The annoyance of a broken boiler, car repairs, or an unexpected bill can happen to anybody, regardless of their financial situation.
If you’re facing a financial emergency, a bad credit payday loan might be something you’ve thought about.
Growing Power is a credit broker, and while none of the lenders on our panel offer payday loans, we could still help you search for a short-term bad credit loan, with a range of repayment terms up to 60 months, depending on the amount of money you apply to borrow.
What is a bad credit payday loan?
With a payday loan, you’ll usually need to repay the entire amount of money borrowed within a month.
If you have bad credit, you might find it difficult to find a lender willing to consider your application.
While finding a loan when you have bad credit isn’t necessarily impossible, you should do thorough research before deciding whether this is the right option for you.
A bad credit loan could come with a higher rate of interest, and you might not be approved to borrow as much money as you need.
Will a bad credit payday loan affect my credit rating?
Yes; any type of loan will affect your credit rating. Your credit score could be impacted either positively or negatively, depending on how you manage your loan.
| How a loan could harm your credit score | How you could protect your credit score |
|---|---|
| Each time you apply for credit, the lender will complete an affordability check, which will include a hard search or Open Banking.* A hard search will be visible on your credit file for up to 12 months and multiple hard searches within a short period of time could damage your credit score. |
Try to keep your credit applications to a minimum. When searching for a loan, a credit broker – such as Growing Power – could help to protect your file from multiple hard searches. A credit broker will scan their panel of lenders for a loan that could be suitable for you, based on the information provided on your application.** |
| If you make a late repayment or miss one altogether, your credit score will decline. | Making your repayments on time each month and clearing the balance of your loan before the repayment term comes to an end could have a positive effect on your credit score, providing any other credit commitments have also been managed well. |
*Open Banking is a process used by authorised third parties, such as lenders. It provides an alternative to a hard search and could be useful for those with a history of bad credit whose current financial situation has improved. Rather than focusing on your credit history, it enables lenders to view your recent spending and repayment habits to understand how affordable a loan would be for you. Open Banking provides a read-only view of your account and lenders cannot see your information without your consent.
**Please note that if you search for a loan with a credit broker, are matched with a lender and choose to make a full application, an affordability check will be carried out. This will be in the form of either a hard search or Open Banking.
Can I apply for a bad credit payday loan?
Before you apply for a bad credit payday loan, you’ll need to make sure that you meet your chosen lender’s eligibility criteria. This will vary from one lender to another, but generally, you may need to:
- Be over the age of 18. For some lenders, the minimum age may be 21.
- Be a UK resident. Some lenders might ask for a certain number of years’ worth of UK address history.
- Have a UK bank account and a valid debit card; and
- Have a regular source of income paid into your bank account.
Are there any alternatives to a bad credit payday loan?
If you’re hoping to spread the cost of borrowing, you might be interested in doing some research into a bad credit short-term loan as a bad credit payday loan alternative.
Unlike a payday loan, a short-term loan isn’t restricted to a month-long repayment term. Depending on the amount of money you apply to borrow, you can usually choose to repay your short-term loan across a set number of months or years.
Short-term loans are typically repaid in monthly instalments. Your monthly repayments will include interest.
Alternatively, you might decide that a loan isn’t quite right for you at this stage. In this case, you may wonder how else you could borrow the money you need.
Could a family member or friend lend you the funds? If you do borrow money from a loved one, you should both agree on and set a repayment plan.
How urgent is your need for money? Is there any chance that you could take a step back and save up instead? Of course, this won’t be a practical solution for everyone but using your own money rather than borrowing funds will mean that you don’t need to pay any interest.
How could Growing Power help me search for a loan?
Growing Power is a credit broker, working with a panel of trusted and responsible lenders. All the lenders on our panel are authorised and regulated by the Financial Conduct Authority (FCA).
None of the lenders on the Growing Power panel currently provide payday loans, but they do offer short-term, personal loans from £100 to £10,000. Depending on the amount of money you apply to borrow, you could repay your loan across a term of 3 to 60 months.
Searching for a bad credit loan with Growing Power
We understand that a history of bad credit doesn’t necessarily reflect your recent financial situation, and, as such, we’re proud to work with a number of lenders who specialise in loans for people with bad credit.
Is a payday loan better than a short-term loan?
The answer to this question depends entirely on the individual and their own financial circumstances. What could be considered a good loan option for one person may not suit somebody else.
If you’re confident that you’re able to repay the full amount of money borrowed within a month, you might choose to search for a payday loan. On the other hand, if you’d prefer to spread the cost of borrowing, a short-term loan might be something you wish to consider.
When it comes to choosing a loan term, it’s worth noting that the longer the term, the more interest you’ll pay, although your monthly repayments will be lower. Shorter terms will give you less time to repay the money you owe, and your monthly repayments will be higher, but you’ll be charged less interest.
I can’t afford my loan repayments; what can I do?
A late or missed repayment will have a negative impact on your credit score, so it’s important to reach out to your lender as soon as you feel like you might struggle to make a repayment.
Your lender will appreciate the fact that you’ve been honest about your situation, and they will be keen to talk you through any options that may be available to help you through this tough time. Every lender is different, but some may offer a temporary repayment holiday or agree to reduce the cost of your repayments while you get back on your feet.
Are you worried about money?
Money worries can leave us feeling stressed and isolated, but it doesn’t have to be this way.
Please know that you can access free, confidential money and debt management advice through sites such as StepChange, MoneyHelper, Citizens Advice, and National Debtline.