How to get a secured loan with a bad credit score?

Applying for a loan might be the first time you know anything about having a low credit score or problems with your credit history. If this is the case – don’t panic. There are, generally speaking, lending options out there for everyone – including loans purposefully designed for people with poor credit scores or problematic credit histories.

Here we have put together some of the basics about having bad credit, what bad credit loans are, as well as how you can improve your credit rating. If you’re struggling with debt there are charities such as Step Change who can offer free debt advice and help.

What is “bad credit” and why might you have it?

Whenever you apply to borrow money, lenders will check your credit report before they agree to lend you money. A credit report is a record of your behaviour when it comes to borrowing. It includes how much money you have borrowed, if you have paid it back and whether you have done this on time.

If you have “bad” credit it means you have probably struggled to pay back your debts and a mark has been left on your report by a lender. This might be for a number of reasons, for example:

  • You haven’t made the monthly repayments on time
  • You’ve missed the repayments altogether
  • You have been declared bankrupt
  • You’ve entered into an individual Voluntary Arrangement
  • You have had a County Court Judgement awarded against you

What are “bad” credit loans?

Bad credit loans are loans that are specifically designed for people with a low credit score. Lenders offering these types of loans tend to charge higher rates of interest because they are taking on a bigger risk with the people they are lending to.

Types Of Loans

As with most loans, you can get two types: unsecured or secured. The main difference is that a secured loan uses something valuable that you own as collateral for the debt. And this means that if you fail to make your payments, the lender keeps whatever is collateral. This is true even if it’s your home. Obviously, this is a very big risk to take, especially if you are not sure you can make the repayments, so you should think this through very carefully.

Things to think about when it comes to loans for bad credit:

  • Loans for bad credit tend to be an expensive way to borrow money. Therefore, before you take out this kind of loan, you should make sure you have thought about all your options. This might mean you go to a credit union for a loan or you took at debt consolidation loans instead if you are trying to manage your debt.
  • Try not to apply for multiple loans at once. This could damage the credit score and make it harder for you to be accepted by a lender. Instead, use a quotation search to see how likely you are to get a loan before you apply. These kinds of checks won’t damage your credit score.
  • If you do take out this type of loan you should try and pay it back as quickly as you can in order to avoid expensive interest rates and waste extra costs.

What can I do to improve my credit score?

Unfortunately, the best loan rates and offers will only be given to people with high credit scores. However, the good news is you can start to build up your credit score at any time to get yourself on the right path for a cheaper loan. As a result, your choices are expanded greatly.

In short, here are some of the steps to improve the credit score:

  • Check your credit report regularly, making sure all the information you expect to be there is present and correct you can do this for free with CllearScore. You can also read our 5 minute checklist of things to took out for in your credit report each month.
  • Sign up to the electoral roll – lenders see this as a sign you are more stable if they can verify where you live.
  • If you borrow money, pay it back on time and if possible, in full each month.
  • Try to avoid using too much of the credit limit.


Try to avoid applying for too much credit in a short space of time. Therefore, it’s worth checking how likely you are to be approved for a loan in the “Offers” section if your account before you officially apply. What’s more, every time you apply for credit a “credit application” search will be carried out and a mark will be added to your report. As a result, if lenders see a lot of applications in a short space of time they may view you as a riskier borrower and may choose not to lend to you.