Getting rejected because of your borrowing history? Some lenders offer special deals for those looking for with bad credit who are looking for credit. But they might cost you more than you imagine.
Bad credit loans is a catch-all term for a wide range of loans aimed at people who have a poor credit history and may struggle to get an ordinary loan at high street banks. Typically, these loans come with higher interest rates or require you to secure something (your car or your house for example) against the loan.
If you need to borrow more than £1,500 and have been rejected by high street lenders. For loans of less than £1,500 a credit card will be much cheaper. Use our advanced credit matching technology to find out which cards you are likely to get.
If you do have to take out a bad credit loan, manage it well and it can help you improve your credit rating so that, in the future, you’ll be able to access better credit products. You can find out more about your credit rating in our guide.
Do you have existing debts that you want to consolidate? Instead of trying to manage multiple repayments on credit and store cards, loans and overdrafts (which may be all on different rates and paid out at different times of the month) you can tidy everything up and take out a single loan to repay them all.
However, this is only worth doing if you get a lower interest rate, which may be unlikely with a bad credit loan. Also, beware that your old loans may have early repayment penalties.
If you’re considering debt consolidation, talk to a free and independent debt charity first such as Step Change or Citizens Advice.
Whatever form of bad credit loan you choose, the interest rate you are offered will still depend on your credit history, and it may not be the interest rate advertised by the bank or building society. Only 51% of successful applicants are offered the ‘representative’ APR. The rest will be offered a higher interest rate, and others with really bad credit histories will be rejected.
You normally don’t know what interest rate you will be offered until you apply for the loan. And applying for lots of loans can damage your credit rating, because banks don’t like to see that you’ve been rejected several times.
The good news is that TotallyMoney.com’s loan comparison service will tell you if you’re likely to be accepted for a loan BEFORE applying. It carries out a ‘soft search’ of your credit data that will NOT leave a mark on your credit file. Our personalised credit comparison service then compares a wide selection of loan providers to give you the best possible choice. This means you can only apply for loans that you know you’re likely to get.
Some brokers offer to find loans in return for an upfront fee. Our online comparison tool does this for free, so you don’t have to part with cash just to do a simple search.
Bad credit loans are a good option if:
But always remember: