Can I get a loan with bad credit? 

For those with bad credit, securing a loan can be a long battle as lenders view borrowers with a low credit score as high risk. This can often lead to stricter terms, higher interest rates or even denials. However, finding loans with reasonable terms is crucial for those with bad credit. Finding a loan with fair interest rates and manageable repayment schedules can help them cover necessary expenses without falling further into debt.  

Being able to repay the loan will also provide an opportunity to improve credit scores which can then open the door to more financial opportunities in the future. 

There has been a growing demand for personal loans in the US in 2024 with 93.9 million Americans currently holding personal loans.

This is a 5.3% year-on-year increase. Partly this is due to a rise in accessible loan options for those with bad credit as more lenders are offering bad-credit loans, secured loans, and alternative lending platforms. Navigating your financial choice carefully is essential to avoid high fees and dangerous lending practices.  

You can take out a loan with bad credit but doing so should be carried out carefully. 

What is classed as having bad credit? 

Lenders will assume you are a high-risk borrower if you have a FICO score below 580. Credit scores typically range from 300-850 with higher scores indicating strong creditworthiness. Scores below 580 falls into the ‘poor’ category which then makes it challenging to secure a favorable loan. 

If you miss or make your payments late on credit cards, loans or bills you will damage your credit report and could end up with a significantly lower score. High credit utilization or using a large portion of available credit will also negatively impact your score. If a borrower is unable to repay debts this will be recorded, and future lenders will be more wary. 

Best loans for bad credit October 2024 

When you have bad credit, finding a personal loan can be challenging, but there are several options available, including payday loans, secured loans, and loans from specialized lenders. Personal loans with a bad credit score is possible but should be carefully considered in order to avoid inescapable debt. 

Payday loans 

Payday loans are short-term loans designed to be repaid by your next paycheck. These loans are often marketed to borrowers with bad credit, offering quick cash with minimal application requirements. However, payday loans come with extremely high interest rates, often exceeding 400% APR, and costly fees. While they provide immediate relief, they can easily trap borrowers in a cycle of debt if not repaid on time. Payday loans should only be used as a last resort. Recent regulations in 2024 have introduced more consumer protections, limiting the amount a borrower can take and capping interest rates in some states. Still, they remain risky and should be approached with caution. 

Lenders specializing in loans for bad credit 

Several lenders cater specifically to individuals with low credit scores. These loans often have higher interest rates compared to those available for borrowers with good credit, but they offer better terms than payday loans. Loan amounts typically range from $1,000 to $10,000, with repayment terms usually between 12 and 60 months, depending on the lender. 

In October 2024, lenders like Upstart, OneMain Financial, and Avant continue to offer personal loans for bad credit borrowers. Upstart, for example, uses a unique model that factors in education and employment, while OneMain Financial focuses on offering personalized loan terms based on your financial situation. Avant provides flexibility with repayment and has lower credit score requirements. 

Secured Loans 

Secured loans are another option for borrowers with bad credit, backed by collateral such as a car or home. These loans reduce the risk for lenders, making it easier for individuals with low credit scores to get approved. Common types include car title loans or home equity loans, where the borrower’s asset is used to secure the loan. The advantage is often a lower interest rate compared to unsecured loans, but the downside is the risk of losing your asset if you default on payments. 

Best loan companies for bad credit 

How to choose a loan for bad credit 

When choosing the best loan for bad credit, understanding key criteria can help you make a smart financial decision. Here are the factors you should evaluate: 

Interest rates 

This is one of the most important factors when choosing a loan. Borrowers with bad credit often face higher rates, but there can be significant differences between lenders. Look for the APR which includes both the interest rate and any other associated fees. Make sure you compare rates across multiple lenders to ensure you are getting the best offer available. The lower the interest rate, the lower your monthly payments will be, this will help you repay the loan. 

Fees and Penalties 

Loans often come with various fees and penalties that can add up. Watch out for origination fees, which are usually deducted from the loan amount upfront. Some lenders also impose late payment penalties or prepayment penalties for paying off your loan early. Be sure to read the fine print and ask about any additional costs. Lenders who are transparent will clearly outline all fees upfront, so avoid any that seem to hide or gloss over these charges. 

