Finance options for bad credit

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If you’ve got a few blips in your credit history or haven’t borrowed money before, finding finance options can prove tricky. A low credit score indicates to lenders that you are a bit riskier to lend to. This is why you might be seeing limited finance options and high APRs. However, just because you’ve had difficulties in the past, you may still have options. To give you a clearer idea of the alternatives that might be available to you, here are a few potential finance options for bad credit.

1. Credit builder cards

A credit builder card is a credit card that you can use to build up your credit score. Although they sometimes come with higher APRs than other cards, they’re available to people with lower credit scores.

If you’re eligible for a credit builder card, using it little and often and repaying it in full each month could help build up your credit score over time – improving your eligibility for loans, mortgages and credit cards in the future.

2. Homeowner loans

If you’re a homeowner, you could be eligible for a homeowner loan even though you have a history of bad credit. You may also find that you can get a more favourable rate with a homeowner loan, giving you lower monthly repayments.

A homeowner loan is a loan that’s secured against your property. As this gives the lender more security, you could borrow larger amounts (up to £500,000+) and spread them over longer terms (up to 30 years). However, with the loan being secured against your home, this means that your lender could repossess your home if you are unable to repay it.

Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

3. Guarantor loans

A guarantor loan is a loan which needs one of your friends or family members to agree to repay your debt if you become unable to pay. It’s similar to a personal loan, however is a finance option for bad credit as it offers an extra layer of security for the lender.

Don’t like the idea of someone close to you being linked to your debt? Well, you may find that repaying your loan each month improves your credit score. This may make you eligible for a personal debt consolidation loan that you can use to repay your guarantor loan and become financially independent.

Want to know more? Take a look at our guide to guarantor loans.

4. Revolving credit

Sometimes when you check your eligibility for a personal loan, you may see an option for revolving credit. Instead of having a sum of money to repay like with a personal loan, revolving credit offers you a line of credit that will be available to you again once you repay it.

How many times you can access this line of credit per year depends on the lender and your credit offer. You’ll only incur charges on interest on what you borrow, when you borrow it – similar to a credit card. Revolving credit options can vary, however. So, make sure you’re fully aware of how and when you’ll be charged for borrowing before you apply.

Finance options for bad credit can be a good way to help you access the finance you need, as well as helping you improve your credit score over time.

Want to see if you can give your credit score a boost before you check your finance options? Take a quick look at our five easy ways to improve your credit score. Or, check out these 5 common credit score myths you should be aware of.

Warning: Late repayment can cause you serious money problems. For help go to

36.8% APR Representative (fixed)

Representative example: 36.8% APR Representative based on a loan of £12,500 repayable over 48 months at an interest rate of 36.8% pa (fixed). Monthly repayment of £500.83. Total amount repayable is £24,039.67.

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