Bad credit loans

Explore options for borrowing with a bad credit score

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How bad credit loans work

Bad credit loans are designed for people with a poor credit score or no credit history. They could also be an option if you’re struggling to get a standard loan.

Loans for bad credit usually have higher interest rates than you’d pay if your credit score was good or excellent. They sometimes also come with other restrictions, such as tighter limits on how much you can borrow and for how long.

That said, they can be helpful if you don’t have other options, and paying them back on time can help build your credit score so you qualify for better products in the future.

How to get a loan with bad credit

There are five key steps you should take to apply for a loan with bad credit:

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Check your credit report for free

You can do this with the three main credit reference agencies – Equifax, Experian and TransUnion. If you find a mistake, contact the credit provider and ask them to correct it. Sorting out any errors could improve your credit score and boost your chances of your loan application being approved.

Work out how much you need to borrow

Only borrow what you need and can comfortably afford to repay. Our loan calculator shows what your repayments might look like based on the length of the loan and interest rate.

Decide which type of loan to apply for

If you’re hoping to borrow a large amount, you may have a better chance of being accepted for a secured loan (see ‘main types of bad credit loan’, below).

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We’ll use a soft credit check to show you which loans you’re most likely to be accepted for without affecting your credit score.

Apply for a loan

If there's a loan that you want to apply for and you’re confident you can make the repayments every month, click 'apply' to be taken through to the lender's site. They'll run a hard credit check (which will leave a mark on your file) and make a final decision on whether to approve your application.

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If you compare bad credit loans with us and don’t qualify, our partner Creditec2 may offer you an alternative such as a line of credit or subscription credit.

Main types of bad credit loan

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Personal loan

An unsecured personal loan for bad credit lets you borrow money at a fixed interest rate. There’s no need to provide an asset as security.

If you have a bad credit score, you’ll probably have to pay a higher interest rate than someone with a good credit score.

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Secured loan

A secured loan lets you borrow money using an asset such as your home as security. This can be a helpful option if you’re a homeowner and have been refused an unsecured personal loan in the past.

Only take out a secured loan if you’re totally sure you can keep up with repayments, as your home could be repossessed if you don’t.

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Guarantor loan

With a guarantor loan, a friend or relative agrees to repay the loan if you can’t.

Sorry – you can’t compare guarantor loans with Compare the Market.

Interest rates for bad credit loans vs standard loans

If you have bad credit, lenders usually charge higher interest rates because they consider you a higher risk.

For example, say you want to borrow £5,000 over three years (36 months). Lenders that offer bad credit personal loans typically offer annual percentage rates (APR) well above standard loan rates – often around 40% or more, depending on your circumstances.

In comparison, the cheapest rate on a standard personal loan is currently about 5.7%.

Example: £5,000 bad credit loan repaid over 36 months

APR

Monthly repayment

Total repaid over 36 months

Total interest paid

40%

£223.71

£8,053.43

£3,053.43

50%

£244.18

£8,790.48

£3,790.48

These figures are for illustration only. Your actual repayments will vary depending on the lender, your credit history, fees and affordability checks.

Borrowing limits on bad credit loans

Generally speaking, the amount you can borrow through a bad credit loan will be less than with a standard loan.

When you apply, the lender will run a hard credit check to take an in-depth look at your credit history. To decide how much you can borrow, they’ll also look at:

  • Your income and everyday spending

  • How much debt you have

  • Why you want the loan

  • Whether you’re securing the loan against an asset.

Use our loan calculator to help you work out how much you might be able to afford to borrow and what your monthly payments could be.

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Charlie Evans

What our expert says...

“Provided you can make the repayments, taking out a loan when you have bad credit can help repair or improve your credit score. But be sure you need the loan and that you can afford the repayments for the entire term.”

Charlie Evans, Personal finance expert

What counts as a bad credit score?

Each of the three main UK credit reference agencies have a different score for what they consider to be poor or low credit (checked in May 2026).

