The 5 Loans You Can Still Get With a Bad Credit Rating

If you have credit score which is poor, do not fret, there are still options for you to borrow money, but some better than others! We look at some of the best options.

Loan 1: Borrow money from friends or family

friends and familyUndoubtedly one of the potentially cheapest ways you can get boost your short term income is to borrow money from a friend or family member.

People are often though not keen on doing this, for maybe it’s embarrassing, or you are worried that it may cause future difficulties.
But if you think there is a friend or family member who may have the money and trusts you enough to lend, then how you actually ask them for help is very important; see our 5 steps below:

1. Have a good reason for needing the money

people are much more sympathetic to genuine reasons such as a broken down car rather than for some new designer clothes!

2. Know exactly how much you need to borrow and what you can pay back and when.

If for example you go to them saying you need to borrow £400, and that you can afford to pay this back over 10 weekly installments of £40, they will see that you have thought about it.

3. Offer an interest payment.

If you were going to turn to another lender, you would have to pay interest, so it’s only fair that you offer them interest on top of the balance of the money that you have borrowed. So rather than paying back £40 per month over 10 weeks, say offer £42 per week?

4. Have a written agreement.

We’re not suggesting you have to get a full agreement in place like a bank; but a simple dated confirmation of amount you are borrowing and when you are going to pay this back will do the trick. When things are put in writing, this gets rid of confusion and reduces any potential risk of future falling out.

5. Pay back as promised.

Last but not least, make sure you pay back exactly what and when you promised. If you do get into a situation where you are struggling to make a payment tell them in advance, and then when you will make this payment up. People hate it when they have to chase you when a payment has been missed; this destroys trust.

If you have a friend or family member who trusts you, has a clean credit history, but does not have the money to lend you, then they might be able to help you by becoming your guarantor for a guarantor loan (see more detail below in No. 5).

The financial crisis and recession that followed saw banks radically change the way they decide to lend money. Essentially, they now want to take fewer risks with their cash.

Martin Lewis
Money Saving Expert

Testimonial Martin Lewis

Loan 2: Bank Overdraft

The overdraft can be one of the cheapest ways of borrowing money, and are great for short term emergencies.

The high street banks are though becoming less and less helpful when it comes to giving out overdrafts, especially if you have a poor credit score.

But it is worth asking your bank, they can only say no!

Loan 3: Credit Card

credit cardsIf you have an existing credit card with a spare balance this may be a way of getting access to short term money.

Whilst it is possible to get cash out of some cards, this is usually very expensive and incurs extra fees, so credit cards are best used for paying for expenses, such as a car repair, directly.

There are a limited number of cards available to people with poor financial histories; though if you need money quickly these card applications can sometimes take up to a month; and there is no guarantee they will accept you application.

Credit cards can be a good option if you have an available balance; but remember to make a plan for paying the card back, for large card balances can be very expensive per month.

Loan 4: Payday loans

payday loans signThe payday loan is now widely known, partly because of high levels of TV advertising, but also because of much bad press due to very high charges.

They can be a good solution to fast cash, but if you do not pay back on time, or use the loans regularly, they can become extremely expensive and cause people serious financial difficulties.

Any type of payday finance should only be considered if (1) all other options have been deemed unsuitable, (2) that you are comfortable you can make the repayments and (3) you are comfortable it will be a one off agreement.

Loan 5: Guaranteed Lending

A guaranteed loan is a form of finance which requires you to find a friend or family member with a good credit rating to back up you loan application.

It therefore does not matter how dodgy your financial records may be, so long as you guarantor has a clean history.

They are up to 10 times cheaper than payday options.

If you think you can find a friend or family member who will trust you to make the repayment; then guarantor lending be the right option for you.

Look at our  calculator below and submit your details to receive a range of offers.

If you think you can find a friend or family member who will trust you to make the repayment; then guarantor lending may be the right option for you.

Look at our calculator and submit your details to start receiving a range of offers (over £500 only)

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