Other loans may be available in the UK loans market that are not included in this service.

Compare best bad credit loans

The best loans for bad credit in our table below are listed by Annual Percentage Rate (APR), from lowest to highest, based on the lender’s representative example. To see each lender’s full representative example use “learn more”. If lenders offer the same representative APR, we’ve ordered the loans by the available loan amounts and terms.

Swipe to the left

Representative APR	Loan Amount	Loan Term
25.8%	£2,000 to £10,000	1 to 5 years	Check Eligibility
32.5%	£1,000 to £25,000	1 to 5 years	Check Eligibility
34.9%	£3,000 to £20,000	3 to 10 years	Check Eligibility
39.9%	£500 to £5,000	1 to 3 years	Check Eligibility
49.7%	£2,000 to £15,000	1 to 5 years	Check Eligibility
49.9%	£1,000 to £5,000	1 to 3 years	Check Eligibility
52.3%	£1,000 to £5,000	1 to 2 years	Check Eligibility

Late repayments can cause you serious money problems. Consolidating multiple debts into one loan can extend the term of your borrowing and increase your cost of borrowing.

Important information: APR is checked weekly with data supplied by the independent financial information service Defaqto. We aim to provide accurate information but prices, terms and conditions of products and offers can change, so double-check first. Loan rates can be dependent on your personal circumstances and specific loan requirements.

Sam Bromley, Lead Writer and Loans Expert at NerdWallet

What our Nerds say…

“You should only borrow what you need and pay it back as quickly as possible, based on what you can comfortably afford to repay each month. Before applying for a loan, it’s important you consider whether you could keep making repayments if an unexpectedly high bill lands on your doorstep or you lose your job, for example.”

What to consider before applying for a bad credit loan

Bad credit loan providers don’t always refer to their products as loans for bad credit, but bad credit lenders often share features to look out for, such as:

advertising loans with high interest rates
saying you can apply even if you’ve struggled with credit in the past
claiming that your credit history or score won’t be the most important factor when deciding on your application

Loans for people with bad credit usually come with higher interest rates. You’ll also have a more limited choice of loans than someone with a better credit score, so it’s important to compare bad credit loans to find the most suitable one for your circumstances. It’s also possible that after comparing loans, you decide a bad credit loan isn’t the right option for you after all.

You can find out what loan deals you’re likely to qualify for, and the loan rate you’re likely to receive, by checking your eligibility using a loan comparison service. To get a personalised quote, you’ll need to enter details such as your income and employment status. The interest rate you receive will depend on your financial situation, your credit history, how much you borrow and how long you choose to repay the loan.If you’re not sure whether you have a good or a bad credit score, you can check your credit score for free before applying for a loan. Your credit score gives you an idea of how a lender may view your application. Checking it can help you apply for credit that you’re confident of getting, as multiple credit applications over a short time can damage your credit score.

What is a representative example?

The figures in our table below show the cheapest bad credit loans based on the lenders’ representative APR examples. To help you see how expensive a loan is, lenders will display the APR, which tells you the total cost of a loan over one year, including interest charges and fees. You should consider this, as well as other key elements, to help you compare loans for bad credit and decide whether a particular loan is right for you.

The advertised APR is known as the representative APR, and this is the rate that at least 51% of applicants will receive. Your personal APR could be higher, lower or the same as this rate.

A representative example illustrates how much it will cost to borrow a certain amount over a specific term, it shows:

An example borrowing amount, such as £5,000.
An example loan term, for example, 60 months.
The annual interest rate and whether it’s fixed or variable.
A monthly repayment amount and the total repayable over the loan term.

What does NerdWallet’s bad credit loan star rating mean?

We regularly check the loans for bad credit market, evaluating and reviewing a number of the UK’s bad credit lenders. We rate their loans based on 20 of the features that customers have told us are most important. These include:

how easy it is to apply for a loan
how quickly you could get the money
the flexibility it offers around repayments
the lender’s customer support

We regularly check if a product or lender has changed any of these features, and we’ll update its star rating as needed. You can use the star rating when comparing personal loans for bad credit, helping you to work out which lenders score well for a range of product features.

