Bad Credit Loans UK (2026)
Specialist lenders who accept poor credit histories. Guarantor loans, secured options, and credit-builder products.
Roughly 1 in 10 UK adults have a credit score classed as 'poor' or 'very poor' (Equifax, 2025), often because of a historical missed payment, a CCJ, a debt management plan, or simply a thin credit file. Mainstream bank loans are typically unavailable, but specialist FCA-regulated bad credit lenders will still lend — at higher APRs that reflect the risk. Used responsibly, a bad credit loan also helps rebuild your score. Below we walk through the UK bad credit loan market, typical APRs, and the alternatives worth considering first.
Types of bad credit borrowing in the UK
- Unsecured bad credit loans
- £500 to £10,000 from specialist lenders (118 118 Money, Drafty, Likely Loans, Everyday Loans). APR typically 30%-49.9%.
- Guarantor loans
- A friend or family member with good credit co-signs. Up to £15,000. APR usually 25%-40%. Guarantor is liable if you default.
- Secured bad credit loans
- Backed by your home. Larger amounts (£10,000-£100,000+), lower APRs (8%-25%), but your home is at risk if you miss payments.
- Credit-builder loans
- Loqbox, Plend, some credit unions. You pay in monthly, the 'loan' is held in savings, and you get the money back plus a boosted credit score at the end.
- Credit union loans
- Not-for-profit lenders with APR capped at 42.6%. Often more lenient on credit history for small loans (£100-£3,000).
Before taking a bad credit loan — try these first
- Check your credit report for errors free at all three bureaus (Equifax, Experian, TransUnion). Around 1 in 5 reports has at least one mistake. Disputing a wrong default can lift your score enough for mainstream rates.
- Credit-builder credit card for small amounts — cheaper than a bad credit loan if used right.
- 0% purchase credit card — if your score is 'fair' not 'poor', you may qualify. Interest-free for 12-24 months.
- Speak to StepChange if the loan is to cover existing debts. Free advice often finds cheaper solutions.
Watch out for
- APR over 50% — if the rate is that high, the loan is a red flag. Check the lender on the FCA register.
- 'Guaranteed acceptance' promises — illegal under FCA affordability rules. Any firm advertising this is unauthorised.
- Upfront fees — legitimate UK lenders never charge before releasing the loan. Advance-fee fraud is the most common bad-credit scam.
- Extending the loan — some lenders let you 'roll over' an existing loan into a new, larger one. This is almost always worse value than paying off and starting clean.
Questions answered
A personal loan designed for borrowers with poor or limited credit history. UK bad credit lenders accept applicants mainstream banks decline, typically those with credit scores below 560 (Equifax) or with recent defaults, CCJs or IVAs. APRs are higher — usually 19%-50% — to reflect the risk.
Identically to standard personal loans: a fixed sum, fixed monthly payments, fixed term. The difference is in the underwriting — lenders look at affordability and income more than credit history. Some offer guarantor loans (a third party co-signs), secured loans (against your home), or specialist products like credit-builder loans that boost your score over time.
Yes, if managed properly. Making every monthly payment on time for 12+ months rebuilds your payment history — the biggest single factor in your credit score. After 2-3 years of on-time payments on a bad credit loan, many borrowers move into the 'fair' or 'good' credit tier and qualify for mainstream rates.
A loan where a friend or family member with good credit agrees to make payments if you can't. Guarantor loans typically offer lower APRs (15-40%) than unsecured bad credit loans because the risk is shared. The guarantor's credit file shows the account, and their credit score is affected if you miss payments.
Yes — by the Financial Conduct Authority (FCA) under the Consumer Credit Act. All UK personal loans under £25,000 are regulated. FCA rules on affordability, responsible lending and fair treatment apply. If a lender isn't FCA-registered, don't use them — check the FCA register at register.fca.org.uk.
For amounts under £1,500, almost always yes. A credit-builder credit card (Capital One Classic, Aqua, Vanquis) offers a £200-£1,500 limit at 30-40% APR. Used responsibly — small purchases paid in full each month — it rebuilds credit without paying any interest. Only use a bad credit loan for larger one-off amounts (car, home repairs, medical).
Often yes, at higher rates. Recent (under 2 years) CCJs are the hardest — specialist lenders like 118 118 Money, Drafty or Likely Loans consider them. Older or satisfied CCJs are easier. Always pay down and settle any CCJ before applying — a 'satisfied' CCJ is much less damaging than an unpaid one.
Typical range: 19.9% to 49.9% APR. The lowest rates (19.9%-25%) go to borrowers with a fair score and stable income. 30%-40% is common for thin-file or recent-default borrowers. Anything over 50% APR in the UK is usually a warning sign — check the FCA register before borrowing.
Yes, if affordability fails or the credit file has recent serious issues (undischarged bankruptcy, multiple unpaid CCJs, debt management plan in last 6 months). Use soft-search eligibility tools first. If declined everywhere, consider: credit unions (members-only, often more lenient), a credit-builder loan (like Loqbox), or speaking to StepChange for free debt advice.
Free, impartial UK debt advice: StepChange (stepchange.org, 0800 138 1111), Citizens Advice, National Debtline (0808 808 4000), PayPlan, MoneyHelper (the FCA-backed successor to the Money Advice Service). All are free; never pay a private firm to 'solve' your debts.