Everything you need to know about personal loans with bad credit uk in the UK.
Yes, it is possible to get a personal loan with a poor credit history in the UK, although your options will be more limited and the interest rates higher than for borrowers with good credit. Lenders assess risk based on your credit score, and a lower score means they charge more to compensate for the increased chance of default.
A credit score below around 560 on Experian (out of 999) or below 580 on Equifax is generally considered poor. At this level, mainstream high-street lenders may decline your application, but specialist lenders and credit unions may still offer loans, typically at rates between 20% and 50% APR compared to 3–7% for borrowers with excellent credit.
Lenders look at your full credit report, not just a single score. Factors that damage your creditworthiness include missed or late payments on existing debts, county court judgments (CCJs), individual voluntary arrangements (IVAs), bankruptcy within the last six years, and multiple credit applications in a short period.
Even less obvious issues can affect your score: having no credit history at all (common among younger borrowers or those new to the UK), not being on the electoral roll, or having high utilisation on existing credit cards (using more than 50% of your available credit limit).
Specialist bad-credit lenders such as Likely Loans, Bamboo, and Everyday Loans specifically serve borrowers with impaired credit. Rates are higher, but approval chances are better. Always compare total repayment amounts rather than just monthly payments, as longer terms mean paying significantly more interest overall.
Credit unions are member-owned financial cooperatives that consider your personal circumstances rather than relying solely on credit scores. They are capped by law at charging a maximum of 42.6% APR (3% per month) and often charge far less. Many have local membership criteria, so check whether one operates in your area.
Guarantor loans allow a friend or family member with good credit to guarantee your repayments. If you default, the guarantor becomes liable. This arrangement can help you access better rates, but the guarantor takes on significant financial risk. Some lenders have moved away from guarantor products following regulatory concerns.
⚠️ Avoid payday lenders and very high-cost short-term credit. While they may approve applicants with poor credit, rates can exceed 1,000% APR. A £500 payday loan can quickly spiral into unmanageable debt. Explore all other options before considering high-cost credit.
Before applying, take steps to strengthen your application. Check your credit reports with all three agencies (Experian, Equifax, and TransUnion) for errors. Incorrect information, such as accounts that do not belong to you or debts incorrectly marked as unpaid, can be disputed and removed, potentially improving your score quickly.
Register on the electoral roll at your current address, as this is one of the simplest ways to boost your credit score. Reduce your credit card balances to below 30% of their limits if possible, and avoid making multiple loan applications in a short period, as each hard search temporarily lowers your score.
💡 A credit-builder credit card, used for small purchases and paid off in full each month, can improve your credit score by 50–100 points within 6–12 months. This may open up significantly better loan options when you need to borrow.
If a personal loan is not available at an acceptable rate, consider whether other forms of borrowing might be more suitable. A 0% purchase credit card can be useful for specific purchases, spreading the cost interest-free for 12–24 months. Some 0% cards are available to those with fair credit, though the limits may be lower.
An overdraft arranged with your bank may be cheaper than a high-interest personal loan for small amounts needed short-term. Budgeting loans from the DWP are available to those on certain benefits, offering interest-free borrowing between £100 and £812. If you are a homeowner, a remortgage to release equity may offer far lower rates than an unsecured loan.
A loan broker who specialises in impaired credit can search across multiple lenders to find the best available deal for your circumstances. They understand which lenders are most likely to approve your application and can help you avoid unnecessary rejections that would further damage your credit score.
Nesto matches you with experienced loan brokers who work with specialist lenders. Find a personal loan broker through Nesto and explore your borrowing options.
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