Can you still get a loan if you have bad credit?


If you have recently been through a financially difficult period in your life then there is a good chance that you may have some bad credit lingering on your credit report. This may be due to late or missed payments on some of your credit agreements, or even late payments on something as seemingly trivial as a mobile phone bill. Many people in this situation want to know whether or not they will still be able to get a loan while this bad credit is present on their credit file, or will they have to wait until it clears off their history before they can borrow again?

Can you get a loan?

The simple answer to this question is yes, if you really ‘need’ to take out a loan then it is possible to do so even if you have a bad credit history. As with most things however, it’s not quite as simple as that. If you have bad credit then it is unlikely that you will be accepted for a loan by a mainstream bank or lender. Since the credit crisis mainstream lenders have tightened up their lending criteria quite drastically, meaning that you will often need to have a very good credit history in order to obtain a low interest rate loan through a mainstream bank.

There are still lenders out there who do lend to people with bad credit. Don’t expect to get the same interest rates as you would receive through a mainstream lender though, as this will likely not be the case. In order to mitigate the risk of lending to people with bad credit, lenders which specialise in this kind of lending often charge higher rates to make up for the extra risk of default that comes with lending to those people who have not kept up with their credit commitments in the past.

So although it is certainly possible to get a loan even if you have bad credit, the terms on which the money is lent will likely not be as favourable as they would be if your credit history were squeaky clean.

Will bad credit lenders do a credit check?

Some bad credit lenders might still want to do a credit check in order to help them decide whether or not they are happy to lend to you or what interest rate they may want to charge. Others will not do any credit checks at all and this will likely be reflected in the rates that they charge. Some lenders might also want you to provide a guarantor or even some kind of collateral before they will lend. If this is the case then you will need to think very carefully about whether you are happy to provide this.

Should you get a loan?

The bigger and perhaps more pertinent question to ask before taking out this type of loan is, do you really ‘need’ it? If you have had problems meeting your repayments in the recent past, are you really sure that you will be able to meet the repayments this time around? It is important that you understand the potential repercussions of non-payment before taking out any sort of loan and this is especially true when borrowing from a bad credit lender. Before taking out a loan it would be wise to sit down first and review your income and expenditure to see if there are some places where you can easily make savings so that a loan may no longer be needed.

As we can see then, it is certainly possible to get a loan even if you have bad credit. It’s likely that you won’t be offered as favourable an interest rate as you would be offered if you had a good credit history and you may even need to provide some sort of collateral in order to secure the loan, but it is possible. Whether or not you should take out a loan if you have some existing bad credit is another question entirely.

One Response to Can you still get a loan if you have bad credit?

  1. My advice to people with bad credit is to try their best to clean their credit up before applying for a loan. The interest rates for bad credit loans are outrageous and a waste of money.

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