However, our star ratings don’t reflect how much it costs to borrow money, because a rating doesn’t take the APR offered by the lender into account. Some loans for bad credit can come with very high interest rates. Always check and compare a lender’s rates against others on the market when considering a bad credit loan.

What is a bad credit loan?

Bad credit loans are designed for people with a bad credit score, which could be caused by past money troubles or a limited credit history. Because people with bad credit are viewed as a higher risk by lenders, they can find it more difficult to access loans and other types of credit. This is where specialist products such as bad credit loans could help.

Bad credit loans often have higher interest rates than standard personal loans, as well as lower maximum loan amounts and terms. It’s important that you only borrow the amount you need, but you may find you have to round up to the nearest £50 with many lenders, for example if you need to borrow £4,980 you may need to apply for a £5,000 loan for bad credit or if you need to borrow £9,980 you may need to apply for a £10,000 loan for bad credit.

You can use bad credit loans for many different reasons, such as car repairs, emergency expenses, or to consolidate your debts into one single repayment. Debt consolidation is likely to make the loan more expensive in the long term, but it can sometimes make the monthly repayments easier and some find managing one payment, instead of several, easier to keep track of.

Some people take out a bad credit loan, or a credit builder loan, to try to improve their credit score to show they can manage debt responsibly. But, if you do this, you need to be certain you can afford to repay the loan in full and on time.

» MORE: What credit score do you need for a loan?

There are various lenders that will consider offering a personal loan to people with bad credit histories. Personal loans are unsecured and will often come with higher interest rates than loans that offer some form of security. To qualify for an unsecured loan, you will have to meet other eligibility criteria, such as having a steady reliable income, and be able to afford the repayments.

Although secured loan providers tend to offer larger sums of money over a long period of time, they are often less strict about borrowers’ credit ratings as the loan is secured against a property or other high-value asset, such as a car. If the borrower fails to repay, the lender has the option to force the sale of the property or goods to get back the money they’re owed, so there is less risk to the lender. This means interest rates can be lower than on an unsecured loan.

For borrowers, however, there is a risk that you could lose your home, so it’s vital that you are confident you can meet the repayment responsibilities before committing to a secured loan with bad credit.

A guarantor loan is when your application is backed by another person (usually a friend or family member). If you have a close family member or friend who is financially stable and has a good credit score, they can opt to act as a guarantor for your loan.

Although you are the borrower, your guarantor agrees to cover the cost of the repayments if you are unable to. Both credit files would be negatively affected if the loan is not repaid on time.

Rather than being a type of loan itself, this is a description of what you might use a loan for. By merging different loans into a single loan, you can simplify your repayments with a debt consolidation loan. These loans come with a single level of interest from one lender, as opposed to maintaining multiple rates from multiple lenders on different debts.

However, bear in mind that consolidating your debts may mean you pay more in interest overall. Debt consolidation loans can be secured or unsecured.

Short term loans are often advertised to people with low credit. Whereas longer-term loans typically have a minimum repayment period of 12 months, you can usually repay a short term loan over between one and 12 months. The available loan size is usually smaller too.

You might consider a short term loan if you need to cover an unexpected or emergency expense, but keep in mind that they can be a very expensive option.

A home improvement loan for bad credit isn’t necessarily a type of loan, rather it’s a bad credit loan for a specific purpose. You’ll usually need to tell the lender what you’re planning on using your loan for.

Before approaching a bad credit lender for a home improvement loan, you’ll need to work out how much your planned renovations will cost. You may also want to consider alternative options for funding.

Emergency loans for bad credit may be an option if you need money urgently, for a broken boiler for example. These may offer smaller maximum loan sizes and shorter loan terms than regular bad credit loans.

But it’s important to think carefully before applying for one of these loans, because they can be very expensive. There may be alternatives that are more suitable for your situation, whether it’s government support, or a loan from your local credit union or council.

