The Complete Bad Credit Loans Guide:
Unsecured loans for poor credit explained What is a bad credit loan?
A bad credit loan is a payday loan for people with a poor credit rating. A bad credit loan typically includes a higher interest rate, a shorter repayment period, and may have a reduced loan amount. The reason for this is people with a poor credit rating are seen as higher risk to a lender.
It is an option for people who struggle to be accepted for a loan either because their credit score is bad or that they have no credit history. It should be noted that approval is dependent on additional factors such as your ability to afford and repay the loan.
How can unsecured loans for bad credit help you?
An unsecured loan for bad credit can help when you don’t have the cash to cover the cost or a good enough credit history required to obtain a standard loan. An unsecured bad credit loan can be an alternative solution to overcome a predicament you might face. There are many ways to use an unsecured personal loan for poor credit such as paying for an emergency car repair, veterinary bills, or home repair.
Where can I get a loan with bad credit?
You can get a loan with bad credit by applying with Flexy Finance. As a credit broker, we work with a number of lenders who are able to accommodate customers who have a poor credit score or bad credit history. It means you can qualify for a loan despite a bad credit rating.
The lenders we work with assess other factors, such as affordability and income, in addition to your credit score. So just because you have a bad credit rating, does not mean you will be automatically rejected.
In addition, when we check your credit score we only undertake a soft-credit search, meaning that your credit score will not be negatively affected when you apply with Flexy Finance.
You don't need to provide any collateral to qualify. This type of finance is also known as an unsecured loan, which means you don’t need to offer any of your valuable possessions as security for the loan and your vehicle and home are always safe!
How does the bad credit application process work? How can I get a loan with bad credit?
You can apply for a bad credit loan in person using a high street lender or online via a credit broker or a direct lender. Applying online requires you to complete an online application and provide some personal details and documentation. These applications are usually quick and easy to complete.
Loans for those with a poor credit history are simple to obtain. In this section we outline every step of the process, from making an application to actually receiving the money, so that you can see for yourself just how efficient and effective bad credit loans are.
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How to apply for a bad credit loan
If you are considering applying for a bad credit business loan we have provided a useful step-by-step guide to inform you on what the application process entails. This is a general guide to the application process and the application process is subject to change and may vary from the guide provided.
It is important to remember that we are a broker and not a direct lender, so we will look to match your application with the most suitable candidate from a panel of top UK lenders.
Are you eligible for a bad credit loan?
Before you apply for a bad credit loan, it is a good idea to check whether you are eligible for a loan. In order to be eligible for a loan you must meet the following criteria:
- Be over 18-years of age.
- Must be a UK resident.
- Have an active bank account with a debit card.
- Receive a regular income.
Step 1 - Apply for a bad credit loan online
You can apply for a bad credit loan via the online application form using your computer or your phone. The application form is easy to fill out and can be completed at a time which suits you best.
The online application will require you to provide some details in order for your application to be assessed. These details include:
- Loan amount and repayment: State how much money you are looking to borrow and for how long you need to repay the loan. The lenders we work with offer loans from £100 - £5000 with a repayment period of 1 - 24 months.
- Personal details: Full name, date of birth, marital status, number of dependants, and your contact details.
- Housing details: Home address and for how long you have lived at that address.
- Employment details: This includes simple details on what you do, how long you’ve worked for as well as the employer you work for.
- Income details: These details are used to help us understand if you’re capable of making regular payments. This includes your monthly take home pay and when you get paid.
- Outgoings: Details of your monthly outgoings are used to determine whether you can afford the loan you are looking to take out. This includes details on outgoings such as rent, food, and bills.
- Bank Account details: These details are needed in order for a lender to transfer the loan into your bank account.
It is essential that the details you provide are 100% honest in order for us to match you with a suitable lender.
Applying for bad credit loans is easy. There are no phone calls necessary - simply fill out a short, online form at a time which suits you best. Apply from the comfort of your own home, or on the go using your mobile.
There are absolutely no application fees. Loan amounts range from £100 - £5,000 and you can choose to spread the cost over a flexible repayment period of 1 – 24 months.
Step 2 - Receiving a decision on your loan application
Once the application is submitted, your application will then be assessed. If successful, you will be matched with a lender that is most likely to accept your application. The lender will then offer you a loan.
If you have a bad credit score or no credit history, it is possible that a lender may not loan you the full amount that you have applied for. Instead you may be offered a smaller amount with a higher interest rate and a shorter repayment period.
