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Best Bad Credit Loan Providers and Sites in 2020

Here is our list of what we consider the best bad credit loan providers in 2020!
Kane Pepi
Author: Kane Pepi
Last Updated: March 25, 2020
A credit score gauge indicating poor, fair, good, excellent - credits shutterstock
A credit score gauge indicating poor, fair, good, excellent - credits shutterstock

If you have a less than ideal credit rating, you probably know just how difficult it can be to obtain a loan and other credit services. And even if you are able to get a loan, it’s likely that its interest rates will be sky high in-line with the higher-than-average risks faced by the lender.

It, however, isn’t all doom and gloom for you as there still are a plethora of UK lenders out there willing to advance loans at competitive interest rates to individuals with bad credit and others with non-existent credit history. And in pointing you to the right direction, we’ve created the ultimate guide to the Best Bad Credit Loans of 2020. Here, we not only explain how bad credit loans work but also list 9 of what we consider the best bad credit lenders in the market.

Table of Contents

    Loan Mr.

    Our Rating

    • Loan starting from £100 to £2,000
    • Representative rate of 49.9% APR
    • Payback period of up to 36 months
    • Offers an extension of your repayment period for a fee
    Note: One of the most important factors that you need to look out for when taking out a bad credit loan is the APR. While a bad credit tends to scare away affordable loan service providers, you will still want to avoid loan lenders that charge super-high interest rates.

    The Pros and cons of bad credit loans

    Pros

    • Suitable for people of all credit profiles
    • Qualify for a loan with a bad credit score or no credit history
    • Thousands of loan providers to choose from
    • Loans from as little as £50
    • Complete the entire application online or via your mobile phone

    Cons

    • Interest rates much higher than conventional loans
    • May impose high fees and penalties for late payments
    • Might demand collateral for the loan

    How do bad credit loans work? Read our step-by-step guide

    The bad credit loan application process works largely the same as any other loan application. However, if you have never applied for a loan before, or you simply want a refresher, be sure to check out the step-by-step guide outlined below.

    Step 1: Find a loan provider

    First, you will want to find a bad credit loan provider that meets your individual needs. And you can start by scrolling down to the section below and reviewing the three providers that we have recommended.

    Step 2: Start the application

    Once you have found a suitable lender, head over to their client registration page/portal. In most cases, the application can be completed online or via your mobile phone in a matter of minutes.

    Step 3: Enter your personal information

    At the next stage of the application process, you will be asked to enter some personal information. At this point ,you will need to provide your full name, home address, previous addresses, date of birth, national insurance number, telephone number, and email address.

    Step 4: Enter your financial information

    After you have provided your personal information, the lender will then ask you some questions aimed at assessing your financial standing. This will initially include your employment status, how much you earn, how long you have been employed with the company, and how often you receive your salary. You will also need to stipulate whether you are a homeowner or renter as well as your current debt status.

    Step 5: Enter your bank account details

    If your application is approved, your loan funds will be transferred to your UK bank account. As such, the lender will ask you to enter the name of your bank, account number, and sort code. These are also used to verify your identity and to prevent fraud.

    Step 6: Review the lender’s decision and if applicable, loan offer

    Once you have entered the above information, the lender will then verify the data against third-party sources – including its preferred credit rating agency. This usually takes no longer than 30-60 seconds, after which you will be informed whether or not your application was successful. In some cases, the lender might require supporting documentation surrounding your identity and/or financial standing.Loan Approved icon

    Nevertheless, if your application is approved on the spot, you will be able to review your loan offer. Known as a pre-approval offer, this will outline how much the lender is willing to lend you, and at what rate of interest. If you are happy with the offer, you can then proceed to the final stage of the application.

    Step 7: Sign the digital loan agreement

    The final stage of the bad credit loan application will require you to sign the loan application form. As the entire process is completed online, you can sign the agreement digitally. In most cases, the lender will then forward the funds to your specified bank account within 48 hours.

