How to Get a Personal Loan in the UK with a Low Credit Score

A low credit score does not automatically disqualify you from getting a personal loan in the UK, but it does narrow your options and will almost certainly affect the rate you are offered. Understanding the landscape can help you borrow responsibly without making your financial situation worse.

What Counts as a Low Credit Score?

The definition varies by CRA. On the Experian scale (0–999), anything below 560 is considered poor. On Equifax (0–700), below 279 is poor. On TransUnion (0–710), below 565 is poor. If you have had county court judgements (CCJs), defaults, missed payments, or a very limited credit history, you are likely in this range.

Why Lenders Are Cautious

Lenders use credit scores as a proxy for repayment risk. A low score signals — rightly or wrongly — a higher likelihood of missed payments. To compensate for that perceived risk, lenders either decline applications or offer higher APRs. The representative APR advertised on loan products only needs to be offered to 51% of successful applicants, so even if you are approved, you may receive a higher rate than advertised.

Lenders Who Consider Poor Credit

Several specialist lenders in the UK serve borrowers with impaired credit histories:

• Likely Loans — specifically targets near-prime and poor credit customers; loans from £500 to £5,000.
• Everyday Loans — branch-based lender for borrowers declined by mainstream providers.
• Bamboo Loans — online lender for fair and poor credit.
• Drafty — a revolving credit facility rather than a fixed term loan.
• Monzo Flex — Monzo's buy-now-pay-later product may be accessible with a lower credit profile, though standard loan products from Monzo and Starling generally require a fair to good score.

Credit unions are another option worth considering. UK credit unions typically offer affordable loans to members regardless of credit history, provided you have a history of regular saving with them.

Guarantor Loans

A guarantor loan requires a second person — typically a family member or close friend with a good credit history — to agree to repay the loan if you cannot. Lenders such as TFS Loans and Guarantor My Loan offer these products. Because the guarantor reduces the lender's risk, you may access lower rates than a solo application with poor credit would attract. The key risk: if you miss payments, your guarantor's credit score is also affected.

Secured Loans

If you own property, a secured loan (sometimes called a second charge mortgage) uses your home as collateral. This reduces the lender's risk significantly, making approval more likely even with a low credit score. However, the risk to you is severe — missed payments can ultimately lead to repossession. Secured loans should only be considered when you are confident of your ability to repay.

What to Avoid

Payday Lenders

Payday loans are short-term, extremely high-cost products — APRs of 1,000%+ are common. The FCA has capped the cost of payday loans since 2015 (no more than 0.8% per day interest, total cost capped at 100% of the principal), but they remain expensive and are associated with debt spirals for vulnerable borrowers. Use them only as an absolute last resort, and repay in full at the earliest opportunity.

Loan Sharks

Unlicensed lenders (loan sharks) operate outside FCA regulation and have no legal right to collect debts. If you are approached by an unlicensed lender, contact the Illegal Money Lending Team on 0300 555 2222.

Improving Your Chances of Approval

• Check your credit file first — dispute any errors before applying.
• Use eligibility checkers — soft searches show your likelihood of approval without affecting your score. Most comparison sites (MoneySuperMarket, Compare the Market) offer these.
• Apply for a realistic amount — applying for £1,000 is more likely to succeed than £10,000 if your income and credit history are limited.
• Stabilise your financial situation first — if possible, spend three to six months making all payments on time before applying.
• Register on the electoral roll — this simple step improves lender confidence in your identity.

The True Cost of High-APR Borrowing

Always calculate the total cost of a loan before accepting. A £2,000 loan at 49.9% APR over three years costs approximately £3,200 in total — £1,200 in interest. If you can improve your credit score before borrowing, even a reduction to 30% APR saves hundreds of pounds. Free advice from MoneyHelper or StepChange can help you assess whether borrowing is the right decision, or whether a debt management plan or budget adjustment is more appropriate.

Borrowing with a low credit score is possible, but it demands careful consideration. The key is to borrow only what you need, compare options rigorously, and use the loan as an opportunity to demonstrate reliable repayment behaviour — which will, over time, repair your credit profile.