As much as we try to budget effectively, we can’t escape unexpected expenses and sometimes they’re just too much to squeeze out of your remaining funds for the month. Borrowing money is a common solution to life’s surprise payments, but for some people it’s not so easy. This is typically because they have a bad credit history or a low credit score which prevents them from being able to use mainstream revolving credit like credit cards or overdrafts. While convenient, these facilities are inaccessible for people with a poor credit history. So, what can you do if you need to borrow money, but you have bad credit?

Short term online loans, also known as bad credit loans, can often help this demographic with emergency or urgent cashflow issues on odd occasions throughout the year. Bad credit loans are intended to help those who can’t access mainstream credit, by providing an alternative borrowing option – just because you have a poor credit history, it doesn’t mean you don’t face the same financial difficulties as those with better credit files. Plus, records stay on your credit file for up to 6 years which means you could be in an entirely different place financially, but your credit history can still prevent you from using more common types of credit.

What does it mean to have bad credit?

Bad credit is a relatively vague term, but it essentially just means lenders view you as a bigger risk when it comes to repaying loans. It’s important to remember that it isn’t a reference to you as a person, it’s just a data system that’s associated with you. Your credit file helps lenders to assess any loan or credit applications and make decisions with regards to your credit risk. Your credit risk is separate from your affordability which is why payday lenders take multiple factors into account when reviewing your application for a bad credit loan.

There are always ways to improve your credit history. Sometimes, a person could have a low credit score simply because they don’t have a credit history – if you’ve never borrowed any money or never even had a mobile phone contract, there’s no data to demonstrate that you can make your repayments and financial commitments on time. One of the quickest ways to improve your credit file is to join the electoral register – this is what you do when you register to vote. It helps because it’s a way to prove your identity and mitigate the risk of fraud.

Why can I borrow with bad credit?

Just because you have a bad credit history, it doesn’t mean you don’t need to borrow money from time to time. And as the data on your credit file can be half a decade old, it’s not necessarily representative of your current ability to repay credit and loans. Bad credit lenders often use multiple sources of information to assess your application and gain a fuller picture of your creditworthiness and affordability, rather than relying solely on traditional credit file data. At, we might use open banking as part of your application process as this allows us to verify your key financial information and determine whether the loan would be affordable, even if your credit file isn’t great.

Where can I find a bad credit loan?

Bad credit loans are almost exclusively found online, with some lenders accepting applications over the phone as well. An online application usually takes a few minutes, and if your application is approved you can often see the funds within the hour. Thanks to technology, lenders can automatically assess your application which is much quicker than having it manually reviewed, so you get the loan decision the same day.

While bad credit loans are easy and quick to apply for, you shouldn’t apply if you don’t really need the money. Short term loans have high interest rates which means they’re not as cheap as some borrowing options and should be reserved for emergency uses like replacing new tyres or repairing the fridge – payments that can’t wait until payday. You also shouldn’t apply if you know you can’t make your repayments. If you’re aware of any unusual payments that are due during your loan term, or if you’ve just received your notice of termination at work, getting a bad credit loan could land you in worse financial difficulty if you’re unable to make the repayments. Missing your repayments also makes credit harder to obtain in the future, so you would only be prolonging the time it takes to rebuild your credit file.

Having bad credit isn’t ideal, but it doesn’t mean you’re financially excluded from credit altogether and there are some easy ways to improve your credit file, if you can devote a little time each week or month to making healthy financial changes. In the meantime, you can always consider a short term loan for the few occasions throughout the year when you experience a temporary cashflow shortfall.