    Criteria used to rank the best bad credit loan providers

    • Lenders with the most competitive APR rates
    • Lenders that allow you to complete the entire application online
    • Lenders that are transparent on their fees
    • Lenders that consider loan application from borrowers with the lowest credit scores
    • Lenders that do not charge high late payment fees

    Reviewer’s choice for bad credit loan providers

    Reviewers Choice
    Loan Mr.
    Rating
    Rating
    Available Loan Amount
    £100 - £2,000
    Available Term Length
    2 and 36 months.
    Representative APR
    49.9% to 1333% APR
    Min Credit Score
    Nil
    Apply for a Payday Loan Now with Very Merry Loans
    Rating
    Rating
    Available Loan Amount
    100 - 2000
    Available Term Length
    12 Months
    Representative APR
    49.9% to Max 1333%
    Min Credit Score
    Not disclosed
    Heart Paydays
    Rating
    Rating
    Available Loan Amount
    £50 - £2,000
    Available Term Length
    4 - 36 months
    Representative APR
    49.9% and 1333% APR
    Min Credit Score
    Nil
    Viva Loans
    Rating
    Rating
    Available Loan Amount
    £100 - £15,000
    Available Term Length
    2 to 36 months
    Representative APR
    49.9% and 1333% APR
    Min Credit Score
    Nil
    Loan Shuttle
    Rating
    Rating
    Available Loan Amount
    £100 - £5,000
    Available Term Length
    2 to 36 month
    Representative APR
    49.9% to 1333% APR
    Min Credit Score
    Nil

    Best 9 bad credit loan providers

    Now that you have a good idea of what bad credit loans are, and how they work. If you’re now ready to make a loan application, but not too sure which lender to go with, we have outlined to best 9 loan providers of 2020.

    Man in glasses working on two computer monitors

    1. Loan Mr. - Borrow between £100 and £2,000

    Loan mr. is an online payday loan broker with a higher than average approval rate. Regardless of your credit score, you are allowed to borrow as little as £100 up to a maximum of £2,000. Since the platform is not a direct lender, the interest rates varies on the lender who approves your loan. Often, the interest rates range from 49.9% to 1333% APR, with repayment period of between 2 and 36 months.

    It is worth noting that missed payments results in debt growth and at the same time affect the amount you qualify for in future. You are welcome to negotiate with the provider on repayment period extension, but that will come with extra charges

    Our Rating

    • Flexible payment periods
    • Faster loan acceptance rate even with a bad credit score
    • All applications are done online with respect to a borrower's privacy
    • Relatively high interest rates - 49.9% to 1333%
    • Comes with strict repayment terms and high default charges

    2. Very Merry Loans - Borrow £100 - £2,000

    Very Merry Loans is a platform that connects borrowers to reputable lenders across the U.K. Unlike most online credit service brokers, the platform doesn't charge a fee for its services which makes it quite popular with a wide spectrum of borrowers. Usually, the loan amount starts from £100 all the way to £2,000, which is transferred to your bank account immediately after approval.

    The best thing is that you can request a loan at any time of the day even during holidays, making the platform reliable in times of financial emergencies. Depending on the loan amount, you should repay the loan within 2 to 12 months, with an interest of 49.9% to 1333% A.P.R.

    Our Rating

    • Doesn't charge a service fee which helps reduce the total cost of the borrowing process
    • Offers round the clock services proving to be reliable in case of emergencies
    • Fast loan processing
    • Very Merry Loans is not a direct lender
    • Higher than average interest rates

    3. Heart Paydays - Borrow from £50 to £2000

    Heart Paydays is a licensed credit broker connecting borrowers to credible lenders without charging an upfront fee or loan servicing fee. You are allowed to borrow from £50 to a maximum of £2,000 at an interest rate of between 49.9% and 1333% A.P.R. The platform has an intuitive interface for easy navigation with loan application terms clearly spelt out.

