Loans For Bad Credit
Find out why a credit line might be better
Is it possible to get a loan with bad credit?
Yes, it is possible to get a loan with bad credit. However, the options available may be more limited, and the terms might be less favourable than loans for individuals with good credit.
At Drafty, we understand that many people can have poor credit and still be financially responsible. Instead of proposing a bad credit loan that puts you into a bigger hole, we offer a credit line to help ease your worries.
Why choose Drafty line of credit over bad credit loans direct lenders?
- Speed - We pride ourselves on offering a quick and easy alternative to bad credit loans. You could get cash into your bank in under 90 seconds, once approved. No need for a long and anxious wait
- Borrow what you need – You can apply for up to £3000 and use what you need from your approved credit line. Unlike a loan for bad credit, you’re always in control
- Reuse - Want to know what really sets us apart? As we offer a line of credit, you can reuse Drafty whenever you need without reapplying. Yes, it’s that straightforward
- No fees – The best bit? There are no fees. That’s right – zero, zip, zilch, nada! What’s more, you only pay interest on what you use, so if you don’t use any of your credit, it doesn’t cost you a thing
At Drafty, we’re proud of our customer service. See why we’re rated great on Trustpilot.
Representative 96.2% APR (variable)
Subject to status. T&Cs apply.^
Drafty Is FCA Authorised
We’re an FCA-authorised and regulated direct lender. Our authorisation number is 689378. Responsible lending is our biggest priority. We want to ensure that our customers' experience with us is great. We believe in ensuring that you are fully informed about the costs, fees, and repayment terms of our credit line. To achieve this, we have taken great care to present all charges, including interest rates and fees, upfront. No hidden costs or unwelcome surprises. Everything is clear and easy to understand.
Representative 96.2% APR (variable)
Subject to status. T&Cs apply.^
What are bad credit loans?
Bad credit loans are designed for individuals with a poor credit history or a poor credit score. These loans often come with higher interest rates and fees as they are considered a higher risk for lenders. Bad credit loans might even help people with a very bad credit score to access funds when they may not qualify for other types of loans. It's important for borrowers to carefully consider the terms and conditions of bad credit loans before taking one out.
What is bad credit, and how do I check if I have bad credit?
Bad credit refers to a low credit score that indicates a higher risk for lenders. Credit scores are numerical representations of an individual's creditworthiness and are based on their credit history. A low credit score suggests that an individual may have a history of late payments, defaults, high levels of debt, or other financial issues, making it challenging for them to qualify for new credit or loans.
You can review your credit report to check if you have bad credit. You can get a free copy of your credit report from each of the three major credit reference agencies (Equifax, Experian, and TransUnion) at least once a year. It's crucial to regularly monitor your credit and address any inaccuracies or incomplete information. If you discover issues, take steps to improve your credit by making timely payments, reducing outstanding debt, and maintaining a positive credit history over time.
Although there are lenders who offer bad credit loans, improving your credit score can enhance your financial health and increase your chances of qualifying for better loan terms and interest rates in the future.
How can I improve my credit score?
- Make timely payments: Consistently pay your bills on time, including credit cards, loans, and utility bills. Payment history is a significant factor in your credit score.
- Reduce Outstanding Debt: Work on paying down existing debt, particularly high-interest credit card balances. Aim to keep your credit card balances well below their credit limits.
- Avoid opening too many accounts: Limit the number of new credit accounts you open, as too many inquiries or new accounts in a short period of time can negatively impact your credit score.
- Keep old accounts open: The length of your credit history is a factor in your credit score. Avoid closing old credit card accounts, as they contribute to the length of your credit history.
- Seek professional support: If your credit situation is challenging, consider consulting with a financial advisor for guidance on improving your credit.
Remember that improving your credit score takes time, and there is no quick fix.
Types of loans for bad credit
Personal loans
A personal loan is a type of borrowing that people can borrow from a bank, credit union, or online direct lender for various purposes. A personal loan can be either secured or unsecured. Secured personal loans require collateral (such as a car or home). Unsecured personal loans do not require collateral but may have higher interest rates. You might get personal loans for bad credit too, but the interest rate is usually higher.
