How to get a loan with bad credit
How to get a loan with bad credit
If your credit score is limiting your ability to get a loan, you still might be able to keep your plans on track.
‘Bad’ credit might simply mean ‘no’ credit if you’re younger or have recently moved to the UK. A financial past that you’ve moved on from might still be having a lingering effect now.
We offer bad credit loans to homeowners in the UK, looking at much more than just a number. Read on for how getting a bad credit loan works and how we can help.
What is considered bad credit?
The UK has three main credit agencies: Equifax, Experian and TransUnion. Each calculates credit scores a little differently and has a unique way of assessing what makes a credit score ‘bad’.
- Equifax (Ratings 0-1000): A score from 0-438 is classed as ‘poor’.
- Experian (Ratings 0-999): A score from 561-720 is classed as ‘poor’. A score lower than this is classed as ‘very poor’.
- TransUnion (Ratings 0-710): A score from 561-565 is classed as ‘poor’. A score lower than this is classed as ‘very poor’.
You can access your credit report for free from all three organisations. Most also offer paid services that get you access to more information.
There are many reasons why people might have a low credit score. If you have little credit history, your score will be lower. For example, if you’re a younger person who has not paid utility bills or taken a pay monthly car insurance policy, lenders don’t have any history to review and assess your potential as a customer.
If you’ve missed previous payments or made several applications for credit in a short space of time, these can also impact your score negatively. Maxing out credit cards, mail orders and store cards can also affect your score.
Bear in mind that, while having a better credit score may increase your chances of being accepted for finance – and possibly also better rates – it’s possible to secure a loan with bad credit.
At Evolution Money, we understand that everyone’s financial situation is different. We’ll take the time to understand your finances and look at your circumstances beyond your credit score if you’re trying to get a loan.
Where can I get a loan with bad credit?
Many lenders now offer loans for people with bad credit. Some may offer lower amounts to those with low credit or charge a higher interest rate as they are deemed a bigger risk of not repaying.
At Evolution Money, we keep things simple. We’ll work with you to find a loan that suits your needs and that you can afford to repay. If you have a ‘bad’ credit score, we’ll look at the reasons why and assess whether it is likely to be a future factor.
Can I get a secured loan with bad credit?
It’s possible to get a secured loan if you have a bad credit score. At Evolution Money, we offer secured loans. As with any kind of credit product, a lower score might mean that you get a higher rate of interest compared to someone whose score is higher. As you are offering an asset as ‘security’, a lender has another avenue to recoup the money that you have borrowed. This is a key consideration before you apply, as you could lose your home if you do not make your repayments.
How to get a loan with bad credit: The process
Different lenders will have different processes and criteria if you’re applying for a loan with bad credit. Here’s how it works with Evolution Money:
- Check Eligibility and Apply: Complete our online application form, letting us know how much you want to borrow and for how long. We’ll perform checks to see if you qualify for one of our loan products without affecting your credit score.
- Offer and Speak with a Qualified Mortgage Advisor: If you meet our initial criteria, a qualified mortgage advisor will contact you to discuss your application, provide you with a personalised loan offer and perform an initial affordability check. They’ll ensure that the loan terms meet your needs and answer any questions you may have. If you’re using the loan for debt consolidation, we’ll discuss which debts you want to pay off.
- Check and Verify Details: Once you accept the loan offer, our team will thoroughly review your application, verifying the details you’ve provided and conducting a valuation of your property if needed. For debt consolidation loans, we’ll arrange to pay off your creditors directly, simplifying the process for you and helping to ensure that your debts are cleared efficiently.
- Release Funds and Repayment: After your application has been fully approved, we’ll either transfer the funds directly to your bank account or, in the case of debt consolidation, pay off your creditors directly. You’ll then begin making monthly repayments as agreed. Direct debit payments can help you avoid missing any payments, which could negatively impact your credit score. Throughout the loan term, our team is here to support you, so don’t hesitate to reach out if your circumstances change or if you have any questions.
What can I use a loan for?
You can use a homeowner loan for all kinds of reasons.
Will a loan affect my score if I have bad credit?
It’s often possible to check your eligibility for a loan without affecting your credit score. Many lenders provide tools that give you an indication of whether you’ll be accepted or not using a ‘soft search’ – which does not appear on your credit file.
When you apply for a loan, lenders will then use what is known as a ‘hard search’ on your credit file. This gives them access to additional financial history and helps them assess if you are a suitable person to offer credit to. It shows if you’ve met repayments on time for other products and how you’ve utilised credit allowances.
A hard search can result in your credit score falling slightly. Making multiple applications in a short timeframe can multiply that effect.
If you take out a loan with bad credit and meet your monthly repayments, this can have a positive effect on your credit score over time. If you manage your overall finances wisely at the same time, your score should be healthier in the long run.
How to improve a bad credit score
- Pay bills on time and in full: Set up direct debits so that you pay utility bills shortly after you’re paid by your work. Try wherever possible to clear any credit card payments at the end of each month, too.
- Check your credit report regularly: Your credit report might include details that are no longer correct. For example, if you set up a joint account with a flatmate for bills but no longer live with them, they can stay on your report as a ‘financial associate’. If they have financial issues, this can impact your score in turn.
- Limit your credit usage: If you have a credit card, the big number next to ‘available credit’ might look tempting. But staying as far away from this limit as possible shows that you’re a responsible borrower and will boost your score.
- Don’t apply too often: Multiple applications in a short space of time means the impact of hard searches can start to snowball. If you think you’ll need to apply for a loan in the future, do so strategically and apply at a time when you’re not looking at other financial products – like mobile phone contracts or store purchases on credit.
- Get on the electoral register: Registering to vote means that lenders have a simple way of confirming your address.
How to get a loan with bad credit from Evolution Money
If your credit score is on the lower end but you still need a loan, use our online form to check your eligibility for a bad credit loan.
We offer secured loans from £5,000 to £100,000 to UK homeowners, looking at much more than just your credit score. You can have confidence that we’ll always act with your best interests in mind as we’re regulated by the Financial Conduct Authority and proud members of the Finance & Leasing Association.
Read real customer reviews to see why we’re rated ‘Excellent’ on feefo. We’re also proud to report that we’ve been awarded the platform’s Platinum Trusted Service Award.
Representative 22.93% APRC variable.
For a typical loan of £26,600 over 180 months with a variable interest rate of 19.56% per annum, your monthly repayments would be £484.00. This includes a Product Fee of £2,660.00 (10% of the loan amount) and a Lending Fee* of £763.00, bringing the total repayable amount to £87,030.00. Annual Interest Rates range between 11.7% to 46.5% (variable). Maximum 50.00% APRC. *Lending Fee varies by country: England & Wales £763, Scotland £1,051, Northern Ireland: £1,736.
Think carefully before securing debts against your home may be repossessed if you do not keep up repayments on your mortgage or any other loan secured against it. If you are thinking of consolidating existing borrowing, you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.