    Compared to other online brokers, Heart Paydays offers more flexible repayment periods ranging from 4 months to up to 36 months, but still, be cautious about delaying repayments as it may affect the amount you qualify for in future

    Our Rating

    • Doesn't charge loan servicing fees
    • Extended repayment terms of up to 36 months
    • User friendly interface
    • The customer support response is a bit slow
    • Higher than average interest rates

    4. Viva Loans - Borrow between £100 and £15,000

    Viva loan is similar to a flight comparison platform only that in this case it allows you to compare lending terms of various lenders. This way, you have the freedom to choose a lender that meets your individual needs.

    The platform has partnered with a wide network of lenders some of whom offers loans starting from £100 to a maximum of $15,000 even with a bad credit score. In fact, the lenders pay a commision to the broker every time you take a loan, meaning the platform doesn't charge users a loan servicing fee. Once your loan is approved, you have about 2 to 36 months to repay the amount at an interest rate of between 49.9% and 1333% based on your creditworthiness and the loan amount.

    Our Rating

    • Offers an above-market principal amount of up to £15,000
    • Favourable eligibility criteria
    • Has a responsive customer support team
    • Even with the freedom to choose a lender, you may still fail to get the best deal
    • Extended repayment period

    5. Loan Shuttle - Borrow between £100 and £5,000

    Loan Shuttle is an online loan matching service provider with a long history of helping borrowers access emergency loans faster at friendly terms. You shouldn't have a problem filling in the loan application details as the platform has a basic layout and a reliable customer support in case of any problem.

    After filling in the required details, a lender will respond to your application with a loan offer of between £100 and £5,000 based on your credit score and lending terms. You will then have a period of between 2 to 36 months to repay the loan at an interest rate ranging from 49.9% to 1333% A.P.R.

    Our Rating

    • Offers a higher borrowing limit compared to the average credit brokers
    • An easy to use platform
    • Access to a wide pool of lenders
    • Shorter repayment period
    • Lenders may employ the services of a debt collector for delayed repayments

    6. Loan Skipper - Borrow between £100 and £2,000

    Loan Skipper links borrowers to third-party lenders who decide on the loan amount to offer an individual as well as the payback duration. The application process is done on the website whereby you'll choose a principal amount of between £100 and £2,000 which is to be paid within 2 and 36 months at interest rates of between 49.9% and 1333% .

    You'll then have to wait for about 24 hours for the funds to reflect on your bank account, which is a pretty long time considering that most lenders in other broker sites take less than a day to release the funds.

    Our Rating

    • The broker is regulated and recognised by the Financial Conduct Authority
    • Has a simple and straightforward interface
    • Limited payback period
    • Cannot be relied on for emergency loans

    7. Ocean Finance – Borrow between £100 - £5,000

    Ocean Finance is a specialist lender that offers its credit products to individuals with a less than ideal credit profile. The platform allows you to borrow from just £100, all the way up to £5,000. And according to the provider's website, the representative rate stands at 49.9% APR. You could, however, end up paying a higher or lower rate than this, which will depend on your credit profile.

    And although Ocean Finance is known to have a much higher acceptance rate in comparison to traditional high street lenders, it is important to note that the company is not a direct lender. In other words, once you go through the application process, Ocean Finance will then match you with a lender from within its network.

    Our Rating

    • Advances unsecured personal loans of between £100 and £5,000
    • Suitable for individuals with a bad credit rating or no credit history
    • The entire application is completed in a straightforward online process
    • Not a Ocean finance is not a direct lender
    • The representative stands at 49.9% APR

    8. New Horizons – Borrow between £50 - £5,000

    Just like Ocean Finance, New Horizons is an online platform that strives to match you with a bad credit loans provider with the most competitive rates in the market. As such, they are not a direct lender but a loans marketplace. Nevertheless, the platform allows you to apply for a loan of between £50 and £5,000. Moreover, New Horizons also markets a representative APR averages 49.9% with the actual rate depending on your personal circumstances.

    The lender allows you to apply for a loan term of 3 - 36 months, while claiming that some of the lenders within its network will transfer the cash within 15 minutes of approval. Most importantly, New Horizons will not charge you any fees to use its platform. Finally, although New Horizons does not perform a credit check on applicants, there is no guarantee the lenders that it matches you with will not pull out your credit report.

