If you have adverse credit, and need to borrow money, then you might be glad to hear that there are loans specifically for people with a bad credit history.

Do I have adverse credit?

Adverse credit is just another term for having a bad credit history. Your history of paying back debts can show how much of a risk you are likely to be for lenders. You might be wondering (and you would not be alone): What is adverse credit? And how do I know if I’ve got it?

  • You are likely to have adverse credit if either of the following applies to you:
    • You’ve missed or late payments on loans, credit cards, or mortgages (this stays on your credit report for at least six years!)
    • You have had a county court judgment against you. This will have happened if you owed someone money and they took you to county court to force you to repay.

If you’re still not entirely sure, or you’ve just buried your head in the sand, ignored your post, and don’t know how you stand at the moment, your best step is to find out. Sign up for Credibble and check your file. It’s the first step to getting your finances back in order.

Okay, I have adverse credit. Now what?

Fear not! You can still get a loan if you have adverse credit. We call these ‘adverse (or bad) credit loans’. The major difference between these and standard loans is that they have higher interest rates. You’ll need to consider the benefits and downsides of this type of loan.


  • An obvious one – you get the money you need, be that for a wedding, a new car, or for paying an unexpected bill.
  • You can actually improve how lenders view you, also known as your creditworthiness, with a loan. If you make your monthly payments on time, your credit will slowly improve. This is because you are showing that you can handle debt well.


  • Adverse credit loans have a much higher interest rate than other loans. This is because lenders see you as high-risk, so charge more interest as security for themselves. Higher interest means a higher total repayment to make.
  • If you’ve struggled to handle credit in the past, you may not have the necessary habits required for borrowing money sensibly. You can prevent this by thinking about budgeting, and ensuring you can afford the loan before you make your application.

What Kind of Loan Can I Get?

So you’ve seen the benefits and downsides, and decided you want to go forward with getting a loan. Now it’s time to choose which kind suits you best. There are three types available:

  • Secured Loans

You back up secured loans with property. The loan is tied to something valuable that you own, normally a house or a car. The reason for this is that this ‘collateral’ acts as a guarantee that you’ll pay back your debt.

Don’t let the name mislead you into thinking this is a safer option for you – these loans are secure in relation to the lender, not in relation to you. The value of your property provides security for the loan company, because if you fail to repay the loan, the company can forcibly sell your property to get their money back.


  • You can borrow a larger sum of money, because you’ve backed up the loan with the value of something you own.
  • Repayments can be made over a longer period, meaning the monthly amount you pay back is smaller.


  • If you are looking secure your loan against your home, you may not be accepted if the property is newly bought and your mortgage is very large. This is because the proportion of the home you actually own is very small.
  • If you fail to repay your loan, the lenders can force you to sell your property in order to free up the cash to pay them back. It is important that you ensure you can afford to pay back the payments before taking out the loan.
  • Unsecured Loans

Unsecured loans (unsurprisingly) are not backed up by property. They are also sometimes known as ‘personal loans.’


  • You can apply for an unsecured loan even if you don’t have valuable property to use as collateral.
  • You don’t risk the disruption and cost of losing your house, if you are a home-owner.


  • If you have red flags on your file, such as missed or late payments, lenders will demand much higher interest rates than they would for a secured loan. This means you’ll pay back more money compared to a secure loan.
  • It can be a lot harder to get an unsecured loan is you have adverse credit.
  • Guarantor Loans

If you know someone who might be willing to act as your guarantor, then this type of loan could be for you. A guarantor loan is when someone agrees to make the payments if you are not able to. Your guarantor will need to have an excellent credit history to make up for your adverse credit, and must be willing and able to step up to pay back your loan if you cannot. A friend like this might be hard to find! If you’re lucky enough to have one, here are the factors to weigh up:


  • Guarantor loans offer lower interest rates than unsecured loans.
  • There’s no risk of losing your property.
  • Lenders give you the opportunity to show sensibility when repaying the debt.
  • Paying the debt in full and on time means your guarantor never needs to get involved.


  • If you miss a repayment, your guarantor will have to make the payment in your place. But if they miss their payment, this will negatively impact your credit report as well as theirs. So one missed or late repayment has a double-whammy effect.
  • Your relationship with your guarantor could be badly damaged if they are forced to pay for your debt. Choose your guarantor wisely!

Think you’ve found something better?

You might have done a quick Google search and think you’ve found a better deal than the options above. But beware! The web is swimming with loan sharks. Here are some tips on how to spot them:

  • Is the loan simply too good to be true?
  • Do they ask for suspiciously little paperwork?
  • Is there a worrying lack of information about the loan?
  • Are they on the Consumer Credit Register? This is a list of companies legally authorised to offer loans. Anyone you borrow money from should be on it.

How can Credibble help?

When you apply for a loan, lenders will conduct a ‘hard credit check’. This check stays on your credit report, visible to all lenders. The key word here is apply, not search, or check eligibility. Apply.

Too many hard credit checks in a row can damage your credit report. This is because it indicates that you’ve been looking around desperately, and getting rejected from lots of loans.

If you create a Credibble account here, we can show you the loans that might be available to you, based on your individual credit report. You’ll know which loans you’re most likely to be accepted for, so you’ll have a better chance of success in your applications. On top of this, we give you personal actionable insights, to ensure that your file looks its best before your application.

Credibble offers two fabulous solutions

If you’re preparing to take a mortgage, never apply until you’ve tried our unique and FREE Credibble Home app. Our smart technology will tell you what you need to fix so you avoid rejection. The app predicts when you will be able to buy, for how much and tracks your month-by-month progress to mortgage success. We’ve even added your own mortgage broker, so you get the best deals available.

More focused on your credit rating? Well, get started for free with Credibble’s 24- Factor Credit Check to truly help you improve your creditworthiness and how lenders view you. (Remember: lenders don’t use your credit score! We’ll show you what lenders look for and how to get your credit report in the best shape possible).

Last updated by Robert Edwards, May 2022

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