Credit reference agency

Score range

Poor or low score

Experian

0 to 1,250

0 to 640

Equifax

0 to 1,000

0 to 438

TransUnion

0 to 710

0 to 565

Reasons for a bad credit score

Your credit score could be low if you have:

  • Failed to stick to a credit agreement

  • Made late repayments or missed repayments

  • Been declared bankrupt

  • Had a CCJ (Country Court Judgment) registered against you

  • Entered into an Individual Voluntary Arrangement (IVA)

  • Financial links (such as a joint bank account or mortgage) to someone with poor credit

  • Multiple credit applications on your credit record over a short space of time. This can suggest to lenders that you’ve having financial difficulties

  • Never borrowed money before.

5 tips to improve your credit score

Here’s how you can help boost your credit score and increase your likelihood of being approved for a loan.

Correct any errors on your credit report

You can check your credit report for free. If you spot something wrong, ask the lender or credit reference agency – Experian, Equifax or TransUnion – to correct it

Register on the electoral roll

Loan providers use the electoral register to confirm your identity and address. It’s a key element in building your credit score

Keep your credit utilisation rate as low as possible

Try not to spend more than 30% of your total available credit limit

Repay existing debts on time

Always make your monthly repayments on time. Set up a direct debit to reduce the risk of missing payments

Make sure your name appears on bills

If you share a home, get your name on one or more of the utility bills. This can help your credit score, as long as you pay them on time

Getting a bad credit loan if you’re unemployed

If you’re unemployed and have a bad credit score you might be able to find a lender who’s willing to offer you a loan, but you’ll probably pay a very high interest rate.

Our loan eligibility checker gives you an idea of whether you’ll be accepted for a loan before you apply. It uses a soft search, which doesn’t affect your credit score.

Read more on getting a loan with no income.

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Alternatives to bad credit loans

Before applying for a bad credit loan, you might want to consider these options:

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What to think about before applying for a bad credit loan

Applying for a loan is a big decision that shouldn’t be taken lightly, especially if you have other debts. Here are the most important points to consider.

The amount you borrow

The more you borrow, the more you’ll need to pay back. Even with small loans for bad credit, you need to be confident you’ll be able to meet your repayments.

How long you take to repay

This is known as the term. Borrowing over a longer period will normally lower your monthly repayments. But you can end up paying more overall when you include the extra interest.

The interest rate

Lower interest rates are often reserved for longer terms or higher borrowing amounts, and for those with a good credit score.

What you can afford to repay each month

Make a budget and work out what you can reasonably afford to repay.

Additional fees

These could include a late payment penalty and an early repayment charge (ERC) if you want to pay off your loan early.

The info you'll need to apply for a bad credit loan

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Personal details

- Your addresses for the past three years

- Your email address

- Your employer’s details

Details about your finances

- Details of your monthly income and outgoings

- Your bank or building society account details

- Information about any County Court Judgments (CCJs) or bankruptcy

If you’re self-employed...

You’re likely to have to prove a minimum of one year’s income through an accountant’s certificate, SA302 form or HMRC online tax calculation

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Bad credit loan guides

Explore what lenders may look for and ways to improve your borrowing options

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Bad credit car finance
See what options may still be open to you
Small loans
Understand how they work and what you'll need to apply
Loan types
Guarantor loans
Understand how they work and the risks to consider
Applying & eligibility
No credit check loans
Understand the risks and what to try instead
View all loans guides

Personal loan calculator

Estimate monthly repayments and compare loan costs over time

Loan eligibility checker

Check which loans and rates you could be offered before you apply

Car finance calculator

Estimate your payments and see how much you could borrow

FAQs

Can I get a loan with an IVA?

It might be possible to get a loan while you have an Individual Voluntary Arrangement (IVA). But you’ll need to get approval from the insolvency practitioner (IP) supervising the arrangement if you want to borrow more than £500.

An IVA is a legally binding contract between you and your creditors to pay back your debts over an agreed period. Many lenders consider it too risky to lend to someone in an IVA. And lenders who do offer a loan will likely charge high interest rates.

It’s not generally a good idea to take on new debt when you’re in an IVA. Your IP can advise you on how to get your finances back on track.

You can also get free and impartial advice on managing debt from charities such as National Debtline and StepChange.

Can I get a loan with a CCJ?