If you choose to accept the loan offer provided by the lender, you are bound by the terms and conditions of the loan contract. Once accepted the loan will be transferred into your bank account.
*Some lenders may require you to provide additional documentation when offering you a loan.
*The loan offered by the lender is subject to change and may differ from your initial application.
Reminder: You can choose to opt out of a loan application at any point before accepting the loan offer provided by the lender. You cannot opt out of the loan after accepting the terms of the loan offer, you are bound by the terms and conditions of the loan contract and must fulfil its obligations.
Step 3 - Repaying the loan
Once you have received the loan into your bank account, you are then required to repay the loan and the interest accrued via monthly instalments. The monthly instalments will continue to be paid until the loan amount and its interest is fully repaid. The repayment period is pre-agreed with the lender.
Getting Approved How can I qualify for very bad credit loans?
Yes, even if you have a bad credit rating or no credit history, you can still qualify for an unsecured payday loan. However, it is always a good idea to try and improve your credit score in order to qualify for a better quality loan, in order to avoid higher interest rates.
You still need to meet the basic criteria to qualify and there are several things which you can do to increase your chances of being accepted. To help with your application process, we’ve outlined some simple, but effective, ways you can improve your eligibility below.
##How to improve your chances of qualifying for a bad credit loan
1. Are you employed - Do you have an income?
Approval is subject to affordability, not just your credit score. So, having a consistent and good level of income will help to counteract the fact that you have bad credit and improve your chances of qualifying for the loan.
Why? It demonstrates to the lender that you can easily afford repayments and reduces the risk of non-payment. Lenders will assess whether you are a good candidate for finance by calculating a debt-to-income ratio. Evidence of a good and regular income will always improve that ratio and in turn, your eligibility for the loan.
Caution: You should expect that lenders will request proof of income, including bank statements and tax returns, so never be tempted to lie about how much you earn on your application.
2. Could you borrow a smaller amount?
While this may not be your preferred choice, if you are worried about qualifying, you may want to consider borrowing a smaller amount of money. With small loans, the amount that you pay back each month is also smaller. Ultimately, you don't need a large income to cover small repayments, so you are far more likely to guarantee the lender's approval.
3. Can you provide a guarantor?
It is by no means essential to have a guarantor – you can still qualify for a bad credit loan with no guarantor. However, having a guarantor could improve your chances of being accepted and help you to obtain a considerably lower interest rate.
Why? A guarantor acts as a means of security for the lender, in case you find yourself unable to pay back the loan. For instance, if you fail to keep up with repayments, the financial responsibility will fall to your co-signer to make repayments for you.
Ultimately, the additional security that comes with a guarantor means that a lender may grant you either a larger loan amount or a lower interest rate.
Top Tip: Before applying for a loan, you can check your eligibility using soft search results. This way, you avoid damaging your credit score, but still receive a clear indication of whether or not you will be accepted for the loan. Do this for free here.
4. Refrain from submitting multiple applications
While you don’t need a stellar credit history to qualify for bad credit loans, anything you can do to avoid damaging your credit score further will stand in your favour when it comes to being approved. Think of it as damage limitation.
So, do not make several different applications for a loan at the same time in the hope that this will improve your chances of being accepted. If a lender sees that you have recently been rejected by multiple different loan providers, it can deter them from granting you a loan.
Is a bad credit loan right for you? The pros & cons of unsecured personal loans for bad credit
Whether your predicament is due to missed utility payments, a regrettable accumulation of debt or simply a thin credit file, bad credit loans can provide you with the emergency finance you require.
That being said, it is always important to consider both the benefits and drawbacks of any financial product together, before making a final decision as to whether it's suitable for you.
What are the benefits of a bad credit loan?
1. Bad credit loans are unsecured
A benefit of bad credit loans is that your personal property won’t be at risk should you default on repayments. As the loan is entirely unsecured, you don’t need to offer any of your valuable assets as collateral for the loan. You will still be responsible for making timely and consistent repayments.
2. Applying for bad credit loans is quick and simple
You can apply for a bad credit loan online using your phone, tablet or computer. The application is really easy to complete and is purposely designed to be completed in minutes. You can apply for a bad credit loan, where and when you want.
3. Tailored repayments
When you take out a loan, you can choose how long you need to repay the loan. With Flexy Finance you can choose between a period of 1 - 24 months, which is repaid back in monthly instalments. The amount that you repay each month is always pre-agreed upfront with the lender before any cash is exchanged, so that there are no costly surprises.
