Best Bad Credit Loans December 2023

If you have a patchy credit file, it may still be possible to get a personal loan. There are a number of specialist lenders that accept applications from people who may have struggled with credit in the past and have bad credit histories.

You will have a more limited selection of loans to choose from than someone with a better credit score, and they will come with higher interest rates, so it’s important to compare providers to find the most suitable loan for your circumstances. It’s also important to consider whether a loan is the right option for you at all.

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. 

To help you see how expensive a loan is, lenders will display a figure called an annual percentage rate (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 find the best loan for bad credit and decide whether a particular loan is right for you.

We’ve assessed many of the bad credit loans on the market and rated the lenders on the features they offer. Our star ratings are based on 20 of the features that a survey of bad credit loan customers said were most important, from payment flexibility and the ease of the application process to the customer support available. 

Partner Spotlight

Compare Loans

NerdWallet has partnered with Monevo. Check your eligibility from a range of loan providers without affecting your credit score, including:

Loan Amount(Required)

Please enter a number from 1000 to 50000.

Loan Purpose(Required)

Please SelectCar / VehicleDebt ConsolidationHolidayHome ImprovementsOne Off PurchaseBills / Expenses

Loan Term(Required)

Less than a year1 year2 years3 years4 years5+ years

Best Bad Credit Loan Providers 

Lender	NerdWallet Star Rating
Abound
Lendable
Bamboo
Salad Money
118 118
Finio
UK Credit

Promotion

Abound Personal Loan

• Representative APR
  25.8%
• Representative Example
  Representative APR 25.8%. Based on a loan of £2,000 over 36 months at an interest of 20.2% p.a. (fixed). Monthly repayments of £77.60. Total amount payable £2,793.60 (includes £130 fee).
• Available amounts
  £1,000 to £10,000
• Available Terms
  1 to 5 years
• Joint Loans
  No

Check Eligibility with Monevo

Nerdwallet has partnered with Monevo. Check your eligibility with this lender and from a range of loan providers without affecting your credit score.

Eligibility Criteria

• Must be aged 18 or over.
• Must have at least one UK bank account.
• Must not have unresolved defaults or CCJs.

Promotion

Lendable Personal Loan

• Representative APR
  35.6%
• Representative Example
  Representative APR 35.6%. Based on a loan of £7,500 over 36 months at an interest rate of 30.9% p.a. (fixed). Monthly repayments of £321.74 and total fees of £395.00. Total amount payable £11,582.54. Maximum APR 49.9%.
• Available amounts
  £1,000 to £25,000
• Available Terms
  1 to 5 years
• Joint Loans
  No

Check Eligibility with Monevo

Nerdwallet has partnered with Monevo. Check your eligibility with this lender and from a range of loan providers without affecting your credit score.

Eligibility Criteria

• Must be aged 18 or over.
• Must be a UK resident.
• Must have a current account at a UK bank or building society.
• Must have an income of at least £800 per month

Promotion

Bamboo Personal Loan

• Representative APR
  69.9%
• Representative Example
  Representative APR 69.9%. Based on a loan of £2,500 over 24 months at an interest rate of 54.2% p.a. (fixed). Monthly repayments of £172.74. Total amount payable £4,145.76.
• Available amounts
  £2,000 to £15,000
• Available Terms
  1 to 5 years
• Joint Loans
  No

Check Eligibility with Monevo

Nerdwallet has partnered with Monevo. Check your eligibility with this lender and from a range of loan providers without affecting your credit score.

Eligibility Criteria

• Must be aged 18 or over.
• Must be a UK resident.
• Must be able to afford monthly repayments.
• Must not be bankrupt.

Promotion

Salad Money Personal Loan

• Representative APR
  79.5%
• Representative Example
  Representative APR 79.5%. Based on a loan of £1,000 over 18 months at an interest rate of 59.97% p.a. (fixed). 17 monthly repayments of £86.23 followed by a final payment of £89.36. Total amount payable £1555.27.
• Available amounts
  £500 to £1,000
• Available Terms
  12 or 18 months
• Joint Loans
  No

Check eligibility with Monevo

Nerdwallet has partnered with Monevo. Check your eligibility with this lender and from a range of loan providers without affecting your credit score.

Eligibility Criteria

• Must be employed by your current employer for at least 6 months
• Must be over 18
• Must be paid monthly, rather than weekly
• Must be earning over £1,400 per month

Promotion

118 118 Money Personal Loan

• Representative APR
  49.9%
• Representative Example
  Representative APR 49.9%. Based on a loan of £2,000 over 24 months at an interest rate of 41.2% p.a. (fixed). Monthly repayments of £123.64. Total amount payable £2,967.43.
• Available amounts
  £1,000 to £5,000
• Available Terms
  1 to 3 years
• Joint Loans
  No

Check eligibility with Monevo

Nerdwallet has partnered with Monevo. Check your eligibility with this lender and from a range of loan providers without affecting your credit score.