Guarantor loans
A guarantor loan can be a game-changer if your credit history is less than ideal. This type of loan requires a guarantor, usually a family member or a close friend, who agrees to take on the financial responsibility if you fail to make the repayments. The presence of a guarantor reduces the risk for the lender, often leading to more favourable terms and interest rates. With bad credit, having a guarantor can help you borrow money while potentially rebuilding your credit score.
Debt consolidation loans
Debt consolidation loans are specifically designed to help you manage multiple debts more effectively. By combining multiple debts into one, more manageable loan, you can streamline your payments and potentially secure a lower overall interest rate. This not only simplifies your financial management but can also help reduce the total cost of your debts. It’s a strategic move for those looking to regain control over their financial health.
Secured loans
A secured loan for bad credit is backed by collateral. The collateral could be property, such as a home, a car, or other valuable assets. The lender holds the right to take possession of the collateral if you're unable to repay the loan. This loan can be a viable option for those needing larger sums of money and who have assets to use as security.
How can I check my eligibility for a bad credit loan?
If you are looking to apply from a reputable bad credit loan direct lender in the UK, it's important to first check your eligibility with them.
If you are looking to apply for a line of credit with Drafty instead, then you must be:
- 18 or over and employed
- Earning at least £1,250 a month
- A UK resident with an active bank account and debit card
Once we’ve gathered your information, we'll conduct credit and affordability checks and then agree on a credit limit with you if you're approved. We’ll then send the cash to your bank within 90 seconds.
Even if you are eligible for a bad credit short term loan, you should only borrow what you can afford to repay. Failing to repay a loan can negatively impact your credit score and make it harder for you to get approved for a loan in the future.
Representative 96.2% APR (variable)
Subject to status. T&Cs apply.^
How to apply for bad credit loans in the UK?
Applying for bad credit loans in the UK involves a process that varies depending on the lender. Start by looking for lenders who offer bad credit loans. You can look for online lenders, credit unions, and banks. Make sure to compare different lenders to find the best interest rates, fees, and loan terms that fit your budget.
Once you have decided which lender to apply with, fill the online application form given on the lender’s website, provide details about yourself and your finances. You may also be asked to provide documents like ID, proof of income, etc.
Choose how much you need to borrow and the repayment period that works for you. If your application is approved, check the loan terms and conditions before agreeing. Once agreed, the money will be sent directly to your bank account.
At Drafty, we believe we offer something better than a bad credit loan. Here's how you can apply for a Drafty's line of credit:
- Apply - We need a few personal details to help us understand who you are
- Get a credit limit - If approved, you’ll be given a credit limit of up to £3,000. You can use it as you require, paying interest only on what you use
- Flexible payment - You’ll need to repay a minimum amount every month. Want to repay early? That’s fine with us! We don’t charge anything extra. Also, it’s easy to make payments through our app
- Fast cash transfer - Use Drafty whenever you want, and we’ll send the money to your bank in under 90 seconds
Representative 96.2% APR (variable)
Subject to status. T&Cs apply.^
How much can I borrow with Drafty?
Drafty offers credit lines from £50 to £3000 (subject to approval) with a flexible repayment schedule. You can use your credit line within the approved limit as long as you make your minimum monthly repayments.
Representative 96.2% APR (variable)
Subject to status. T&Cs apply.^
Can I repay my loan early?
Yes, in most cases, you can repay your loan early. However, there may be penalties or fees associated with early repayment depending on the lender’s terms and conditions of the loan agreement.
With Drafty, there’s no charge for repaying early, and we make it easy to do so on our app.
What to keep in mind when looking for a bad credit loan?
- Do I really need it: Assess the urgency and necessity of the loan. Consider alternative options, and only proceed if the need is genuine.
- Check credit score: Obtain a copy of your credit report and check your credit score. Understand the factors contributing to your bad credit and ensure that there are no errors in the report.
- Cost: Calculate the total cost of the loan, including interest rates and any additional fees. Be aware of the annual percentage rate (APR) as this includes both the rate of interest and any additional fees.
- Comparing lenders: Research and compare multiple lenders. Look for reputable institutions that specialise in bad credit loans. Consider factors such as interest rates, repayment terms, and customer reviews to make an informed decision.
