Having bad credit doesn’t mean you’re out of options. In fact, in 2025, there are many trusted lenders in the UK that understand financial struggles and are willing to offer low-interest personal loans to individuals with poor credit scores. Whether you’ve missed payments in the past or had issues like CCJs or defaults, this guide will walk you through everything you need to know to get access to fair and manageable loans.
We’ll cover what qualifies as bad credit, how it impacts interest rates, and what kind of personal loans are available in the UK specifically tailored for bad credit. You’ll also discover the top lenders, their interest rates, eligibility requirements, and how you can improve your chances of approval even if your credit score isn’t ideal. We’ll also include repayment examples, market insights, and expert tips to help you make smart financial decisions.
Understanding Bad Credit in the UK
When we say “bad credit,” we usually mean a credit history that has red flags for lenders. These could include missed payments, loan defaults, County Court Judgments (CCJs), bankruptcy, or multiple credit applications in a short time. Credit agencies like Experian, Equifax, and TransUnion categorize scores differently, but a score below 561 (Experian) or under 280 (Equifax) is typically considered poor or very poor.
Having bad credit often makes it harder to qualify for loans from high-street banks, but many specialist lenders now cater specifically to people in this situation. The key is knowing where to look and how to apply smartly.
How Interest Rates Change for Bad Credit Loans
If your credit score is low, lenders see you as a higher risk. Because of that, they usually charge more interest to protect themselves. Here’s an approximate idea of what you might expect based on your credit score:
| Credit Score | Average APR (Approx.) |
| Excellent (760+) | 9% to 10% |
| Fair (640–719) | 17% to 22% |
| Poor/Bad (<640) | 25% to 36%, sometimes more |
For example, if someone with good credit gets a loan at 6.95% APR, a person with bad credit might be offered the same loan at 25% or higher. While this may seem unfair, it’s all about reducing the lender’s risk.
Loan Market Trends in 2025
In 2025, personal loans in the UK will become more flexible. As interest rates start to ease slightly, the borrowing environment has become more favorable. With more fintech companies entering the market, people with bad credit are no longer dependent on payday lenders or high-cost short-term loans. Instead, we’re seeing more structured, affordable options.
Roughly 7% of UK adults currently have unsecured personal loans, and around 13% are planning to apply for one within the next year. This shows a growing demand, especially among those looking to consolidate debt or cover emergency expenses. The market is responding with competitive rates and faster approval processes, especially from online lenders.
Top Lenders Offering Low-Interest Loans for Bad Credit
Here are some of the best lenders in the UK offering personal loans even if your credit history isn’t perfect:
1. Updraft
- Loan Amount: £1,000 to £20,000
- APR: Around 25.9%
- Terms: 1 to 5 years
- Key Feature: No early repayment fees, quick approval
2. Evlo (Previously Everyday Loans)
- Loan Amount: Up to £10,000
- Target Audience: Borrowers with income over £31,000/year
- Specialty: In-person appointments, manual underwriting
3. Sunny Loans / Munzee
- Loan Amount: Up to £10,000
- Flat Rate: Around 36% (can be higher)
- APR: Up to 77% (be cautious!)
- Speed: Very fast processing
4. Zopa
- Loan Amount: £1,000 to £25,000
- Good For: Flexible terms, fintech security
5. Lendable
- Loan Amount: £1,000 to £20,000
- Approval: Instant decisions via AI
Sample Repayment Examples
Example 1: £5,000 Loan from Updraft (3 years @ 25.9% APR)
- Monthly payment: £205
- Total repayment: £7,380
Example 2: £3,000 Loan from Sunny (2 years @ flat 36%)
- Monthly payment: £170
- Total repayment: £4,080
Example 3: £10,000 Loan from mainstream bank (5 years @ 6.95%)
- Monthly payment: £197
- Total repayment: £11,820
Tips to Increase Approval Chances
- Check eligibility using soft search tools
- Compare offers through loan comparison websites
- Avoid applying to multiple lenders at once
- Make on-time payments on current loans or bills
- Consider a guarantor loan if possible
- Use secured loans if you have collateral (like a car)
FAQs
Q1: Can I get a loan without a credit check?
You can, but it’s risky. These usually come with sky-high interest rates. Always read the fine print.
Q2: Will a personal loan help my credit score?
Yes—if you make your payments on time, it can improve your score over time.
Q3: How fast will I get the money?
Many online lenders transfer funds the same day after approval.
Q4: Are secured loans safer?
They offer lower interest rates, but you risk losing the asset if you don’t repay.
Q5: What’s the difference between APR and flat rate?
APR includes interest + fees; flat rate is calculated on original loan amount only.
Final Thoughts
While bad credit might limit your choices, it doesn’t lock you out of the loan market. Many responsible lenders in the UK now offer personal loans with relatively low interest for people who are rebuilding their credit. By comparing options, checking eligibility first, and being smart about repayments, you can access the funds you need without falling into a debt trap.
Whether you’re consolidating debt, handling an emergency, or covering unexpected costs, this guide helps you find the best path forward in 2025—even with less-than-perfect credit.