Repayment terms 

Some loans offer shorter terms with higher monthly payments, while others provide longer terms with lower payments but higher overall costs due to interest. Consider how flexible the repayment schedule is, and ensure it aligns with your budget. Look for options that allow early repayments without penalty, especially if you plan to improve your financial situation over time. 

Approval process 

Some lenders offer fast approvals with minimal checks, whereas others may conduct a thorough credit check and verification process. Being approved quickly will be tempting, however they can often come with higher interest rates and fees.  

Check customer feedback and reviews 

During your research it is important to take a look at past customer reviews and feedback. This will tell you how trustworthy the lenders are and whether this is a good decision for you. 

Alternative to loans for bad credit 

If you cannot find a loan with favorable terms and you have a bad credit score, there are some other options. 

Credit builder loans 

They are designed to help improve your credit while borrowing money. The lender will hold the loan amount, whilst you make regular repayments. This is a way to prove you can be a low risk, trusted borrower and in the future more lenders will accept you. 

Debt consolidation loans 

For those with multiple debts, a debt consolidation loan can combine them into one monthly payment, often with a lower interest rate. This simplifies repayment and can reduce overall interest costs. 

Secured credit cards 

You will have to provide a cash deposit as collateral, this makes them easier to obtain with bad credit. 

Advice business Financial Life Planning has hired Paradigm Norton’s Rebecca Tuck as its new operations director to help drive the expansion of the business.

Kate Shaw launched the firm around 10 years ago and has been running it on her own ever since.

“We both got to the point in our careers where we are ready to do something different,” Tuck told Money Marketing.

“[Kate] could’ve carried on like that indefinitely, I probably could’ve stayed at PN indefinitely, but I just wanted a change.”

Tuck has joined the business to “get it properly ship-shape”. “It’s like phase one in world domination, that’s the plan,” she said.

The first step is to make everything behind the scenes as efficient as possible. This includes making the client journey smooth and enjoyable.

“We are looking to grow, ultimately,” Tuck said. “There is definitely space for more people to join in the not-too-distant future. But by getting me in first, we can just make sure we’ve got that really solid foundation to build on.

The business is also going through a brand refresh and is working on a redesigned website.

“Kate is one of the most genuine people I’ve met in financial services,” said Tuck.

“And she really wants to do what’s best for clients. She is genuinely doing something a bit different.

“It was a really exciting opportunity for me to come in, essentially with a blank sheet of paper, and help design what that looks like and what that experience will be.

Shaw and Tuck first met at the IFW conference in May 2023.

“We got talking and realised we were very much on the same page, and there is a really exciting opportunity to join forces and use each other’s skillsets and do something exciting,” says Tuck.

“Bigger picture, longer term, there is definitely a desire to expand to help more people, to be a place where people can be themselves.”

Shaw said: “We’re very much about doing an absolutely brilliant job for people who don’t feel that they fit into the traditional financial planning firm.

“We want people to land onto our website, which is being updated at the moment, and look at it and go ‘that’s me’.”

She said there are a lot of people, especially Gen X women, who are “quite badly served” by financial services.

“We want there to be a home for everybody,” she added.

In terms of when the business is looking to hire new employees, Shaw said it is to do with when the right person comes along. “If that’s next week, awesome. But we’re keen to make sure it is a very tight ship that we’re running.

“It’s a team effort. We’re onboarding a new client this week and Becca’s going to be involved in that. It’s not just a case of I do the clients, she does the ops, we’re all in it together.

“It’s really important that they know they’ve got a home with us. We’re on their side. We’re independent, we know what we’re doing and we only answer to them.”

THOUSANDS of households can get their council tax reduced or even wiped entirely.

The support you can receive depends on your personal circumstances and your local authority.

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Several factors influence the extent of the discount you might receive, such as your household income, whether you have children, and if you are in receipt of any benefits.

Therefore, if you are on a low income or receiving benefits, you could qualify for a reduction in your council tax.

However, eligibility criteria vary depending on your location.

Councils retain the authority to set their own eligibility requirements, and your income may affect your claim, even if you are claiming benefits.

If you are struggling to pay your bill, you might also be able to arrange a deferral or discuss setting up a payment plan with your council to help manage the cost.

