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Bad Credit Loans

Bad Credit Loans

How much do you need?

Bad credit loans

If you have been turned down for a loan or found it difficult to get a credit card or a mobile phone contract, you probably have a poor credit history. If you have a low credit score, taking out a personal loan can be a challenge. Credit options are limited, and most mainstream providers will be unwilling to help. If you have been refused finance in the past because of a problem with your credit history, a bad credit loan could be a solution worth considering.

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What is a bad credit loan?

A bad credit loan is basically a credit product designed for people with an adverse credit history. Specialist lenders tend to provide loans for people with bad credit as they have different ways of assessing credit risk. A history of poor credit activity doesn’t always mean people are unable or unlikely to pay a loan back, but there is a higher chance it could happen.

Unfortunately, this means that the rate of interest for bad credit loans is usually higher.

Lenders that specialise in bad credit finance will often let you borrow smaller amounts of money over shorter periods, so you could borrow as little as £100 over a few weeks if needed.

This means you can choose to only borrow what you need and keep your payments down as the interest charged is for a short period of time.

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What is a low credit score?

Every time you make a purchase, pay a bill or apply for finance, your actions are recorded by the 3 main Credit Bureaus. Experian, Callcredit and Equifax.

These are companies are used by credit providers to give them an indication of an individual’s ‘credit worthiness’.

Each Bureau has a different scoring system, but what they all have in common is they give each of us a 3 digit numeric score that tells lenders how much risk we present.

Lenders can then use this information to decide if they want to lend money - or not.

Credit Score Scale

Average Score in the UK

Maximum Score

Callcredit – Noddle

Credit Score Scale
  • Very poor:
  • Poor:
  • Fair:
  • Good:
  • Excellent:
  •  1
  •  2
  •  3
  •  4
  •  5
Average Score in the UK

611

Maximum Score

710

Equifax – ClearScore

Credit Score Scale
  • Very poor:
  • Poor:
  • Fair:
  • Good:
  • Excellent:
  •  0-279
  •  280-379
  •  380-419
  •  420-465
  •  466-700
Average Score in the UK

380

Maximum Score

700

Experian – CreditExpert

Credit Score Scale
  • Very poor:
  • Poor:
  • Fair:
  • Good:
  • Excellent:
  •  0-560
  •  561-720
  •  721-880
  •  881-960
  •  961-999
Average Score in the UK

Mid 700s

Maximum Score

999

A low credit score can be caused due to one or more of the following reasons:

  • 1

    Non-existent/limited use of credit

  • 2

    Late repayments

  • 3

    Going over an overdraft limit

  • 4

    Missing payments

  • 5

    Being declared bankrupt

  • 6

    Having a County Court Judgement (CCJ) made against you

  • 7

    Entering an Individual Voluntary Arrangement (IVA)

If you don’t know your credit score, you can easily find the information online for free, although be aware of free trials that charge you a recurring monthly fee after the trial finishes.

Sometimes mistakes are made by credit bureaus. If you check your credit file and see some unusual or incorrect entries – speak to them and ask them to remove the offending entries.

Doing so should help you improve your credit score and make things easier in the future.

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Why is it difficult to get a loan with a bad credit score?

When you apply for a loan, you are asking somebody to lend you a large sum of money that you promise to pay back. Lenders want to make sure they get their money back otherwise it can be very costly.

Credit scores were designed to help lenders make decisions based on your historical actions. If you have taken out credit in the past and always paid back the money, in full, without missing a payment, there is a strong likelihood you will be able to do so again.

If you have had problems in the past paying back your credit obligations, these will show up on your credit file and lower your credit score.

A bad credit score is a warning for lenders.

If they feel your credit score and credit history presents a risk, there is a good chance your loan application will be not be approved. If you do receive a loan offer, the lender will almost certainly charge a higher rate of interest.

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How much can I borrow?

Depending on your personal circumstances, you may be eligible to borrow up to £25,000 if you have bad credit, but this type of loan will often be secured against a property.

Most bad credit loans range from £100 - £5000 but many providers will only offer smaller loan amounts for first-time customers, often a maximum of £500. This is because lenders will typically want to build up a history of repayments before they feel confident lending larger amounts.

Many lenders are now able to assess your bank account activity through open banking, which means they have a much more detailed view of your spending habits. This can be a really good way to demonstrate your current financial management if you are being hindered by problems in the past.

Advantages of a bad credit loan

  • 1

    Access to finance for those with a less than perfect credit record

  • 2

    Quick approval

  • 3

    Fast access to funds

  • 4

    A starting point to rebuild your credit

  • 5

    You are protected by the FCA price caps

  • 6

    A flexible solution that allows you to borrow what you need, over a period that ensures repayments are affordable

Disadvantages of a bad credit loan

  • 1

    The rate of interest charged on your loan will be higher than mainstream finance solutions

  • 2

    You may not receive a loan offer to match your application (you may be offered a smaller amount)

  • 3

    You can get trapped in a cycle of debt if you don’t pay your loans on time

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Why choose iLoans for my bad credit loan?

We are an FCA authorised credit broker and, as members of the ICO, you know that your personal data is secure. Our service is free of charge and our fast online application form means you can receive a loan offer from one of our specialist lenders in a few minutes.

When you make a bad credit loan application through our website, your application is assessed by our lenders in real time and our process won’t impact your credit file.

This means you can quickly and safely see what your options are, without causing further damage.

Applying for a bad credit loan should be as simple and straightforward as any other type of personal finance application. We are here to make sure you only deal with responsible, regulated credit providers we have personally approved.

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