Bad Credit Loans in the UK

Read before you apply

This page explains:

• who bad credit loans can (and can’t) help
• what credit checks happen and when
• how much borrowing can cost
• how our hybrid lending model works to widen options responsibly, without guarantees

Next step (no pressure): check your eligibility and see whether we can make an affordable offer.

What we mean by “bad credit loans”

A bad credit loan is a regulated credit option designed for people who may have:

• missed or late payments
• defaults or arrears
• CCJs (County Court Judgments)
• a limited or uneven credit history

If you’re unsure how a CCJ may affect your chances, we explain this in more detail on our CCJ loans page.

These loans are not a shortcut and are not suitable for every situation. They are intended for short-to-medium-term borrowing where repayments are affordable and clearly understood.

How much you can borrow and how long you have to repay

Our loans are unsecured, meaning no guarantor is required.

• Borrowing amounts: £300 to £1,500
• Repayment terms: 3 to 9 months

Spreading repayments over several months can reduce the risk of falling into repeat borrowing. Some people refer to this structure as a short-term loan, but the key difference is that repayments
are spread across manageable monthly instalments rather than being due all at once. We explain this further
on our short-term loans for bad credit page.

Credit checks: what happens and when

UK lending rules do not require lenders to run a hard credit check at the start of every application. What the Financial Conduct Authority requires is a reasonable and proportionate assessment of creditworthiness and affordability before lending.

This requirement is set out in FCA Consumer Credit Sourcebook (CONC) 5.2A, which focuses on whether a lender has gathered sufficient information to assess a customer’s ability to repay without causing financial harm.

Initial assessment (before any formal credit commitment)

When you apply, we carry out an initial assessment to understand:

• your income and essential outgoings
• your existing credit commitments
• whether lending would be affordable and responsible

This assessment may include information from credit reference agencies and other verification checks. At this stage, the purpose is eligibility and affordability, not to finalise lending.

Why we avoid unnecessary hard credit checks

As a direct FCA-regulated lender, our approach is deliberately cautious:

• a hard credit search is reserved for the final stage, only if we are in a position to make you a loan offer and you choose to proceed
• if we cannot fund your loan, we aim not to leave an unnecessary footprint on your credit file

In simple terms, if we can’t lend responsibly, we don’t believe you should be penalised on your credit record for checking your options.

If a hard credit search is required

In some cases, a hard credit search may be needed to complete a formal application or finalise an agreement. If this applies:

• we will make it clear before it happens
• you will always have the choice whether to proceed

If we cannot make you an offer

If we’re unable to lend directly, you may be offered the option to explore alternatives through trusted partners. This only happens with your consent, and those partners are also required to carry out their own creditworthiness and affordability assessments under FCA rules.

How the application process works

Step-by-step overview

1. Apply online and provide basic personal, income, and expenditure details
2. We assess affordability and creditworthiness
3. You receive a clear outcome:
   • an offer from us, or
   • the option to consider a referral to trusted partners
4. If you accept an offer, you review and sign the agreement electronically
5. Funds are sent once checks are completed and the agreement is in place

Timescales can vary depending on verification requirements and your bank.

Our hybrid lending model: why it exists

Bad credit lending is not one-size-fits-all. Different FCA-authorised lenders assess risk differently. Our hybrid model exists to widen access while maintaining responsible standards.

We assess applications as a direct lender

Payday Bad Credit is a trading style of Western Circle Limited, which is authorised and regulated by the Financial Conduct Authority. We always assess applications first under FCA rules.

Referral options, only with permission

If we cannot offer a loan directly, we may offer to refer your application to a small group of FCA-regulated brokers that have passed our compliance and due-diligence checks.

These brokers:

• work only with FCA-authorised lenders
• operate under regulatory standards
• are used to check whether another lender’s criteria may be more suitable

Safeguards you should expect

• referrals happen only with your explicit consent
• data is shared securely and only for the purpose of checking availability
• affordability rules are never bypassed

What the hybrid model does and does not do

• It may increase the chance of finding an offer
• It does not guarantee approval
• It does not override affordability assessments

Risks and responsibilities you should understand

Borrowing with bad credit can help in some situations, but it can also make problems worse if misused. Please consider carefully:

• missed payments can lead to extra charges and financial stress
• borrowing to repay borrowing can create a difficult cycle
• free debt advice may be a safer option if you are already struggling

How bad credit loans apply in different situations

Bad credit loans can be relevant in different circumstances, depending on your credit history and borrowing needs. The supporting pages below explain specific situations, but all applications follow the same assessment process:

• CCJ loans — how existing CCJs affect eligibility and affordability
• No guarantor loans — unsecured borrowing without asking someone else to support the loan
• Short-term loans for bad credit — understanding repayment length and structure

These pages explain specific situations, but all borrowing is assessed under the same responsible lending standards.

Frequently asked questions

Will applying affect my credit score?

This depends on the type of checks used and the stage of your application. We aim to be clear about when a hard credit search may occur.

Can I repay early?

Yes. You can repay early at any time and save money on interest, free of charge.

What happens if I’m declined?

Declines can happen in bad credit lending. If we can’t lend directly, you may be offered the option to explore alternatives through vetted, FCA-regulated partners, but only with your permission.