- Budget planning: Evaluate your current financial situation and create a detailed budget. Determine how much you can realistically afford to repay each month without jeopardising your essential expenses.
How do I compare bad credit loans from different lenders?
Here's a step-by-step guide on how to compare bad credit loans:
- Interest rates: Compare the interest rates offered by different lenders. Bad credit loans typically come with higher interest rates, but even with bad credit loans interest rates can vary.
- Total cost (APR): Look beyond the interest rate and consider the Annual Percentage Rate (APR). The APR includes both the interest rate and any additional fees.
- Repayment terms: Evaluate the repayment terms offered by each lender. Consider the loan duration and whether the repayment schedule aligns with your budget. Shorter terms may have higher monthly payments but can save you money on overall interest.
- Fees and charges: Be aware of any additional fees or charges associated with the loan. Common fees include missed payment fees, late payment fees, or early settlement penalties. Compare these fees across lenders to understand the full financial implications of each loan.
- Loan approval time: If time is crucial, consider how each lender processes and approves loans. Some lenders may offer quicker approval times, which can be important in urgent financial situations.
Alternatives to bad credit loans
1. Payday loans
2. Credit cards for bad credit
Credit cards for bad credit are designed to help individuals with less-than-perfect credit histories rebuild their credit. These cards typically have higher interest rates and lower credit limits, reflecting the increased risk for the lender.
3. Borrowing money from a friend or family member
Borrowing money from friends or family is an informal and personal lending arrangement. While this approach may provide more flexibility and may not require a credit check, it's essential to approach it with care. Clear communication and a formal agreement detailing the loan amount, terms, and repayment plan can help prevent misunderstandings and maintain the relationship.
Contact Drafty today
- Live chat - Log in or create a new Drafty account to speak to our team through our live chat function
- Drop us a message - If you'd like to send us an email, checkout our contact us page and drop us a line. A member of our friendly team will answer your questions as soon as possible
- Give us a call - We're here to answer your calls on 0203 695 8072 from 9am to 6pm Monday to Friday, and 9am to 1pm every Saturday#
FAQs – Loans for bad credit
How can I get better rates and higher limits?
To secure better rates and higher limits, maintain a good credit score through timely payments and responsible credit use. Plus, increasing your income, reducing debt, and diversifying credit types can enhance your credit profile.
How long can I take a bad credit loan for?
The duration of a bad credit loan can vary depending on the lender and the specific terms of the loan agreement. Generally, terms can range from a few months to several years. Selecting a term that balances manageable repayments with minimal total interest is important.
Can I borrow money with very bad credit?
Yes, borrowing money or getting a loan with very bad credit is possible, though your options may be limited. There are direct lenders like Drafty, who will consider more than your credit rating when reviewing your application.
Does a bad credit loan affect my credit score?
Yes, like any form of borrowing, a bad credit loan can impact your credit score. Repaying on time can improve your score, while late or missed payments can cause further damage it.
Is it possible to get a bad credit loan with no credit check?
We advise you to not take a loan from any lender who offers a loan with no credit check. All FCA-regulated direct lenders need to perform a credit check as part of the loan application process. This practice is in place to prioritise responsible lending and ensure a thorough assessment of each application.
Why is it difficult to get a loan with poor credit history?
Getting a loan with a bad credit history is challenging because lenders view poor credit history as a higher risk. This makes them cautious about offering loans. A history of missed payments suggests a higher chance of defaulting on new loans.
Can I get loan with poor credit score?
Yes, it's possible to get a loan with a poor credit score. There are lenders who specialise in bad credit loans, though the conditions might include higher interest rates or the need for a guarantor.
Drafty is an FCA-authorised provider of a Revolving Line of Credit with a credit limit of up to £3000, available to borrow as and when you need it (subject to affordability checks). You only pay interest on what you draw/use.
Representative Example: Assumed credit limit: £1200. Representative 96.2% APR (variable). Annual interest rate 69.4% (variable).
There is no set minimum or maximum repayment term, so long as the minimum monthly repayment sum is met, however, you may repay back early without any fees and save on interest.