Bad Credit Loans

What are bad credit loans?

Bad credit loans are designed to ensure a poor credit history doesn’t stop you getting access to the finance you need. Not all lenders accept people with poor credit histories, so you may have fewer options to choose from – but that doesn’t mean you can’t borrow. Loans for people with poor or no credit history are typically unsecured, so pose less risk to your home or car - although bad credit secured loans are also available.

With a bad credit loan, you can access the credit you need and improve your credit score in the long run, if you make your regular repayments on time.

Borrowing with bad credit may mean the interest you pay is higher than with other types of personal loan, which should be considered when calculating your ability to meet the repayments.

What can cause bad credit?

Having a poor credit score can affect your future borrowing, so it’s important to try and find out the cause. Some of the following may apply in your situation.

• Missed repayments. If you have a bad credit rating, it could be because you have previously missed payments on a loan or credit card. If this applies to your current situation, it’s important to get in touch with the lender to discuss your repayments going forward.
• You have a CCJ. You may also have a poor credit score if you have a CCJ (County Court Judgement) against your name. This could happen if you’ve defaulted on a loan or credit agreement in the last six years.
• No history of borrowing. Your bad credit might not be evidence of adverse borrowing. You may have a low score if you have no history of borrowing, as it’s harder for lenders to assess how reliable you are as a borrower. The good news is you can work to improve your credit score.
• Electoral roll is out of date. You may not be showing on the voters roll record of your current home. Remember to complete the forms and register as soon as possible after you move into a new property.

What to know before you apply

Before you apply for a bad credit loan, it’s worth doing your research so you know any loan you do apply for is right for you. This can also help to simplify the process and give you the best chance of being accepted.

Income and outgoings

Lenders will ask about your income and expenses, as well as any debts you may have. This is so they can determine whether you can afford the monthly repayments on a loan, so it’s worth ensuring you have a full picture of your finances before you start.

Loan security

If you’re applying for a secured loan for bad credit, a lender will need to know about your property. This can include your house, or your cars. The more equity you hold, the less risky the proposition to lenders, which could mean lower rates on your repayments.

Credit history

Lenders will usually want to see your credit report to get an idea of your current situation. It doesn’t mean you’ll need a perfect credit history to be approved at the rate you want, but knowing what your credit report looks like can stand you in good stead.

Purpose of your loan

You should be able to provide a clear reason for your application. Some lenders may be specific on purposes you can and can’t borrow the money for, so it helps to have your answer set out before you apply.

Am I eligible for a bad credit loan?

We always do our best to search for a loan that works for you, even if you don’t have a perfect credit history. But your unique financial situation can tell lenders whether or not you are eligible. Lenders will assess your credit history and your repayment history before deciding whether to approve your loan application.

Take a look at our article on loan eligibility for further advice on applying for a bad credit loan.

Pros and cons of a bad credit loan

It’s important to consider all the pros and cons before taking out a loan for bad credit.

Pros

• It can be used to improve your credit score, provided you keep up with repayments.
• If you’re using it to consolidate debt, it’s easier and more affordable to pay back at a single rate (though the total amount payable is likely to be higher).
• Being accepted can be a great help to your finances if other lenders have previously declined your application.

Cons

• An unsecured loan for poor credit will likely have a higher rate of interest. This can mean repayments are higher than other loan products over time.
• Falling behind on repayments on a secured bad credit loan may put your property at risk or cause your credit score to fall further.

Representative example

HOMEOWNER UNSECURED LOANS - Rates from 7.3% APR.
If you borrow £12,000 over four years at a Representative APR of 15.4% APR (fixed), you would pay £330.33 per month. The maximum APR is 99.1%.

Frequently asked questions

We’ve already covered the basics of bad credit rating loans and how they work, but there are other details to be aware of before sending your application.

How do bad credit loans work?

Bad credit loans are a type of borrowing designed to help people with a poor credit history. They are usually approved as a short-term measure until you can get back on track, because if you maintain your repayments, this can improve your credit score and allow you to borrow at lower interest rates in the future.

Many people who apply for bad credit loans have been turned down by their high street bank, often by an automated credit decision engine. At Norton Finance, we believe people should be given a second chance and that the past should not always dictate the future.

Can I have a loan with a CCJ?

Yes, it’s possible to apply for a loan with a CCJ. Some lenders will work with you on a repayment package that covers the debt, plus the amount you want to borrow.

Find out more about CCJs.

How much can I borrow?

Depending on the kind of loan, you can borrow from £3,000 up to £500,000.

How long are the repayment terms?

Repayments on an unsecured loan can be spread over a period of between one and seven years, to ensure you can comfortably meet them. A secured loan can be repaid over terms ranging from 3 to 30 years.

What are the interest rates?

The interest rate will vary as your current circumstances and financial history are taken into consideration.

How long will it take?

You will receive an instant decision from us, and an unsecured bad credit loan could be in your bank account within 1-2 days. However, for secured bad credit loans we recommend you give one to two weeks to allow your application to be processed.

Do I need a guarantor?

No, you will not need a guarantor. Our bad credit loans criteria is based on the loan applicant’s details only, so you can apply independently without asking a friend or family member for help.

Applying for a bad credit loan

No matter your reasons for needing a bad credit loan, Norton Finance will work with you to find a solution that meets your needs. If you’re on benefits, have a CCJ or are searching for a joint application, we can help.

Simply fill in an application online, and our team will get to work searching our wide network of lenders and plans to provide you with a range of flexible options.

Can I apply for a loan with bad credit?

We help people with different financial situations to try and improve their circumstances and source a loan to match their needs. Whether you’re dealing with debt issues such as CCJs or are not deemed eligible for a loan by some lenders, we’re here to help.

For those who are retired, self-employed or on benefits, obtaining a loan can be difficult, but Norton Finance filters through hundreds of options to find a product you’re more likely to be accepted for.

What do I need to apply?

When you’re ready to start your online application with us, you should have the information below to hand:

• Personal financial details
• Employment status
• Details of your income