£7,000 Loans for Bad Credit

Updated: April 17, 2024 Author:

Key Takeaways: If you have a low credit score and need a large amount of money for debt consolidation or any other purpose, it can be difficult to know where to turn. A standard personal loan from your bank is often off limits because of your credit history. However, there’s no cause for despair. There are credit loan options out there for you, even if you have no credit history at all. The key to securing large bad credit loans of £7,000 is to understand what’s causing your score to drop and approach lenders that cater to your situaton within their eligibility criteria.

    What is a Bad Credit Loan? 

    Loan providers don’t market bad credit loans under that name, which is why many people with a less than perfect credit history feel as if there are no options out there for them. However, rest assured, these loans do exist, and there are some lenders who specialise in providing them. 

    A bad credit loan is designed for those who have a rather chequered credit history, or who are “credit invisible” without any credit history at all. Usually, these loans come with greater restrictions and a higher rate of interest than loans for those with a good credit score, but nevertheless, they are certainly an option when you are in urgent need of money. 

    Can I Borrow a Large Amount With Poor Credit?

    While it’s easier to borrow small amounts under £1,000, whether through a payday loan, a pawnbroker loan, or a credit builder credit card, when you need larger amountsof £7,000, you may worry that it’s an impossible task. The good news is that there are still ways to borrow larger sums, even with a really low credit score, when you take the right approach. 

    Which Loan Am I Likely to Get If I Have a Bad Credit Score?

    Depending on your circumstances, you’ll have different options: 

    A Guarantor Loan

    This type of loan requires a friend or relative to agree to making your repayments should you fail to do so. If you can find a guarantor who has a good credit score, you’ll have the best chance of securing a loan with a higher limit or better interest rates. If you have someone willing to co-sign on a guarantor loan, this is likely to secure better interest rates. However, it’s important to understand the implications of failing to make your repayments, since your guarantor will be left to repay the entire amount and they could end up in financial difficulties themselves. 

    A Secured Loan

    If you own a valuable asset like a car or a property, a secured loan may be a good choice for you. Lenders are far more likely to consider an applicant with a poor credit history if they have an asset they can use as collateral, since that reduces their risk, and you’ve got a better chance of being offered a higher limit or better rates with this type of loan. Don’t forget, though, that if you don’t repay your loan, you could end up losing your home, your vehicle, or whichever asset you’ve used as collateral. 

    A Debt Consolidation Loan

    If you’re looking for £7,000 to consolidate your existing debts into one more manageable monthly payment, a debt consolidation loan could be right for you. This kind of loan allows you to move your debts from several different accounts to one single loan, simplifying your payments while reducing how much interest you pay overall. 

    While debt consolidation loans can help manage your finances more effectively, it’s important to check how much interest you’re going to pay overall. Even when the loan’s rate is lower than those on your existing accounts, it’s still possible to pay a larger amount in interest overall if the loan period is longer.

    A Credit Union Loan

    One possibility to consider is joining a credit union. These not-for-profit organisations are more willing to look at your personal circumstances and affordability rather than just your credit score when determining whether to lend money to you. There are restrictions on membership, though. Some only offer loans to people in certain professions or in certain areas of the country, so you’ll need to check the criteria before applying. Use the website findyourcreditunion.co.uk to see what’s available in your area.

    A Personal Loan

    Personal loans don’t require an asset to act as collateral, which gives them their other common title, “unsecured loans”. However, with a poor credit score, you’ll usually need to look to lenders who specialise in offering poor credit lending rather than to traditional high street banks. The interest rate will probably be far higher than those on regular loans too, so it’s important to bear that in mind when weighing up your options. 

    How bad credit affects loan approval rates

    It’s certainly possible to get cheap credit loans even with terrible credit, so if you need funds urgently, don’t panic. Your first step is to work out how much you’re able to afford to pay back every month without falling into financial hardship. Next is to compare loans from different providers to find the one that meets your needs and financial abilities. The best rates are had by going to bad credit loan direct lenders. One thing to bear in mind, though, is that you should only make an application for a loan that you have a good chance of getting, as every application is recorded on your credit report, which can end up lowering your score even more. Checking your eligibility first before applying is good practice as it gives you a good understanding of whether you’re likely to be approved.

    The most crucial thing to keep in mind is to never to borrow more than you need, and to always make your monthly repayments in full and on time. Failing to do this will inevitably lead to an even lower credit score, and even more problems in securing a loan in the future. On the other hand, if you meet all your repayment obligations, your credit score will start to improve and next time you need to borrow money, you’ll have more options to consider.