How to Get Money Fast When You Have Bad Credit

Updated: December 05, 2023 Author:

Quick Answer: Traditional finance is often slow and inaccessible, meaning your options are often limited to alternative lenders and payday loan companies. Secured loans and Universal Credit advances should be considered when possible due to their low-cost nature.

    Credit scores are a way to help lenders assess the likelihood that a customer will repay their loans on time.

    If you have a bad credit score, it likely means that many traditional options, like a personal loan from a bank, are off the table. 

    This guide will highlight the alternative options at your disposal. Fortunately, many of the bad credit loans happen to also be fast, because customers with poor credit run into more cash emergencies. So with that in mind, here are your main options.

    Getting Money Fast With Bad Credit – What Are Your Options?

    Your four main options for getting money fast with bad credit are:

    • Payday Loans
    • Guarantor & Secured Loans
    • Online Alternatives & Peer-to-Peer
    • Universal Credit Advance

    We have established that many traditional methods are off the table. While credit cards and overdrafts could be a consideration, approval tends to be harder than with avenues like payday loans. Credit cards aimed at those with bad credit do exist, though they’re not the fastest route to cash.

    Credit unions are certainly another option, too. These are more focused on poor credit, they operate on a members’ basis (i.e. workplace or association), meaning they’re not directly accessible to the public. It’s wise to explore the route of membership, but they’re not particularly fast cash.

    Option 1: Payday Loans – The No.1 Go-to For Quick Cash

    Payday loans are short-term, high-interest loans that are specifically designed to tie you over until your next “payday”. Payday loans have received controversy for this targetted approach, and their subsequently high-interest terms. However, this high interest isn’t supposed to be accrued for long, given the nature of fast repayment. 

    This makes payday loans a high-risk for both parties: the lender and the borrower. This option should only be considered if you have a clear and confident repayment plan.

    Option 2: Guarantor & Secured Loans

    Guarantor loans are when a second person co-signs the loan and thereby accepting to take on the liability of repayments should you fail to repay. Similarly, secured loans offer a similar benefit to the lender, only in the form of repossessing an asset of yours should you fail to repay.

    In both loans, poor credit is less of an issue in the eyes of the lender because of the safety net. Guarantor and secured loans are personal loans that take longer to process, though, but they are a cheaper option than payday loans. 

    Option 3: Online Alternatives & Peer-to-Peer

    Online platforms have been working hard to overcome the hurdle of poor credit, often by using alternative ways to assess risk. Algorithms that assess spending habits, educational background, income stability, and many innovative data points mean that approval rates can be higher than traditional methods.

    Peer-to-peer (P2P) bypasses traditional frameworks altogether by connecting borrowers to lenders. This is a broader and more open marketplace, meaning your chances of finding a lender increases along with a more personalised experience.

    Option 4: Universal Credit Advance

    A Universal Credit advance is a way to gain up to 100% of your first estimated universal credit payment in advance. You need to explain why you need it and verify your ID. The process is a relatively fast option, often taking around 3 days, and is interest free.

    In 2023, around 6 million people in Britain were on Universal Credit. Given that those with poor credit are disproportionately likely to be on Universal Credit, it’s an often overlooked aspect of financing. And, due to high inflation, the real value of your repayments decrease over time.

    Will These Improve My Credit Score?

    Improving your credit score is important to not only access more credit options, but to access cheaper credit too. Whilst your short-term needs may be quick cash, it’s important to have one eye on the future, and choose an option that could benefit your credit score.

    The universal credit advance is the only option that has zero impact on your credit score. The other three share similarities, in that when used sparingly, they can sometimes help build up a credit score when repayments are made on time.

    The extent to which your credit score will improve will depend on the product and how it’s used. Repaying traditional, low-cost options like secured loans will have a better impact than payday loans, for example.

    Mistakes To Avoid When Getting Money Fast With Bad Credit

    There are two key mistakes to avoid when accessing fast-money with bad credit. 

    Firstly, only take out debt that you are confident in repaying. Many of the fast loan options are priced highly, which increases the risk of a debt trap. Plus, the longer it takes to repay, the more you’re exposed to the high APR.

    Secondly, it’s important not to abuse any of these loan options. If you rely on payday loans every payday, it becomes obvious to credit bureaus and your credit score will be impact. This is also the same for high credit utilisation, meaning you’re making the most of your credit limit.

    Final Thoughts on Fast, Bad Credit Loans

    Customers that suffer with a poor credit score often want cash fast. Lenders know this, and many options exist to serve this purpose. Payday loans and online lenders (i.e. P2P loans) are the two big options – they are fast and accessible, but both can come at a high price. 

    Loans agreed with collateral can reduce your risk, and therefore the cost, but can take a little longer. Credit cards can be an option, and good for building credit.
    Finally, if you are a recipient of Universal Credit, a Universal Credit advance can be a free option with no impact on your credit score. If you’re concerned with hurting your credit score, use these options sparingly, with low credit utilisation, and always compare lenders.