Frequently Asked Questions

While getting a personal loan with bad credit isn't impossible, it is harder and more expensive. Traditionally, payday loan and short-term loan lenders were known to lend to persons with less favourable credit scores. However, this is an expensive form of lending due to the high-interest rates.

It may be best to improve your credit score first before applying to borrow money. This can take time, but remember that you may get a better deal with a good credit history.

Many lenders may still lend to you even if you are self-employed. Check the lender's criteria to ensure you will not be rejected in such a case. Lenders may ask you to prove your income, as you can be seen as higher risk, due to not having the security of an employer behind you and a consistent, regular income.

The usual rules around affordability will still apply. For example, suppose you can only afford to pay yourself £1,000 a month. In that case, you are unlikely to accept a loan with £500 monthly repayments.

In short, a personal loan direct lender will use your credit score to indicate how reliable you may be as a borrower. It's not a guarantee, however. Lenders look at affordability, too, considering your income and regular expenditure. They will also look at any outstanding debt you may have.

Your credit history will show how good (or bad) you are at paying back debts and bills. It will have a history of where you have lived and any financial connections that you may have with other people. Additionally, it will show if there have been any recent "hard" searches on your credit file - due to you trying to apply for credit elsewhere. It's good to regularly check your credit history, look for mistakes, discrepancies or missing data and get these fixed as soon as possible. Your credit score is one of the factors that will help a lender decide whether to lend to you or not.

Generally, the better your credit rating and history, the more likely you will be accepted for a personal loan. Loan companies specialise in lending to people with bad credit ratings, so all is not lost if your credit history is less than perfect.

This depends on the lender and the information they have on you. Some lenders may ask you for additional information or need to speak to you, this may slow down the process. Usually online lenders are the fastest option. Payments are normally done by bank transfer and on the same day that your application is accepted. However, some loans, for example guarantor loans, can take several days or even weeks to approve. Always check with your lender before applying.

If you qualify for an interest free purchase period on a credit card, this can work out cheaper than a loan. However, if you don’t pay off the full balance before the interest free period ends, the credit card company will start charging interest at their standard rate. This can work to be out more expensive than if you had chosen a loan with a good interest rate.

Most personal loans are unsecured, and don’t require you to provide collateral or an asset to secure the loan. However, always ensure that you read all the terms of your loan carefully before applying, so that you understand the requirements of the loan and the risks involved.