Expert Advice: Always ensure that you can comfortably afford loan repayments before making an application, to avoid encountering any costly surprises further down the line. To do this, we advise using a free, online repayment calculator.
What are the drawbacks of a bad credit loan?
1. Loan amounts can be smaller
Loan applicants with poor credit present themselves as a higher-risk investment for the lender. To counteract this risk, loan providers limit the amount which is granted to you, hence the amount that you are allowed to borrow is restricted to £100 to £5,000.
Providing that you're not looking to receive a large amount of money for the purchase of real estate for example, this simply won’t affect you.
Some lenders will impose additional fees, such as late repayment charges, so you should always check and discuss any fees directly with the lender before signing for a loan.
2. Potentially higher interest rates
As previously mentioned, personal loans for bad credit are high-risk investments for direct lenders. To protect their best interests, lenders can charge higher interest rates to justify the risk. The exact interest rate you will be charged will depend on:
- How poor your credit score is
- The amount you want to borrow
- Your income
Understanding Poor Credit Why might you have a bad credit history?
Have you defaulted on loan or credit card repayments in the past? Maybe you’ve accumulated a large amount of outstanding debt? Or perhaps you’ve made the mistake of making lots of applications for credit all at once? Crucially, these are all factors which could negatively affect your credit rating.
There are several things you can do to better understand your credit history and improve your overall rating for the future. So, in this section we’ll give you all the information you need to really get to grips with your credit file.
What exactly is a credit score?
Your credit score helps lending companies to determine whether you are a reliable or risky borrower. In other words, by looking at your previous credit report a loan provider can reach a fair judgement as to how likely you are to repay the loan amount.
If you have a strong history of consistently repaying your debts on time, it is likely that you will have a high credit score, and the lender will accept your application for a loan. On the other hand, if you have defaulted on monthly repayments in the past, your credit score may have suffered as a result. In this case, it is likely that any future applications you make for a loan or credit may be rejected.
You can find quick and easy tips on how to improve your credit score here.
What is a thin credit file?
Having a ‘thin credit file’ means that you are yet to build up a substantial credit history. This is usually because you haven’t taken out a loan or credit in the past, so there is no history of you having repaid any debts.
This can result in a low credit score and may cause a loan provider to reject your application. With no record to support that you can be relied upon to consistently make repayments, you become a riskier investment than someone who has proved that they can repay a loan in the past.
Will Bad Credit Affect Your Application for A Loan?
Bad credit loans from Flexy Finance are available to an extensive range of individuals and will allow you to borrow the money you need as quickly and affordably as possible.
Other loan options, especially those offered by traditional financial institutions such as banks, focus solely on assessing your credit file to determine whether your application should be accepted. However with a poor credit loan, approval is subject to several additional factors, such as:
- Your income
- Your personal financial situation
- How much you are requesting to borrow
- Your ability to actually afford and repay the loan
So, getting approved isn’t exclusively dependent upon your credit history and a much wider range of applicants are successfully accepted for this type of financial product!
FAQS Frequently Asked Questions
Quick answers to the most popular questions regarding loans for poor credit:
How much can you borrow with a bad credit loan?
Unsecured loans for poor credit allow you to access amounts ranging from £100 to £5,000.
What do you need to qualify for a bad credit loan?
- You need to live in the UK
- You must be 18 years old minimum
- You’ll need a UK bank account
How do you repay a bad credit loan?
First, select a repayment period which best suits your individual needs. You can choose to repay over a period of 1 – 24 months.
Next, agree on an affordable, monthly repayment amount with the lender. The repayment amount will then be fixed for the duration of the repayment period, so you will always know exactly what is expected of you and you can budget accordingly.
To get a representative example of the amount you will need to repay, visit Money Saving Expert’s loan repayment calculator.
If you default on repayments, what happens?
Bad credit loans are unsecured, which ultimately means that if you default on repayments the lender will not be able to recoup for their losses by taking ownership of your valuable personal possessions, such as your home or vehicle.
However, this is not to say that defaulting on repayments won’t have repercussions – some lenders will charge late fees. Also, if you fail to make repayments for a sustained period of time, as with any loan, the debt will be passed on to a debt collection agency.
How quickly can you receive a bad credit loan?
Same day loans are available for those with poor credit history, so you could receive the loan amount in as little as 24 hours!
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