Pros and cons of loans for bad credit

Bad credit loan advantages

You can borrow a lump sum of money to use for many different purposes.
As long as you repay the loan in full and on time, and manage your other credit commitments responsibly, it could contribute to improving your credit score.
If you have bad credit, you’re more likely to be accepted for one of these loans when standard personal loans are no longer an option.

Bad credit loan disadvantages

These loans typically come with higher interest rates.
You may not receive the advertised rate. Rates for these loans often depend on your credit profile so you could be offered a loan but with a higher rate of interest charged.
You may not be able to borrow as much as someone with a good credit score.
Your loan options are more limited as not all providers offer bad credit loans.

How do bad credit loan rates compare with other types of loan?

According to Defaqto, the independent financial product analyst, the best loan rate for a bad credit loan is around 25.8%. On the other hand, one of the best loan rates advertised by a mainstream lender is currently 6.1%.

The table below illustrates the difference in monthly repayments and the total amount paid for a £5,000 loan over 60 months as your APR increases. The rates in our examples below are all rates currently advertised by both mainstream and bad credit lenders for this loan size and term.

Representative APR	Estimated monthly repayments	Estimated total repayable	Estimated interest paid
7.2%	£98.94	£5,936.40	£936.40
7.4%	£99.41	£5,964.24	£964.24
9.9%	£104.95	£6297.00	£1,297.00
34.9%	£162.72	£9,763.22	£4,763.22
37.9%	£169.75	£10,185.00	£5,185.00
59.9%	£220.59	£13,235.40	£8,235.40

How to work out what you can borrow using a bad credit loan

Using a loan calculator before you apply for a bad credit loan may help you work out how much you can afford to borrow. You can see how much your monthly repayments and total repayable could be at different interest rates.

After using the loan calculator, you might decide to complete a budget to check how your estimated monthly repayments will fit into your overall spending. It’s a good idea to leave enough room for unexpected costs, such as emergency car repairs.

It’s important that you don’t borrow more than you need, because a change in your situation could lead to the monthly repayments becoming unaffordable.

» MORE: Work out what you can borrow with our personal loans calculator

How to compare loans for bad credit

A loan eligibility service such as the one offered at NerdWallet and other comparison sites can give you options for borrowing money based on the details you provide. Usually, it carries out a soft search of your credit history, which doesn’t affect your credit score – but be sure to check this before using the service.

When comparing bad credit loans, the advertised interest rate will likely be the most important factor that influences your decision. However, you can also consider the ease of each lender’s application process, how fast they can pay out and whether they have the level of customer support that you need.

What to consider when taking out a bad credit loan

Before applying for a bad credit loan, you should think carefully about whether it is the best option for you.

When you take out a loan, you are taking on a debt that will need to be repaid so you need to be confident that you can afford to borrow this sum of money.

To help you decide whether a bad credit loan is right for you, ask yourself:

Are there any cheaper alternatives available? For example, have you considered a bank overdraft or borrowing from a friend or family member?
Do you meet the requirements? Check that you meet the basic eligibility criteria of a lender before you apply for a loan from them.
How much can I borrow? If you have bad credit, you may not be able to borrow as much as someone with a better credit score. Consider whether you can borrow enough to meet your requirements.
Can I afford the repayments? It’s important that you only take out a loan if you can afford to repay it in full. If you miss a payment, you could face more interest charges and penalty fees, which puts you at risk of getting into unaffordable debt. It will also be recorded on your credit file. To minimise the chances of getting behind on repayments, only borrow the amount you need; don’t take out a bigger loan just because you can.
What is the loan’s APR? Bad credit loans typically come with high interest rates, which can make them an expensive form of borrowing. The APR tells you how much a loan will cost you over the course of a year, taking into account the interest on the loan and any fees. Bear in mind that lenders advertise a representative APR, which is the rate that at least 51% of borrowers have been offered, so you may be offered a loan with a different rate.
Do you need the loan immediately? If you don’t need the loan right now, it may be worth waiting before applying. You could use this time to try to improve your credit score, which could increase the number of loans you are eligible for and help you access more competitive rates of interest.
Do you already have a loan? Taking out multiple loans will increase the amount of debt you have. Only apply for a loan if you are sure you can afford the repayments, on top of all your other existing expenses and repayments.