    Our Rating

    • Does not charge any loan application fees
    • Maintains relatively high limits for personal loans - between £50 and £5,000
    • Extended loan repayment terms - upto 36 months
    • Not a direct lender
    • A relatively high APR - 49.9%

    9. Cash Float – Borrow between £200 - £1,100

    If you don't like the sound of being matched with a third-party lender, and want to apply for a loan with a direct lender, then you might want to consider Cash Float. The online-only lender offers bad credit loans of between £200 and £1,100. Not only does the platform accept less than ideal credit profiles, but borrowers are not required to add a guarantor to the loan agreement.

    You might, however, want to note that the APR rates charged by Cash Float can be quite high - starting from 49.9%. We nevertheless liked the lender's transparency when it comes to interest rate calculation plus they make it possible for you to review your pre-approval loan rate before depositing the loan in your bank.

    Our Rating

    • Straightforward online loan application process
    • No guarantor required
    • Cashfloat is a direct lender
    • Relatively low loan limits - between £200 and £1,100
    • High APR rates - as much as 695%

    What is a bad credit loan?

    In its most basic form, a bad credit loan is simply a conventional loan that allows UK consumers with bad or non-existent credit history to obtain a loan while those with a good credit profile benefit from the best loan offers that carry attractively low interest rates. In most cases, a bad credit loan will also be characterized by high interest rates. Bad credit loan providers – both direct lenders and loans marketplaces – come in handy in providing an alternative source of finance for bad credit borrowers.

    smiling woman tearing a paper writtern bad credit illustrating bad credit loans

    The overarching reason for the high interest is that loan providers are required to take on more risk by lending to those with bad credit borrowers given that the chances of defaulting will be higher when compared to borrowers with a good credit score.

    After all, if you do have a bad credit score, it is likely to be because you have previously missed out payments on credit-based products. This doesn’t include loans per-say, but other credit products such as credit cards, store cards, and overdrafts. It is also important to note that bad credit loans are also suitable for those that have no credit profile at all. This might be because you only recently turned 18, or you have never taken out credit before.

    How do lenders assess my credit score?

    If you have ever interacted with a credit service, whether a loan, credit card debt , or bank overdraft, you certainly left a trail and these lenders have your credit history. These lenders have probably shared this credit repayment history with the three main credit bureaus. In the UK, the three main agencies are Equifax, Experian, and Callcredit. And if you were prompt with your repayments ensuring they were on time, your lenders shared the good news with the bureaus.  Similarly, if you missed payments or failed to pay altogether, the negative reported is also filed with the credit bureau agencies.  As you go through life, these credit agencies will collect more and more data, which subsequently results in what is known as your ‘credit score’.

    Here’s an overview of some of the main factors that determine what your credit score looks like.

    • Whether you have ever missed or been late for a repayment
    • How much credit you have, or have previously had outstanding
    • The types of credit products you have
    • The size of your repayments in relation to your outstanding balances
    • Whether you have any CCJs (County Court Judgments) against your name

    It is also important to note that your credit profile is used to verify your identity when you apply for a loan. This is crucial, as your application is likely to be rejected if the lender is unable to verify your identity electronically. One of the easiest ways for credit agencies to do this is to check your name against the electoral roll.

    Note that credit agencies will also hold data on whether you have any court records against your name that are linked to debt (such as bankruptcies), and whether you have any financial associations with other UK consumers (such as joint mortgages).

    Do I have bad credit?

    Whether or not lenders deem you to have a bad credit score is ultimately down to the main credit reporting agencies. As we noted in the previous section, your credit profile is dictated by your credit-related actions. On the one hand, just because you have missed a payment in the past doesn’t necessarily mean that you have a bad credit rating and thus require a bad credit loan. A bad credit score is often the result of a consistent history of missed payments or worse – defaulting on loan agreements, then it is likely that this has resulted in a bad credit score.

