How to Get a Personal Loan with Bad Credit in 2025

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Not all individuals possess an excellent credit history. Actually, there are tons of people both in the United Kingdom and the United States of America who are facing the situation of their payments being done late, their accounts going into default, or using their credit to a high degree. The great news? When carrying a not-so-good credit file, one could still manage to obtain a personal loan in 2025, however, the appropriate tactics should have been known.

Check Your Credit Report First

First of all, obtain a copy of your credit report prior to submitting an application:

  • UK: Experian, Equifax, TransUnion.
  • USA: AnnualCreditReport.com (free reports from all three bureaus).

👉 Inspect your credit report for inaccuracies (e.g. your old debts that are marked as unpaid) and challenge them. A tiny change can raise your credit score considerably.

Consider a Secured Personal Loan

If you have a bad credit score, it is likely that lenders will propose more attractive conditions if you are willing to put up collateral for the loan:

  • Homeowner loans in the UK backed by the property.
  • Credit union loans in the USA where the savings account or vehicle acts as security.

👉 Typically, the APR on secured loans can start from 5%–8%, while it is over 20% for unsecured bad credit loans.

Apply Through Credit Unions

Compared to banks, credit unions have more adaptability.

  • UK: Several neighborhood credit unions lend money to members irrespective of the credit report.
  • USA: Navy Federal, Patelco, and DCU deliver savings-secured loans with the interest rate as low as 2.5%-3.5% APR.

Use Online Lenders Specializing in Bad Credit

There are some online lenders who accept loans only for those clients whose credit score is low.

  • UK examples: Likely Loans, Everyday Loans.
  • USA examples: Upgrade, Avant, OneMain Financial.

👉 A higher APR (15%–30%) should be anticipated, but they might give you a go-ahead when traditional banks do not.
Improve Your Approval Chances

  • Add a co-signer: A family member with a good credit record can help you get a loan with better conditions.
  • Provide evidence of stable income: Lenders take the ratio of income to debt into account, not just credit score.
  • Pay off old debts: Clear your credit card balances before you apply for a loan.

Be Careful with Scams
People with bad credit are frequently the targets of deceitful “guaranteed loan” ads. Some of the warning signs are listed below:

  • Paying money in advance before getting approval.
  • Not doing any credit checks at all.
  • Lenders who are not licensed.

👉 One step always is to make sure the bank is quite safe –

  • In GB: Close the FCA (Financial Conduct Authority) list of approved companies.

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