Eligibility Criteria

• Must be between the ages of 18 and 70
• Must have a minimum yearly income of £8,400
• Must be employed or self-employed
• Must be a UK resident and hold a current UK bank account and debit card

Promotion

Finio Personal Loan

• Representative APR
  39.9%
• Representative Example
  Representative APR 39.9%. Based on a loan of £2,000 over 24 months at an interest rate of 39.9% p.a. (fixed). Monthly repayments of £116.07. Total amount payable £2,785.68. Maximum APR 69.9%.
• Available amounts
  £1,000 to £5,000
• Available Terms
  1 to 3 years
• Joint Loans
  No

Check Eligibility with Monevo

Nerdwallet has partnered with Monevo. Check your eligibility with this lender and from a range of loan providers without affecting your credit score.

Eligibility Criteria

• Must be aged 18-73 years old.
• Must be a UK resident.
• Must have a UK personal bank account.
• Must be confident you can afford the monthly repayments.

Promotion

UK Credit Personal Loan

• Representative APR
  31.9%
• Representative Example
  Representative APR 31.9%. Based on a loan of £11,000 over 66 months at an interest rate of 28.01% p.a. (fixed). Monthly repayments of £328.37. Total amount payable £21,672.42. Maximum APR 34.9%.
• Available amounts
  £3,000 to £20,000
• Available Terms
  3 to 10 years
• Joint Loans
  No

Check eligibility with Monevo

Nerdwallet has partnered with Monevo. Check your eligibility with this lender and from a range of loan providers without affecting your credit score.

Eligibility Criteria

• Must be a homeowner.
• Must be aged 21 or over and under 71 at the end of the loan.
• Must have been a UK resident for at least 2 years.
• Must have a net annual income of at least £15,600.

The pros and cons featured with each brand are chosen by us based on a combination of our expert opinions from research of the product market and an exclusive survey of UK consumers conducted on behalf of NerdWallet UK to identify the features that people feel are most important. There are other pros and cons that should be taken into account before considering a financial product. Information was correct at the time of publication but may have changed since.

Nerdwallet Survey: February 2023

What is a bad credit loan?

Bad credit loans are designed for people with a poor 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. 

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.

What is bad credit?

If you have bad credit, it means credit reference agencies (CRAs) view your credit history more negatively.

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 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).

(Accurate as of June 2023)

To further complicate this, each individual 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?

Types of loans for bad credit

Bad credit loans come in various forms. It’s worth spending some time researching these different loan options to make sure you choose the right one for your situation.

Personal loans for bad credit

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.

Secured loan

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.

Guarantor loans

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 

Debt consolidation loans

This is actually 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 bad credit 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.

Partner Spotlight

Compare Loans

NerdWallet has partnered with Monevo. Check your eligibility from a range of loan providers without affecting your credit score, including:

Loan Amount(Required)

Please enter a number from 1000 to 50000.

Loan Purpose(Required)

Please SelectCar / VehicleDebt ConsolidationHolidayHome ImprovementsOne Off PurchaseBills / Expenses

Loan Term(Required)

Less than a year1 year2 years3 years4 years5+ years

Pros and cons of bad credit loans

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 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 of age 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.

To apply for a loan, 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 have a negative effect on your score so make sure you only apply for loans you feel confident of successfully getting.

How to improve your credit score

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.

Alternatives to bad credit loans

Before applying for a bad credit loan, it’s worth considering if there could be a more suitable option for your situation.

• Credit union loans: Credit unions are not-for-profit organisations that could help people who may struggle to get approved for a loan elsewhere. 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.
• Budgeting loans and advances: 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.
• Credit card: 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.
• Friends and family: 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.

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.

Best bad credit loans methodology

NerdWallet has evaluated and reviewed 13 consumer bad credit lenders in the UK.

We considered 20 data points for each loan, based on the criteria that matter most to customers, scoring them on loan features, flexibility, application process and availability of customer support, among other factors. This information was gathered from each lender’s website, company representatives and independent financial product analyst Defaqto. In addition, we regularly add new brands and our editorial team reviews them against the same criteria for consistency and accuracy.

Using the same data across all products and features, we were able to create star ratings, presented on a scale of one to five stars, where a one-star score represents ‘poor’ and a five-star score represents ‘excellent’.

Important information: Neither the review nor ratings considered the lender’s lending rates, and therefore does not reflect how much they charge to borrow from these lenders. Loans for bad credit consumers 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.

Debt charity information

If you are struggling with debt, seek advice from one of these debt advice services:

• Citizens Advice
• MoneyHelper (formerly The Money Advice Service)
• National Debtline
• StepChange
• The Money Charity

About the Author

Rhiannon Philps

Rhiannon has been writing about personal finance for over three years, specialising in energy, motoring, credit cards and lending. After graduating from the University of Cambridge with a degree in…

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