How to get a loan with bad credit

Before you think about getting a bad credit loan, you should work out a budget so you know how much you can afford to repay each month. This will help you when you start looking at different loans as you know how much you can afford to borrow.

You may also want to check your credit score to see if there are any easy ways to improve it, as a better credit score will help you to get a more competitive loan.

If you’re thinking of applying for a loan, check the eligibility criteria of the lender. Every lender has different requirements, with some only accepting applications if you earn above a certain income.

As a minimum, most lenders will require applicants to be at least 18 or 21 years old and a UK resident.

You can often check your eligibility for a loan before you formally apply. Checking your eligibility won’t affect your credit score and it allows you to see how likely you are to qualify for different loans, reducing your chances of applying for an unsuitable loan.

You should only formally apply for a loan if you are confident of being accepted, as loan applications will appear on your credit history and could affect your score.

How to apply for a loan with bad credit

To apply for a loan with poor credit, you will need to provide the lender with personal information and details about your finances, such as your:

name
address
date of birth
contact details
living situation, e.g. tenant, homeowner
income
employment status

Lenders will also run a hard credit check as part of your application. This will be recorded on your credit history. Multiple applications will harm your score so make sure you only apply for loans you feel confident of successfully getting.

What is bad credit?

If you have bad credit, it means the data held by credit reference agencies (CRAs) about your credit history could indicate that you won’t be able to successfully manage your repayments.

Having bad credit may mean you have made late payments, missed payments, or defaulted on credit in the past. You may also have an individual voluntary agreement (IVA), a debt relief order (DRO), or a county court judgment (CCJ).

You may also be judged to have bad credit if you haven’t been able to build up a credit history, if you are young or if you’ve recently moved to the UK, for example.

The three main CRAs have different scoring systems, so there is no single figure to indicate you have bad credit. These scores and definitions are decided by the CRAs and can change. At the time of writing, the CRAs judge someone to have “poor credit” if they have the following scores.

Equifax if it’s 438 or below (out of a possible 1,000)
Experian if it’s 720 or below (out of a possible 999)
TransUnion if it’s 565 or below (out of a possible 710)

To further complicate this, each lender will also have its own criteria for what it considers to be bad credit and this will affect your eligibility from one lender to the next.

But once your credit file reaches a certain point, for example evidence of an IVA, you will need to spend some time rebuilding your score before you consider applying for more credit.

» MORE: What is a bad credit score?

Can you build your credit score to get better rates?

A better credit score can help to increase your chances of getting approved for a loan and being offered better rates of interest.

There are a number of ways to improve your credit score, including:

Register to vote.
Pay all of your existing credit commitments in full and on time.
Reduce the amount of credit that you’re using, so you have a low credit utilisation ratio (the percentage of your credit limit that you use).
Check your credit report for any mistakes and ask the provider to correct them.
Remove any old financial links from your credit report, if you’ve ever had a joint loan or mortgage with someone, for example.

Sam Bromley, Lead Writer and Loans Expert at NerdWallet

What Our Nerds Say

“If you don’t need to borrow money right now, it’s worth improving your credit score before applying for a loan. It’s not something you can do overnight – you should give yourself at least six months to establish a history of making timely repayments. But while it takes time, it can make borrowing much less expensive for you.”

A credit union loan could be an option if you’re struggling to get approved for a loan elsewhere. Credit unions are not-for-profit organisations that could help people who find it more difficult to access services from traditional financial providers. You need to be a member of a credit union to apply for a loan. The interest rate that credit unions in Great Britain can charge on a loan is capped at 3% a month or 42.6% APR. The cap is 1% a month or 12.68% APR in Northern Ireland.

If you receive universal credit or certain benefits, you may be eligible for a budgeting loan or budgeting advance. These are loans from the Department for Work and Pensions (DWP) that don’t charge any interest. The amount you could borrow will depend on your individual situation.