Those claiming the following benefits are likely to be eligible for money off their bill:

The amount you can get your council tax reduced will vary, so you’ll need to check with your local council.

However, those claiming the following benefits and who are classified as “severely mentally impaired” could get their council tax completely wiped:

• Universal Credit with limited capability for work or work related activity
• Employment support allowance (ESA)
• Attendance allowance
• Standard or enhanced rate of the daily living component of personal independence payment (PIP)
• Middle or higher rate care component of disability living allowance
• Armed forces independence payment
• The disability element in working tax credit
• Incapacity benefit
• Severe disablement allowance
• An increase in disablement pension for constant attendance
• Unemployability supplement
• Constant attendance allowance paid from industrial injuries scheme
• Unemployability allowance paid from war pension schemes
• Income support, including a disability premium due to incapacity for work

What is the severe mentally impaired discount?

This allows households to apply for a discount on their council tax bill if you or someone they live with is severely mentally impaired.

To be eligible for the discount you’ll need to:

• Get a certificate to say you’re severely mentally impaired from a medical professional, such as your GP.
• Prove your eligibility for certain benefits which you can check with your local council.

If you qualify as severely mentally impaired you’ll get a 100% discount if one of the following applies:

• You live on your own
• Any other adults in your household either qualify as severely mentally impaired or are full-time students

If nobody else in your home is classed as severely mentally impaired and is disregarded from paying council tax like live-in carers – your council tax will be reduced by 50%.

And if you live with someone who is severely mentally impaired you’ll get a 25% discount as long as either:

• There are no other adults in your household
• Everyone else in your home is disregarded

Your income and savings won’t affect whether you can get this discount.

How do I apply for a council tax reduction?

If you’re based in England or Scotland, you need to contact your local authority for a claim form to register for a council tax discount.

You can find this via the Government’s “Apply for Council Tax Reduction” service by visiting www.gov.uk/apply-council-tax-reduction.

After the claim is accepted, the discount should apply automatically every year.

Councils are not legally obliged to backdate any claims, but they might, depending on where you are based.

If you live in Wales, there is a national scheme.

You can find out more by visiting www.gov.wales/council-tax-discounts-and-reduction.

What energy bill help is available?

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There’s a number of different ways to get help paying your energy bills if you’re struggling to get by.

If you fall into debt, you can always approach your supplier to see if they can put you on a repayment plan before putting you on a prepayment meter.

This involves paying off what you owe in instalments over a set period.

If your supplier offers you a repayment plan you don’t think you can afford, speak to them again to see if you can negotiate a better deal.

Several energy firms have grant schemes available to customers struggling to cover their bills.

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But eligibility criteria vary depending on the supplier and the amount you can get depends on your financial circumstances.

For example, British Gas or Scottish Gas customers struggling to pay their energy bills can get grants worth up to £2,000.

British Gas also offers help via its British Gas Energy Trust and Individuals Family Fund.

You don’t need to be a British Gas customer to apply for the second fund.

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EDF, E.ON, Octopus Energy and Scottish Power all offer grants to struggling customers too.

Thousands of vulnerable households are missing out on extra help and protections by not signing up to the Priority Services Register (PSR).

The service helps support vulnerable households, such as those who are elderly or ill, and some of the perks include being given advance warning of blackouts, free gas safety checks and extra support if you’re struggling.

Get in touch with your energy firm to see if you can apply.

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As a founder of a small advice firm who’s just read that we’re heading for extinction, I feel compelled to respectfully disagree.

Firstly, I’m not entirely sure I accept the premise that there’s evidence small firms are on the way out.

Advice is still a cottage industry and small firms are well represented in the numbers. The Financial Conduct Authority’s latest retail intermediary market data shows a significant but not huge fall, from a high baseline.

Those with one to five advisers still made up 88% of all directly authorised firms in 2023.

So, I suppose the next question is: is there reason to believe small firms have some strategic disadvantage compared to big ones that makes them more likely to vanish in the years ahead?

The day big advice firms start undercutting me on cost while delivering a product anywhere near as good mine is the day I’ll worry about small firms going extinct

I’d say the relative merits tend strongly in the opposite direction.