    One of the key problems in this respect is that each credit rating agency will have its own credit rating system. This is different from other countries such as the US, which uses a one-size-fits-all FICO score for consumers. Nevertheless, here are illustrations of how different credit bureaus rate your credit performance:

    Equifax – Credit score ranges from 0 to 600

    • Very Poor: 0-278
    • Poor: 279-366
    • Fair 367-419
    • Good: 420-466
    • ? Excellent: 466+

    As you can see from the above, you will typically fall within the remit of ‘bad credit’ if your credit score sits between 0 and 366. In other words, being in possession of a ‘very poor’ or ‘poor’ credit rating will likely require you to obtain a bad credit loan.

    Experian – Credit score ranges from 0 to 1,000

    • Very Poor: 0-560
    • Poor: 561-720
    • Fair 721-880
    • Good: 881-960
    • ? Excellent: 960+

    As you can see from the above, Experian has a much wider range when it comes to having less than ideal credit. In other words, having a score of less than 721/1000 will result in a credit score of either ‘very poor’ or ‘poor’.

    How much do bad credit loans cost?

    In most cases, bad credit lenders don’t a one-size-fits-all interest rate for bad credit borrowers. Rather the APR rate for loans advanced to different individuals will depend on such factors as your specific credit rating, the size of the loan, how long you want to borrow the funds for, and your income.

    Ultimately, you won’t know how much you are going to pay on your bad credit loan until you actually make an application. Don’t worry, you won’t be under any obligation to proceed with the loan when you receive your pre-approval offer.

    Nevertheless, here’s a breakdown of the factors affecting your credit score.

    • Credit Score

    This by far is the most important metric that lenders will look at when you apply for a loan. As we noted earlier in our guide, your score will vary depending on the specific credit rating agency. Furthermore, lenders will typically only use one of the three agencies, so there is often no knowing which agency your credit score is being collected from.

    cartoom man staring at credit rating scale

    In most cases, however, a low credit score will almost always attract high loan APR and vice versa.

    • Size of the loan

    Lenders will also base your APR rate on the amount of money that you wish to borrow. Don’t forget, interest rates are directly correlated to the amount of risk that the lender is undertaking. In other words, the more money that you choose to borrow, the higher the rate of interest. This is not exclusive to bad credit loans, but all credit-based products regardless of the borrower’s underlying credit score.

    • Term of the loan

    In a similar nature to the size of your loan, lenders will take the term of the loan into consideration when assessing your APR rate. Once again, this is all down to the risk of lending the funds to you, so the longer you wish to borrow the funds for, the higher the APR. At the same time, the shorter the term of the loan, the lower your APR is likely to be.

    Take note, the exception to this rule is Payday loan lenders. As you might well know, Payday loans come with super-high APR rates that often exceed 1,000%, even though you are only borrowing the funds for a few weeks. However, for the purpose of this guide, we will make the assumption that you are in the market for a conventional personal loan that you pay in installments over an extended period of time.

    • Income

    On top of your credit score and the size/term of the loan, lenders will also want to know what your employment situation is when assessing your APR rate. More specifically, lenders will want to know how much you are earning in your current job. You stand a better chance of obtaining a lower rate of interest if you are employed full-time with an attractive annual income.

    On the contrary, if you are only working part-time, or your full-time income is somewhat low, then you are likely to be hit with a higher APR rate. Take note, lenders will often ask you to verify your specified income status, so make sure that your application is accurate.

    • Assets and debt levels

    The final key metric that bad credit loan lenders will look for when assessing your APR rate is your income/debt ratios. And this involves assessing the value of your assets in the form of amount of cash you have in your bank account or  whether you are a homeowner or a tenant.

    When it comes to your debt levels, lenders will look to see how much debt you currently have outstanding. For example, if you have a plethora of other loans, credit cards or overdraft balances outstanding, then this could have a detrimental impact on the APR rate you are offered.

    Loan Mr.

