Can I Get a Secured Loan with Bad Credit?


Written by Daniel Tannenbaum on August 4, 2021

Updated September 2, 2021

Yes, you can get a secured loan with a bad credit history – and this is often a popular choice if you have been declined for a traditional unsecured loan.

With a secured loan, a lot of the eligibility is based on what you are using as security or collateral, such as your home or property – and less so your income and credit score.

So even though you have a history of missed repayments, arrears or defaults, because your loan is secured against a property, the lender always knows that they can repossess that property to recover any potential losses.

Using a secured loans broker could be useful if you are looking for a loan with bad credit and some lenders only operate via brokers. A broker will run a soft credit search and give you an indication of what you can borrow and at what rates, saving you a lot of time and effort.

For a free and no obligation quote, you can check your eligibility in less than 5 minutes with Lender Expert today >>


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How Can I Get a Secured Loan with Bad Credit?

There are a number of secured lenders in the UK that specialise in offering loans to people with bad credit including CCJs, IVAs, arrears and defaults – and their loan rates and amounts are adjusted to cater to people with different credit backgrounds.


“Loan rates and amounts are adjusted to cater to people with different credit backgrounds”


Using your property as security is very valuable to lenders, since property typically increases in value over time.

So if you are unable to keep up with repayments and the lender has tried to give you loan extensions or payment holidays and this has not sufficed, they will have the right to claim ownership of your property and sell this on the open market to recover their costs. 


Does a Secured Loan Require a Good Credit Score?

No, a secured loan does not need a good credit score to be approved. Your eligibility is largely based on what you are putting up as collateral which is most likely to be a property, flat or home (see second charge loans) and in some cases a vehicle such as a car, bike or van (see logbook loans).

The more valuable your property is and the more equity that you have in it will certainly help your application.

Every secured lender is different and some may run a credit check on you and some may not. But there might be credit checking to confirm that you have not recently been declared bankrupt or have any other reasons why you may struggle to repay your loan.

There are other factors involved to ensure that you can afford to repay the loan such as having a stable income, not too many outstanding debts and a valuable property.


What Other Factors Are Taking Into Consideration When Applying for a Secured Loan?


Value of your property – Having a valuable property is key to get your secured loan approved, especially if you are up to date with mortgage repayments. You will need to be a homeowner and not a tenant (see tenant loans for more information). The property will usually be subject to a survey and should be in good condition and able to hold its value or increase over time.

Equity in your property – The more equity that you have in your property, the better. This assumes that you have been paying off your mortgage for several years and is a good trust indicator. It also shows that you have less debt outstanding and could always sell the property to raise funds.

Your income – With a stable income and employment, you should be in a good financial position to make monthly repayments. You may need to show proof of income via a payslip or bank statement, but this is something that is taken into account for secured loans and all other kinds of loans and credit cards too.

Your outstanding debts – A secured lender will consider your outstanding debts and affordability for a loan. If you are overwhelmed with other financial liabilities including a mortgage, cars, school fees and more – this could influence your ability to repay your loan and your eligibility.


Will My Loan Be More Expensive if I Have Bad Credit?

Yes, typically having bad credit will make your loan more costly as lenders need to manage the potential risk of default or not paying back your loan. 

So whilst the starting rates for secured loans is around 3.34% APRC, this is likely to be somewhat higher if you have an adverse credit history.

But this could be mitigated if you have other strong characteristics such as a stable income, employment, valuable property and solid equity in that property.

Use the secured loan calculator to get an estimate of the monthly payments and interest charges depending on how much you wish to borrow.


What Are The Risks of Getting a Secured Loan for Bad Credit?

The biggest risk of getting a secured loan with a bad credit history is that your valuable security is always potentially at risk if you do not keep up with repayments. If you are using your family home or residence as the main form of security, you could potentially lose this and be without a home if you do not keep up with repayments.

There are always personal and financial situations that arise and getting a bad credit history is sometimes unavoidable. But in the case of a secured loan, you need to be 100% certain that you can make all repayments or you could find yourself losing your treasured home.


How Can I Check My Eligibility for a Secured Loan with Bad Credit?

You can check your eligibility for free with Lending Expert and acting as a broker, we will be able to compare offers across a number of secured lenders in the UK, with bad credit histories taking into consideration.

Enter your details in less than 5 minutes and our team will come back to you with a list of competitive options. It is completely free to apply and we only charge a broker fee if your secured loan is approved and funded. Simply check your eligibility below!


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