out by Zable. This will consist of a hard search and a further check powered by Open Banking. A hard search will remain on your credit file for up to 12 months, and multiple hard searches within a short period could have a negative impact on your credit score. Any credit obtained upon successful application will be provided by Lendable Ltd. 

Find out if you’ll be accepted before you apply for your thimbl. Credit Card

• For all credit levels, from poor to excellent
• Checking won’t affect your credit rating
• 48.9% APR Representative (variable)

Check my eligibility

Money worries? Debt concerns? Help is available.

Whatever you’re facing, please know that free, confidential and impartial support is readily available from the following charities and organisations: StepChange, MoneyHelper, Citizens Advice, and National Debtline.