You might be able to get a loan with a County Court Judgment (CCJ), but your options will likely be limited and interest rates higher.

Lenders see CCJs as a warning sign because they show you’ve struggled to manage debt in the past. And that means you’re less likely to be considered for future borrowing.

But the longer it’s been since the CCJ was issued, the better your chances of approval – especially if you’ve cleared the debt and kept up with the repayments.

Before applying for a loan with a CCJ, check you can comfortably afford the repayments alongside your other outgoings.

Can I get a loan if I’m on benefits?

You might be able to get a loan while on benefits, but you’ll typically be able to borrow less and from fewer lenders. You usually need to be in regular employment, with a stable income, to get a loan from a mainstream lender.

There are specialist lenders and brokers who will count certain benefits as part of your income in a loan application, but you could face higher interest rates. This means it will cost you more to borrow.

Can I get a guaranteed loan for bad credit?

Guaranteed loans don’t exist in the UK, regardless of your credit history. The Financial Conduct Authority (FCA) requires all lenders to perform credit and affordability checks before a loan is approved. This is to make sure that you can afford to repay what you owe.

You can use our loan eligibility checker to see which loans you’re likely to be accepted for, without any impact on your credit score. Acceptance isn’t guaranteed though.

Can I get a business loan with bad credit?

A bad credit score could make it difficult to get a business loan. But these steps could help get your loan application approved:

  • Apply for a smaller loan and you might have a better chance of success

  • Pay off any small loans and credit cards

  • Consider a specialist lender that deals with people who have poor credit

  • Consider a secured or guarantor loan, which offers a lender more security.

What if I get refused a bad credit loan?

If you’ve been refused a bad credit loan, it’s important to find out why. You can then make any necessary changes before applying again.

It’s usually a good idea to wait a while before you apply for another loan. Too many credit applications in a short amount of time can be a red flag to lenders. If you can, take the time to get your finances and credit score in a better shape.

Before you apply for another loan, use our loan eligibility checker to see which loans for bad credit you’re likely to be eligible for.

Why have I been rejected for a loan in the past?

There are several reasons why you may have been rejected for a loan:

  • You have too many loans, maxed-out credit cards and other debts

  • You have a bad credit rating because of a history of missed or late payments

  • You have no credit history because you’ve never borrowed money before

  • You don’t have a steady job with a regular income

  • You don’t earn enough to comfortably afford the loan repayments

  • You don’t own a house or a car to put up as security against a secured loan

  • There are mistakes and inconsistencies on your application form.

Understanding why you were rejected for a loan can help you make the necessary changes to improve your chances of being accepted in the future.

Can I apply for a loan without affecting my credit score?

When you submit a full application for a loan, it will leave a hard search on your credit file. This could have a negative impact on your credit score when you first take out the loan.

But if you manage your loan responsibly and prove you’re a reliable borrower, this could help build your score.

You can check your eligibility for a loan before you make a full application. Our loan eligibility checker will show you which loans you’re most likely to be accepted for, with no negative impact on your credit score.

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Charlie Evans
Reviewed 20 May 2026 by Charlie Evans Personal finance expert

Charlie is a senior commercial leader with close to a decade of experience across the UK’s leading personal-finance and comparison platforms. Before joining Compare the Market as Head of Commercial in 2024, he held senior commercial roles at TotallyMoney and MoneySuperMarket Group.

Methodology

1Based on the % of respondents familiar with Compare the Market reporting they love the brand in the last 12 months vs. other leading PCWs. Source: Savanta BrandVue Financial Services, National Representative Survey of 9,772 respondents (June 2026)​

2Creditec is a UK credit broker that helps customers explore a range of alternative borrowing options through a single application journey. Working with a panel of lending and credit providers, Creditec aims to match customers with products that may be suitable for their circumstances. As part of our partnership, customers who are unsuccessful in obtaining a loan through Compare the Market may be given the option to continue their journey with Creditec, where they can explore other products that may be available to them. Any products shown and any lending decisions are determined by Creditec and its panel of providers.

Compare the Market Limited acts as a credit broker, not a lender. To apply you must be a UK resident and aged 18 or over. Credit is subject to status and eligibility.