Can I Get A Secured Loan With Bad Credit?

Yes, you can get a secured loan with bad credit. If you have a bad credit score then it may be worth looking at getting a secured loan as you may find it easier to be accepted for a secured loan than an unsecured personal loan.

By using your home as security, you can usually borrow more with a secured loan than with an unsecured loan, and at a lower rate – even if you have a bad credit score or poor credit history.  

However, it is important to note that, in most instances, traditional lenders will see a better credit score as an indicator that borrowers will be able to meet their loan repayments. They will therefore will be less likely to approve applications for those with bad credit. 

Our guide below explores further how secured loans work with a focus on borrowers with bad credit. 

Why Might I Be Approved For a Secured Loan With Bad Credit?

It may be more accessible to get a secured loan with bad credit than a unsecured loan because whatever your financial situation, having security means that the lender should be able to recover their funds down the line, even if a borrower cannot meet their repayments. 

Secured loans are different to an unsecured personal loan, where the loan is not secured against an asset. This means the loan is riskier for the lender, and therefore having a good credit score and regular income becomes more important.

With a secured loan, you are also likely to be able to borrow a higher amount and with a lower rate of interest than what would be offered to you via an unsecured loan offer. 

With a secured loan however it is essential to remember that any missed payments can result in your security (home) being repossessed by the lender.

How Do I Know If I Have Bad Credit When Looking for a Secured Loan? 

To find out if you have bad credit when looking for a secured loan you can obtain a copy of your credit report. You can easily contact a credit reference agency. We would recommend checking your report two times per year so that you are aware of any changes and check whether you could be improving your score. 

If you have a bad credit score, it means that your credit history up to now will result in companies viewing you negatively as a potential borrower. You might find that it is more difficult to get a loan application approved or access to certain services will be denied. There are however bad credit loans available that you could be eligible for. 

Why Would I Have Bad Credit?

There are a number of reasons you can end up with bad credit. These include;

• Late payments for credit cards and loans
• Defaulting on a loan
• You are young and have not built up credit yet
• You have recently moved to a country
• You have not opened a checking account
• Your partner has bad credit (and you share mortgages or accounts)
• Bankruptcy 

How Do I Get A Secured Loan With Bad Credit?

You can get a secured loan with bad credit by following some simple steps. Start by comparing rates of loans available in your area through a broker. Check that you are eligible for a loan to avoid any disappointment and save on wasting time. 

Make sure you can comfortably meet any repayments as per the terms of your loan. Try to limit the number of loans you apply for to save a negative impact on your credit report.

Should I Get A Secured Loan If I Have Bad Credit?

Getting a bad credit loan can be useful, provided that you use the loan responsibly. It can be an excellent way to build credit if you pay the loan back promptly, and this can help you to improve your credit score.

By making your credit score better, you can benefit from access to loans with more favourable rates in the future.