6th May 2021
Can I get a personal loan with a poor credit score?
poor credit score

A personal loan can be an ideal solution when you need to cover an unexpected expense, but many people wonder if they can get one if they have a poor credit score. While it’s still possible to get a personal loan with a poor credit score, it might make it more difficult to get your loan application accepted. It is also likely to affect the interest rate you are offered and the other loan terms. Here we take a look at why a poor credit score affects your loan application, and what you can do about it.

 

What does a poor credit score mean?

An individual’s credit score is based on information from the three major credit reporting agencies, and scores range from 300 to 999. Your credit score tells lenders how good you are with debt and how likely it is that you can make the repayments on time. A good credit score demonstrates that you’ve borrowed money and paid it back on time, therefore you represent a low risk to the lender. Because of this, lenders are likely to offer you better rates or larger amounts of money.

On the other hand, if you have ‘bad credit’ or a low credit score, this may mean you’ve struggled to keep up with debt repayments in the past. You might have a low credit score for reasons such as late monthly repayments, missing payments altogether, bankruptcy or too many ‘hard’ searches on your credit file.

You may also have bad credit simply because you haven’t borrowed in the past and haven’t had the time to build up a credit history. If you have no credit history, or what’s known as a ‘thin file’, it’s difficult for lenders to assess how responsible you are with money. Unfortunately, this in itself is a risk for lenders and it’s likely you’ll find it harder to get approved for a loan.

Some lenders, particularly those who use open banking, might consider other factors when assessing your overall ‘creditworthiness’ that are not included in your credit report. This could include things like your employment history, current income and bank account balances. While you may be able to get a personal loan based on this information, lenders will probably charge you higher interest rates than they would if your credit was good.

 

How do I find out about my credit score?

Before you decide to make a loan application, it’s a good idea to know about your credit history and your credit score. This will help you to understand how lenders will view your loan application and the terms you are likely to be offered. You can find out your credit score from online companies such as TransUnion and Experian without negatively impacting your credit history. Our article “How can I check my credit score for free”, goes into more detail about how to access this information.

You can also take steps to build your credit history and improve your credit score. This can include things like making sure you’re on the electoral roll, getting an overdraft and getting utility bills in your name. For a more detailed look at how to boost your credit score, you can read our article here. So, if you’re wondering if you can get a personal loan with a poor credit score, the answer is yes, but it might be more difficult and you won’t get the best terms available.

Contact mal - consumer credit lender

Looking for more information on personal loans or boosting your credit score?

Personal loans

We explain how personal loans work and what to look out for when applying

Credit score

Everything you need to know about credit scores including how to improve yours

Top tips

Top tips from loans by mal designed to help you understand your options

Borrow from loans by mal

loans by mal offers short term, unsecured loans based on your monthly income.
Click the button to visit our loan calculator and find out how much you could borrow.

Representative 53.9% APR

COVID-19: Please view our Covid-19 help page if you are affected