    Our Rating

    • Loan starting from £100 to £2,000
    • Representative rate of 49.9% APR
    • Payback period of up to 36 months
    • Offers an extension of your repayment period for a fee

    Glossary of loaning terms

    Credit Score

    A credit score shows your creditworthiness. It's primarily based on how much money you owe to loan or credit card companies, if you have ever missed payments or if you have ever defaulted on a loan.

    Guaranteed Approval

    Guaranteed Approval is when, no matter how bad, your credit score its, your loan application will not get declined.

    Credit Limit

    A Credit Limit is the highest amont of credit a lender will lend to the borrower.

    Collateral

    Collateral is when you put up an item against your loan such as your house or car. These can be repossessed if you miss payments.

    Cash Advance

    A Cash Advance is a short-term loan that has steep interest rates and fees.

    Credit Rating

    Your Credit Rating is how likely you are to fulfill your loan payments and how risky you are as a borrower.

    Fixed Interest Rate

    Fixed Interest Rate is when the interest rate of your loan will not change over the period you are paying off you loan.

    Interest

    The Interest is a percentage based on the amount of your loan that you pay back to the lender for using their money

    Default

    If you default on your loan it means you are unable to keep up with your payments and no longer pay back your loan.

    Late Fee

    If you miss a payment the lender will charge you for being late, this is known as a late fee.

    Unsecured Personal Loan

    An Unsecured Personal Loan is when you have a loan based solely on your creditworthliness without using collateral.

    Secured Loan

    A Secured Loan is when you put collateral such as your house or car up against the amount you're borrowing.

    Prime Rate

    This is the Interest Rate used by banks for borrowers with good credit scores.

    Principal

    The Principal amount the borrower owes the lender, not including any interest or fees.

    Variable Rate

    A Variable Rate is when the interest rate of you loan will change with inflation. Sometimes this will lower your interest rate, but other times it will increase.

    Installment Loan

    An Installment Loan is a loan that is paid back bi-weekly or monthly over the period in which the loan is borrowed for.

    Bridge Loan

    A Bridge Loan is a short term loand that can last from 2 weeks up to 3 years dependant on lender.

    AAA Credit

    Having an AAA Credit Rating is the highest rating you can have.

    Guarantor

    A Guarantor co-signs on a loan stating the borrower is able to make the payments, but if they miss any or default the Guarantor will have to pay.

    LIBOR

    LIBOR is the London Inter-Bank Offered Rate which is the benchmarker for the interest rates in London. It is an average of the estimates interest rates given by different banks based on what they feel would be the best interest rate for future loans.

    Home Equity Loans

    Home Equity Loans is where you borrow the equity from your property and pay it back with interest and fees over an agreed time period with the lender.

    Debt Consolidation

    Debt Consolidation is when you take out one loans to pay off all others. This leads to one monthly payment, usually with a lower interest rate.

    Student Loan

    If you obtain a Student Loan to pay your way through College then you loan is held with the Department for Education U.K.

    Student Grants

    Financial Aid in the form of grants is funding available to post-secondary education students throughout the United Kingdom and you are not required to pay grant

    FAQ

    Can I get a bad credit loan if I am unemployed?

    In the vast majority of cases, you will need to be in full-time employment to get the most competitive bad credit loan offers. However, some lenders have been known to accept applications even if the borrower is unemployed.

    How much am I able to borrow with a bad credit lender?

    How long does it take to apply for a bad credit loan?

    The modern era of loan applications means that you can now execute the entire application online. As such, if the lender is able to verify your information automatically with the third-party sources it uses, then you could be approved for a bad credit loan within 15 minutes.

    Will I need to upload any documents?

    This depends on whether the lender is able to verify the information you entered during the application automatically. If they can't, then you might be asked to upload supporting documentation. This could be anything from a passport/driver's license to verify your identity, or a payslip to validate your stated income.

    UK Loan Types
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    Kane Pepi

    Kane holds academic qualifications in the finance and financial investigation fields. With a passion for all-things finance, he currently writes for a number of online publications.