Did you know? Around 17% of adults in the UK are rejected for a loan due to a poor credit score.
This shows that a credit score is a common hurdle for people when borrowing funds. But solutions may still be available through responsible direct lenders.
A bad credit situation makes it difficult for you get a loan even for a small need. But direct lenders make it possible through their credit-friendly lending process.
You can even find very bad credit loans with no guarantor from a direct lender. Based on your repayment ability, you can get a loan with almost any credit score.
DIRECT LENDERS VS BROKERS – RISKS AND BENEFITS
Sometimes applicants don’t understand whether they should choose a lender right away or hire a broker. Some don’t even know the difference between the two. The comparison below will help you see how the two differ.
| Feature | Direct lenders | Loan brokers |
| Who provides the loan? | The lender themselves | A third party that connects with lenders. |
| Transparency | Transparent due to 100% digital application process. | Ensure you get a lender with transparent terms. |
| Credit checks | Soft credit search to process application | Brokers can also do a hard credit assessment. |
| Approval speed | Instant approval decision | May take time to match with lenders. |
| Affordability | Affordable due to a focus on current repayment ability. | Match with a lender that may not be affordable. |
Benefits and risks of lenders and brokers
After comparing, learn the benefits and risks of poor credit lenders and loan brokers.
| Direct Lenders | Brokers | ||
| Advantages | Risks | Advantages | Risks |
| Direct deal with the lender | Limited options to compare | Access multiple lenders. | The matching process may take time |
| Same day fund disbursement | Approval as per repayment ability | Save time during an emergency | Some brokers charge a fee |
| Credit-friendly lending policies | Difficult to spot the right one. | Wide range of loan products | Terms and costs may vary |
| Personalised affordable deals | Loan may have hidden costs. | One soft check, multiple offers | Unwanted marketing calls |
Which are the top 10 bad credit lenders in the UK?
Here are the best lenders for bad credit loans you can find in the UK. All are listed here to facilitate quick, easy shortlisting. You can visit their sites individually for deeper insight into their lending policies.
1) Cashloans2go:
A direct lender known for its simple eligibility criteria, instant approval decisions, and personalised loans. Flexible repayment plans, you can change the schedule in case of any financial issue. No guarantor or collateral required. The lender has a high approval rate.
2) Mr. Lender:
The loan provider specialises in loans for people with poor or limited credit histories. It focuses on current repayment ability rather than credit history. Improve your credit score with easy repayments. But the interest rate is higher due to your risky, bad credit profile.
3) Moneyline:
A trust lender that offers personal loans to people with poor credit. Get tailored repayment plans as per your affordability. Get clear and transparent loan terms in the loan agreement. It is known for its fair deals and speedy process.
4) Polar Credit:
The lender is known for its flexible lending policies. The applicants who struggle with mainstream lenders can choose it. An online application and a speedy decision make the lender even more dependable.
5) QuidMarket:
It is a good option if you are looking for transparency on loan costs. The lender considers all credit profiles. However, the interest rate is high. But it clarifies repayment obligations to avoid any dispute with its customers. Also known for its quick customer support.
6) Savvy:
Savvy aims to provide manageable repayment plans. Hence, you can expect affordable loans despite a bad credit score. The lender has a rational, affordability-led approach for making approval decisions. Your overall borrowing experience will be hassle-free, thanks to the lender’s borrower-friendly policies.
7) Drafty
This financial solution provider offers a line of credit regardless of credit score. This makes the loan company a good choice for your ongoing funding needs during a bad credit situation. Fill short-term financial gaps and pay back interest only on the amount used, up to the available credit limit.
8) Cashfloat:
It is a direct lender that offers quick, short-term loans for bad credit. Transparent terms and a flexible lending approach make it your first option in a last-minute financial need. The lender focuses on clear repayment terms based on an applicant’s affordability.
9) Buddyloans:
It provides bad credit personal loans in the UK. With clear pricing and longer repayment terms, the lender offers affordable deals. The loan amount limit is not big, but the tenure limit can be up to 60 months. You can apply anytime due to its 24×7 online presence.
10) Creditspring:
Creditspring is a subscription-based lender, but a direct lender. It offers short-term, unsecured loans to those with lower credit scores. The lender avoids the traditional lending approach and focuses on current repayment ability.
Alternatives to bad credit loans – In case you feel the need
A smart borrowing decision is always the informed one. Hence, there are some alternatives to loans for bad credit. All the loans below are available to people with poor credit.
Unsecured loans – These are short-term, collateral-free loans available to individuals with low credit. Avail funds if you have a regular income and employment.
No guarantor loans – Get a loan without using a guarantor. The interest rate is high, but you can apply for it based on your personal repayment ability. It means no struggle to find a guarantor.
Same day loans – These are instant loans with same-day fund disbursement. But these are for small funding needs. Due to the quick deposit of funds, the lender cannot take the risk of lending a large amount.
Personal loans – These are multipurpose, short-term loans for any purpose. You can get personal loans for car repairs, medical emergencies, and other needs.
CONCLUSION
You can now choose the lender based on your research and choice. However, it is best to let a broker handle the hard work of comparing bad-credit direct lenders.
You should focus more on developing a strong repayment ability. That is the strongest factor to get you approved for a loan. Regular income, stable employment, and a verified residential address are three critical factors. They prove your citizenship and your status as a responsible borrower.
FAQs
1. How to avoid debt cycles?
Some efficient tips help you avoid debt cycles. Always borrow an affordable amount and stick to a repayment budget. Don’t take another loan to repay an existing one. Repay more than the minimum if possible.
2. What happens if you miss a payment?
There are several consequences of missed repayments. Your credit score may drop, and a late fee may apply. Also, interest on missed payments accumulates, and collection actions may take place.
3. How do I improve my credit scores?
Several simple yet pragmatic tips can help improve the score. Reduce outstanding balances and pay all your bills and debts on time. Avoid multiple applications at once and check your credit report regularly for errors.
