Can I borrow Money in London if I Have a Bad Credit Rating? - Broke in London

Can I borrow Money in London if I Have a Bad Credit Rating?

Guest post by James Dawson

Finding the right loan when you have bad credit might seem daunting, but it doesn’t have to be. You might be worried that you are going to be rejected for a loan application if you have a poor credit history and currently have a bad credit score, but there are specialist lenders on the market that have a service designed to help people borrow money even if they do have a bad credit history. Of course, the options are limited when compared to people applying for credit with a good credit score, and the interest and payment terms might be worse, but having an option to take out a loan is better than being rejected outright.

What types of loan can I apply for with bad credit?

If you have a low credit score currently and you have struggled with debt in the past, you might find that you are restricted when it comes to the range of loans that are available to you. Even if you have a better credit score now than you once had, you still might find it difficult to secure certain types of loan, or loans with a good interest attached. There are some loans that you can apply for to help you if you have bad credit.

1. Personal loans

Unsecured loans (or personal loans as they are commonly known) are a popular option for those with bad credit, as they are not secured against your home or car, which can be worrying. There are specialist lenders who deal in bad credit loans, helping people who have been turned away from some lenders because of their bad credit history, but who deserve a chance to prove they can be a good borrower in the near future and beyond. If you are constantly rejected for bad credit history, how are you able to improve it in the future unless a lender gives you a chance to prove yourself?

2. Secured loans

A secured loan is one where you are required to put up a valuable asset as security (your home if you own it) against your loan. This is most notable when you are applying for a mortgage and can help you to borrow at competitive interest rates or APR if you have a low credit score. Secured loans generally offer a longer timescale for you to pay the money back, providing you have large enough equity in your property. Make sure you can afford repayments as to miss payments could risk losing your home.

3. Guarantor loans

A guarantor loan is designed for those with a very bad credit score and poor credit history. If you are running out of options to borrow money, you might look for a guarantor loan. This is where a loan is guaranteed by a family member or close friend legally signing up to agree that they will pay the remainder of the loan back if you fail to fulfil your promise of keeping up with repayments. You’ll find that these types of loans often have high interest rates, and it also potentially puts strain on your relationship with the person you ask to be your guarantor.

How does a bad credit loan work?

When you find a bad credit loan lender it is the chance you’ve needed to improve your credit score and have the money you are looking to borrow, for whatever reason that is. Decide how much money you need to borrow and for how long, put in your application, and if you are accepted you should receive the funds within a few days at most. Paying the loan back in monthly repayments, plus the agreed interest on top, must be made consistently, without missing a date, as this will further damage your credit score if you miss a payment.

What happens if I am rejected for a bad credit loan?

If you have a poor credit history and you have found that you have been rejected for some loan applications, it is good to know what to expect. Every hard check can stay on your record for up to two years, but a hard application with a rejection will impact your credit score for about 12 months. If you make multiple applications close together this will impact your credit score. It is at this point that you should think about looking for bad credit loans and improving your credit score over the coming months and years.

How can I improve my credit score?

Even if you have a bad credit score now and have managed to borrow money for the immediate future, you need to think about how to improve your credit score, as this will help you in the long-term.

1. Take out small loans and pay back on time

Taking out smaller loan amounts (see the types of loan above) and making sure that you pay them back on time and in full, will help your credit score to build nicely in a positive fashion. It will demonstrate that you are good at managing payments, at not taking out too much credit at any given moment and having a high percentage of debt compared with your income. Over time, the more you can consistently show that you make payments on all your credit, the better your credit score will become, and the better the types of loan and credit you can apply for.

2. Check your credit file

Any mistakes on your credit file could in fact be hurting your credit score over time. There are four main credit agencies in the UK, and you have the right to access them to view your details. Make sure that everything is accurate and up to date, and if you find anything that is wrong, contact the credit agency and ask them to not only rectify the error but to put a note on your file that shows this process is in place.

3. Register to vote

One of the ways in which lenders will appraise your application for a loan is to identify you and find out if you are the person that you say you are. Registering to vote and ensuring that your name and current address are on the electoral roll is a great way to help with this process. It also helps to boost your credit rating as a result. Also, the longer you stay at one address the more stable you appear to lenders.

4. Don’t apply for too many loans

The more applications you make over a short period of time, the less lenders will trust you. This is even worse if you are rejected for multiple loan applications over a short period of time, as every time you do so it leaves a negative mark on your credit file, and this will bring your credit score down.

5. Keep an eye on your credit utilisation

Try not to go above 30-50% of your available credit on any line of credit you have access to. By borrowing within these reasonable limits, you demonstrate that you are a responsible borrower and are more likely to be accepted on future credit applications.

Close down unused accounts

If you have any old credit cards that are fully paid off and that you no longer use, cancel them as soon as you can. Unused credit cards that are hanging around on your credit file could have a damaging effect on your credit score.

Where can I find a bad credit loan to suit my needs?

It is important to find the right solution for your needs. This will depend on a range of factors, such as the type of loan you want to take out, the reasons behind the loan, the amount you wish to borrow and the payment terms you are seeking, your credit score and history, and other personal circumstances. Comparison sites for bad credit loans and other financial services are there to help you make the correct choice for your needs,  helping you work out the best choices that fit your current credit score and where you see yourself in the future.

Having bad credit and looking for a loan might seem like a stressful time, but there is help out there for you and there are lenders with the means to assist bad credit loans. There are a few different types of loans that you can apply for, even if you do have a poor credit history. Just remember, that you might pay a higher interest, have shorter repayment periods, and other limitations, but it is a good chance to take out a loan to help you with your current needs, and if you maintain consistency with paying back your bad credit loans on time, it will only help you build a good credit score for the future. This will open up a whole new world of possibilities when it comes to available credit and lower interest. If you are struggling with debt and you are worried about your mental health, there are some debt charities out there that can help you.


Please note that financial information and lending options may change over time. It’s essential to verify the accuracy and suitability of any financial advice and loan options with up-to-date and reliable sources. This article provides general information and should not be considered as professional financial advice. Always consult with a qualified financial advisor for personalized guidance tailored to your specific situation.