A low credit score is usually down to a bad track record on the part of the consumer in settling debts resulting in CCJs, defaults, arrears or bankruptcy. Having no track record at all as a borrower can also mean a low credit score, as the lender has no history on which to make an assessment of risk. Occasionally an administrative error by a lender can result in an impaired credit rating.

When you apply for a personal loan, the lender will look at your credit file and the information you provide on the application form to make its own calculations on your "risk" as a potential customer. Most mainstream lenders will reject you if you have a poor credit history, however there are some specialist lenders who will provide unsecured loans for tenants and many more who will provide secured loans for homeowners even if they have a low credit score.

Getting behind with your credit card payments, failing to pay a parking fine, non payment of a utility bill and other financial mishaps can tarnish your credit record, meaning you could be turned down for a loan if you apply to a high street bank. Repeated attempts (and rejections) to obtain a personal loan at prime rates could further damage your credit rating. Instead you need to approach a lender who is willing to provide loans for people with a low credit score.

If you have some credit black marks against your name, the interest rate you will be charged for a loan will be higher than the standard deals as you'll be designated as a non standard borrower. If you are a homeowner, you could consider a secured loan. However, any decision to consolidate unsecured debts with a secured loan needs to be taken very carefully. Although secured loans are freely available to people with poor credit history, they do put your home at risk if you default. The lender can forcibly sell your house to recover the loan.  Where possible a personal unsecured loan is the best option and this is the only choice for tenants or people who live with their parents.

It is important to borrow only what you need and make sure you can comfortably afford the repayments. 

So whether you want to consolidate debts, finance a wedding, holiday or home improvements, use the search facility above to find UK lenders who will accept applications for loans from people with bad credit history.