There are five categories of credit score, i.e. Excellent (961-999), Good (881-960), Fair (721-880), Poor (561-720), and Very Poor (0-560). These are according to Experian, which is a prestigious credit score agency. Very bad credit loans from direct lenders belong to the last one.
You will be amazed to know that the number of individuals with extremely poor credit scores is huge in the UK. What will be the reasons? Well, there are many such, but the primary one is the imbalance between spending and savings.
You cannot blame inflation in the country or any other nationwide or global issues. It is your personal finance, and your decisions will matter a lot. External factors affect your finances, but you can do more than nothing.
It is what the UK loan marketplace teaches us: that you can have multiple borrowing options. You just have to utilise them effectively, and the results will be in your favour.
Therefore, you should go for loans for extremely bad credit to save your finances urgently.
Why do you have very bad credit?
There can be two kinds of circumstances, due to which you have a very poor credit score.
- First, you have made mistakes of doing shopping excessively that is beyond your payment capacity;
- Second, you must have faced financial emergencies that are tough to manage and costly to your personal finances
You may find your situation among these, but time is to improve your finances. Availing of a loan may be like another debt, but this time, you will be on the beneficial side.
Adverse credit scores are also the consequences of County Court Judgement (CCJ), bank defaults and bankruptcy.
Where to apply for loans for very bad credit?
Expecting these loans from traditional lenders like banks may not be possible. They may agree to your loan request but keep the interest rates much higher, and the lending norms will be stricter.
In contrast, you have the option of direct lenders in the UK. These are more flexible than their conventional counterparts. It does not mean you get bad credit loans on guaranteed approval. Some exceptions will be there, which you must go through.
For instance, you should not be under debt while applying for these loans. Besides, your recent financial performance should be accurate, and you should pay each payment on time. Lenders also do not want you to apply for loans from several lenders. It will have a harmful impact on your credit profile.
Therefore, you should only apply for very poor credit loans from direct lenders. Interest rates will be higher, but you will have a better chance of fetching instant approval.
What are the benefits of loans for very bad credit?
There are many benefits of very poor credit score loans, provided by direct lenders. However, you should analyse everything before signing the loan contract. It would be better to consult with your lending company’s financial advisor or loan representative.
Here are the loan benefits:-
Online mode: You do not need to go anywhere to submit the application for these loans. Instead, you will apply online with minimum paperwork. The distance to your loan is just of one-page online application form.
Soft credit check: Since these are short-term loans, online lenders do not execute hard credit checks. They tend to go for soft credit checks that will not impact the applicant’s credit record. However, you cannot expect very bad credit loans from direct lenders with no credit checks.
Loans on affordability: You already have an adverse credit record, and availing of a loan with a higher amount will be one of the biggest mistakes. Instead, responsible lenders will only allow you affordable loans to obtain.
Credit score improvement: As you get affordable loans, you will find repaying the loan quite comfortable with your monthly income. Regular and steady loan repayments will further improve your credit scores.
Financial responsibility increases: You have taken loans previously to get extra funding for a specific purpose. This time, your motive is different. You want a loan to enhance your credit record, remove CCJ or start a positive credit score. All these things will make you more financially responsible.
What are the possible risks of very bad credit loans?
These loans for adverse credit ratings are not untouched by any risks. There are plenty of them, and you cannot ignore them; otherwise, you will regret it later.
- The first and foremost risk is that you will have to pay a very high interest rate, as you are not putting any security against the loan;
- If you apply for a loan amount beyond your repayment capacity, you will pay heavily for this later. It is because missing repayment will take you into a more complex situation;
- The loan marketplace should be researched before applying for a loan. If you miss this, you get trapped in mere advertisements of some loan companies. Choose only a reliable lender with a decent history.
What loan options come with very bad credit?
When you approach a direct lender to have a loan with an extremely poor credit score, one thing is for sure: you get multiple loan options. These may include:
Car loans: Online lenders may offer car loans for awful credit situations. It becomes possible because they accept loan applications on other aspects like the applicant’s monthly income.
CCJ loans: These are more specialised loans obtainable for people with adverse credit scores. If you get approval on it, you can have the chance to clear the judgment against your name.
Doorstep loans: These urgent doorstep loans with no credit check apply to those without a credit history. You can use these funding options at your doorstep and have a positive credit record.
In the Nutshell
Undoubtedly, very bad credit loans are helpful in multiple situations. They have varied benefits, which will help you come out of difficult financial circumstances. At the same time, you have to face significant risks as well.
The main crux of our discussion is that you can go for these loans but with better preparation and sincerity in paying back. Only then can you guarantee yourself a well-balanced financial life.

Anna Johnson has more than 11 years of experience in direct lending industry of the UK. She is the Senior Content Editor at 24cashflow where she is leading a large team of loan experts. During her career, she has helped the loan aspirants to use the particular loans in the best way and improve their financial lives and status.
Anna Johnson is known for her in-depth research of the UK loan marketplace, as she has worked with many major lending firms in her career. During her educational phase, she has done a research on ‘Finance Fundamentals for Growing Business’.