If you have a bit of a chequered past when it comes to credit then getting a loan might seem like an impossible task. It doesn’t have to be if you know where to look.

What is a bad credit score?

A difficult credit situation could be a genuinely ‘bad’ credit score i.e. where you have missed debt repayments in the past or have a CCJ (County Court Judgment) against you. However, it could also be ‘no credit score’ – where you just don’t have any credit history at all. Either way, lenders will struggle to place you as a good borrowing prospect. It’s hard to put a figure on what will constitute a bad credit score. Credit agencies provide their own individual guides but lenders don’t rely on these exclusively. Most will have their own set of criteria that they use to assess you as a credit risk so don’t give up if your credit score isn’t perfect.

How to get a loan if you have a bad credit score

You can still get credit if you have a bad credit score. The difference between someone with a good credit score and someone with a bad credit score is often just the type of loan that’s available. A poor credit score will mean that you don’t get the best deals on interest rates and borrowing conditions as you’ll have to go for one of the “bad credit loans“. There’s not much that you can do about that other than to work to improve your credit score. However, usually you can still borrow. And if the interest rates and conditions on offer work for you financially – and you can afford the repayments – then you can still get the cash you need.

Reputable lenders in this field can be a good option for anyone with a bad credit score for two reasons. The first is that money is usually offered for a shorter period of time and the amount borrowed tends to be less than a standard personal loan. As long as you have the guarantee of an income with which to make the repayment you’re less likely to be rejected. The second reason is that borrowing via a loan and making all the repayments on time can work towards improving your credit score.

Bad credit loans fall into a number of different categories. There are some where you will simply pay a higher rate of interest and be offered the loan for a shorter period of time. Others such as guarantor loans can be a good deal for borrowing with bad credit on a different basis. A friend or family member stands as guarantor for you, promising to repay the bank if you can’t. This can sometimes mean you get a better deal. The same is true of Homeowner loans – where the lender has a property you own as back up if you can’t pay.

Improving your credit score

The best way to work out how to get a loan if you have a bad credit score is to improve that credit score. There are a number of ways you can do this:

  • Make current payments on time
  • Clear existing debt
  • Check your credit report is correct
  • Pay rent on time – this can now count towards boosting your credit score
  • Look out for fraudulent transactions