A credit card can allow you to spend only the amount you need and, if you pay it off in full each month, you won’t pay any interest. You may be eligible for a credit card with a bad credit score, such as a credit builder card, but you may face higher interest rates and lower credit limits. Bear in mind that if you don’t pay off your balance, credit cards can be an expensive way to borrow.

» MORE: Compare credit cards for bad credit

If you have close friends or family, you could think about asking them to lend you money. While this can be a cheap way to get the cash you need, you should consider your personal relationship with the individual lending the money. It may be worth drawing up a written contract, so both parties agree on how and when the money will be repaid.

What if borrowing money isn’t the right option for you?

Borrowing money isn’t always the answer. If you’re struggling to afford your living expenses or finding it hard to make payments on any existing forms of credit, it’s worth asking for professional debt help. There are several debt charities that can offer free support and guidance on your situation, including:

Loans from specialist bad credit lenders are likely to be easier to get if you have a bad credit history. Depending on your circumstances, you could also improve your chances of acceptance if you apply for a secured loan or a guarantor loan. The extra security of these loans can give the lender more reassurance that they will get their money back.

However, you should consider the risks involved with these types of loans before applying. For example, secured loans come with the risk that you could lose your property if you fail to repay the loan.

You can use a bad credit loan for a variety of reasons. Lenders will often ask what you plan to use the loan for as part of their application process.

Certain online lenders may be able to offer you a loan if you have bad credit. However, this will depend on your individual circumstances and factors such as your income. Many lenders will allow you to check your eligibility for a loan, so you can see how likely you are to be accepted before applying.

Possibly. Whenever you apply for a loan, the lender will conduct a hard credit check, which will be recorded on your credit history. This could temporarily affect your credit score, but if you make your repayments and manage your other credit commitments responsibly, your score should recover.

Making several applications for credit within a short space of time is likely to damage your credit score, because lenders may think that you rely on credit to stay afloat.

All authorised lenders have to run affordability checks as part of the application process for a loan, which in most cases, will involve a credit check. However, you can often check your eligibility for a loan without a hard credit check.

There may be some lenders that may offer a loan with no credit check, and assess your ability to repay a loan in other ways. But always double check that the lender is authorised before taking out a loan.

Borrowing from a family member or friend could be an option if you need money but want to avoid a credit check. However, you should consider the possible risks involved and only borrow from someone you know and trust. Never borrow money from someone that you don’t know as they could be a loan shark.

If your loan application is declined, don’t try to apply for another loan straight away. Applying for a loan involves a hard credit check, which will appear on your credit history, and multiple applications could affect your credit score.

Instead, it’s a good idea to check your credit score and try to work out why your application was rejected. You can then take steps to improve your score, which should hopefully improve your chances of getting accepted for a loan in the future.

These are some of the reasons you may have been rejected for a loan in the past.

You don’t have a regular, stable income.
You have a thin or invisible credit file because you haven’t taken out credit in the UK before.
Your credit history is poor because you’ve struggled to keep up with your repayments in the past.
You have a lot of credit obligations already, for example hefty credit card debt or loans that you haven’t paid off.
You have a CCJ or have been declared bankrupt.
Your application form contained errors or inconsistencies.

If you’ve been rejected for a loan before, working out the reasons why can help you limit rejected applications in the future.

It may be possible to get a loan with a CCJ, but this will depend on the lender and your individual situation. Some lenders won’t lend to you if you have a CCJ, but other lenders may consider your application. However, they will only offer you a loan if they think you can afford to repay it in full. You are likely to be charged a higher rate of interest if you are approved for a loan.

Think carefully before borrowing any money, and consider whether it’s the right option for you. It may be more appropriate to wait and improve your credit score or get professional debt help, for example.

Dive even deeper

Debt Consolidation Loans: Compare Rates to Combine Debt

Best Loans for Bad Credit UK – January 2025

Compare best bad credit loans

Provider

Representative APR

Loan Amount