Loans Guides

Bad credit loans

Where can I get a bad credit loan, and how do I find the best deal? (Updated 17/7/09)

If you need a bad credit loan, you should shop around to find one with a low interest rate that might help to improve your credit history. Your options will be a bit limited, but you can find great deals with a bit of research

In this guide we show you how to get a bad credit loan and offer top tips on how to get the best deal.

You might also like to check out our guide to repairing your credit rating

Alliance Leicester Unsecured Loan

Company	% Typical APR
	Borrow between £7,500 and £15,000 with Alliance & Leicester, 8.0% APR typical.

Where can I find a bad credit loan?

Whether companies are interested in lending to you will depend on how bad your credit rating is. You might find that some lenders are sympathetic if you speak to them in person, but most will base their decision on the results of a credit check which will give them a simple yes or no.

If you haven't done so already, you should definitely check your credit rating. Not only will checking your credit report reveal how you look to prospective lenders, it also gives you the opportunity to correct any information that is wrong and give yourself the best chance of being approved.

Check your credit report with CreditExpert

Company	Notes
	Sign up for your FREE Experian credit report with a free 30 day trial of the CreditExpert service.

When looking for the best bad credit loan, don’t stop at the usual high street banks and building societies – many online lenders specialise in bad credit loans and secured loans. Watch out for companies charging sky-high interest rates though. Find out how competitive a bad credit loan is by comparing it with similar loans from other lenders.

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Should I consider a secured loan?

If you have bad credit, it’s worth trying to get an unsecured personal loan. However, a series of rejected loan applications may reflect badly on you and make your credit rating even worse. If you’re a homeowner, your best bet may be a secured loan.

You should only take out a secured loan if there’s no alternative, especially if you’re not particularly good with money. The loan will be secured on your house, which means that the lender can take possession of your home if you can’t repay it. If you must sign up for a secured loan, keep your repayments to the absolute minimum by finding a low APR and borrowing as little as possible.

Compare unsecured loans

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How do I choose a bad credit loan?

The best thing to do is shop around and do plenty of research, as your repayments can add up to a small fortune. Try to find the lowest APR and a lender that will be sympathetic if your circumstances change. Before signing anything, ask your lender what will happen if you default on your payments – will you be able to arrange a new repayment scheme? Will you have to pay to do this? What happens if you can afford to repay your bad credit loan early – is there a fee for doing this?

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Top tips on getting a bad credit loan

Follow our top tips to get the best deal on a bad credit loan:

Improve your credit rating – If you are struggling to find a lender that will lend to you, try everything you can to improve your credit rating. A good start would be to follow our top 10 tips to fix your credit rating.

Don’t borrow more than you need – You may increase the chances of getting approved by reducing your loan amount, and while it may be tempting to add a little extra to the loan amount to treat yourself, don’t do it. Borrowing more will cost you even more in interest in the long run, and you’ll likely be in debt for longer, so only borrow what’s necessary.

Consider a secured loan – If you have a poor credit history, you are likely to have more chance of being approved for a secured loan than an unsecured one. Consider this option carefully though as there is the risk that if you can’t meet your repayments you may lose your home.

Apply selectively – Don’t apply for lots of bad credit loans at once as this could seriously damage your credit rating even further. Select the loans you apply for carefully, and spread out your applications over some time. Try and find out a company’s lending criteria before you apply, to see whether you match it.