If your credit score’s not great, lenders might suggest you get someone to act as a ‘guarantor’ – this is someone who’ll cover the payments on your loan if you can’t. But this is not always an option. Learn about the loans you can get without a guarantor when your credit score’s less than spotless.
With a guarantor loan, you get someone else to agree to make the payments if you can’t. So, a no-guarantor loan is one where you’re solely responsible for keeping up the payments and repaying the amount borrowed.
No-guarantor loans can be:
Lenders will check your credit score before deciding if they will lend you money. Your credit score shows how reliable you are at keeping up payments for all kinds of things, from subscriptions to mortgages. The higher your score, the better. If your score is very low, this is described as bad credit.
If you have bad credit it can be tricky to get a loan without someone to act as a guarantor. But it’s not impossible. You might find it easier if you’re in a position to take out a secured loan. If you do consider this, remember you’ll have to put up an asset such as your home to get the loan. This means if you fall behind with the payments your home could be at risk.
Getting a secured loan can be easier than an unsecured loan when your credit score’s poor and you don’t have a guarantor. That’s because the lender knows it can recoup its money by selling the asset you’ve put up as security.
The main advantage of a no-guarantor loan is that you don’t have to involve anyone else. This means there is no risk of damaging relationships or causing major conflict if you can’t pay.
You also will have a wider choice of loans and, depending on how bad your credit score is, you might find interest rates are more competitive.
The main disadvantage of trying to borrow when you have a poor credit history and no guarantor is that your application is less likely to be accepted.
It’s also possible interest rates will be higher if you apply for a loan and don’t have a guarantor.
And if you opt for a secured loan to improve your chances of being accepted, there’s the risk you’ll lose the asset you’ve used to secure the loan.
The amount you’ll be able to borrow will depend on your circumstances. This can include how much you earn, your regular spending and the lender’s specific criteria – as well as the extent of your bad credit. Typically, the maximum is around £5,000.
Guarantor loans tend to be more expensive than no-guarantor loans. And if you have a poor credit score, the loans available to you are likely to charge a higher rate of interest than the loans available to people with a good score.
There aren’t specific fees associated with no-guarantor loans for bad credit. But always look out for extra charges such as for arrangement or acceptance, late payment or early repayment.
Lenders almost always carry out credit checks when you apply for a loan. If you’ve been their customer before, they’ll look at how you’ve managed any previous loan with them. You get a better score when it’s clear you’ve kept up payments in the past and kept well within your credit limit on a credit card, for example.
If you can improve your credit score, you’ll have a better chance of success when you apply for a no-guarantor loan. It’s a good idea to make sure there aren’t any mistakes on your credit report. And if there are reasons for some poor scores that were beyond your control – such as you were in hospital or lost your job, - it’s possible to add an explanation.
Make sure you’re on the electoral roll so you can prove where you live. Staying at the same address long-term, if you can, will help. Make sure you’re keeping up with any credit card payments as well as subscription payments for things like Netflix and Spotify.
Lenders usually say their online application forms take just a few minutes – but you’ll need to have various details to hand. Lenders will want information about where you’ve lived for the last few years, your current and/or recent employers, and your income and spending. If you’re accepted, you should get the funds in a matter of days, if not hours.
Alternatives to no-guarantor loans for bad credit include credit cards and overdrafts. These can make sense when you want to borrow a relatively small amount – and they allow you to vary the amount you repay each month.
With a credit card you can borrow money for spending, up to a set limit. You have to make a minimum monthly repayment.
If you have a current account, you probably have the option of an overdraft. So, you can take out money or pay bills up to a set limit even if you don’t have enough money in the account. This might be interest-free on a small amount. But you could apply for a specific overdraft arrangement. With that you’ll pay interest on anything you borrow and if you go over the amount agreed the interest rate will be higher.
With Experian, you can compare no-guarantor loans for bad credit from a range of lenders. Our online service lets you check your eligibility rating, so you’ll understand your chances of approval before applying. We're a credit broker and not a lender: we don't provide loans, but we can help you find and compare different offers all in one place.
We're a credit broker not a lender†