As someone who’s been knocking around the industry for 20 years, working my way through mostly big firms (and mostly “good” big firms), I can tell you confidently the small ones are where most of the innovation and the best client outcomes are concentrated.

My tiny little firm is the best I’ve worked at – and not just by a bit.

There’s always a lot of chatter about tech and I suppose big firms with big budgets do have theoretical first-mover advantage with innovative solutions. In practice, however, they are also held back by sclerotic compliance and dysfunctional politics.

Our industry is also fundamentally analogue, which isn’t a bad thing. Tech just seems to try to solve problems round the edges. Our best work isn’t what goes on when we’re slickly onboarding clients, running platform reporting, benchmarking portfolios. Clients value these things – but are they a big part of what they value?

My tiny little firm is the best I’ve worked at – and not just by a bit

I say no. It’s the interactions we have with them over the life of a relationship, where we understand and care about them. The rest is highly commoditised, and largely invisible unless it goes spectacularly wrong.

Anyway, access to established tech is well democratised. A tiny one-adviser firm can feasibly stack the best platform, cashflow planning and analytics software, and insource investment governance which beats the pants off everything out there, to deliver gold standard services to clients while controlling the biggest variable in all this – adviser time.

I am yet to see a big advice firm delivering this combination of good tech (table stakes) and good service (the valuable part).

I understand clients’ desire for a “soup to nuts” service experience (except in a restaurant setting, obviously) but I disagree tech is a silver bullet that’s going to magically solve the lack of genuine client care that’s endemic to big financial services.

Turns out the robos were mostly providing what younger clients were supposed to want, not what they wanted

I don’t even think it’s what most clients want.

Mine skew much younger than average and I talk to them regularly about what good looks like. Their answer is never about seamless tech, single application onboarding or whizzy client portals.

They often talk about having the kind of trusted adviser in their life that traditional professions have stopped trying to be. They want to partner with someone – not a set of processes or a brand – for the long haul. They want a service that flexes in response to their life stage and shifting priorities. They want true accountability.

Tellingly, a lot of these clients come to me from robo advisers that were also meant to put me out of business ages ago. Turns out the robos were mostly providing what younger clients were supposed to want, not what they wanted.

At the risk of labouring my point, another source of work is clients who’ve been through the aggregation mangle.

No amount of slick tech and fat budgets can convince a client they are getting something better when it feels worse

When I explained how we work to a new client recently, she said, “that sounds great, and a lot like what I used to have”.

She originally worked with a small local IFA, who had made her feel valued and looked after for many years. Then he exited. Enter the consolidators, with their strategically aligned platform provider, their team structure, their nationally recognised brand, their 30 underlying funds and 2.3% TER. She wasn’t a particularly interested investor. But she wasn’t daft either. And she knew what less-for-more felt like.

What’s my point? Two things. First, that it took me 20 years to truly understand the optimum model for clients looks a lot more like a good, dare I say, old-school IFA than the focus-group designed, centralised-team-based alternative many big firms think is the thing.

Second, that no amount of slick tech and fat budgets can convince a client they are getting something better when it feels worse. My clients are smart consumers.

Horrible supermarkets may not be everyone’s friend in the value chain, but they are the consumer’s friend. Can big financial services say the same thing?

In a lot of industries, you either pay a premium for someone small and local, who will treat you with care, or you buy from a big, cheap brand that won’t. It’s false equivalence to suggest this is the same in advice.

Horrible supermarkets may not be everyone’s friend in the value chain, but they are the consumer’s friend. Can big financial services say the same thing?

The day big advice firms start undercutting me on cost while delivering a product that’s anywhere near as good as what we do is the day I’ll worry about small firms going extinct.

If they really are where the future of advice is, then, in the words of the philosopher Duncan Bannatyne, “I’m out”.

Greg Moss is founder of Eleven.2 Financial Planning. He is a chartered financial planner and fellow of the Personal Finance Society

BRITISH Gas has issued its final warning to customers as they have just hours left to secure an accurate energy bill this month.

Households must submit an energy meter reading before the end of the day in order to ensure their next bill is based on actual usage rather than estimates.

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This comes after a change to the energy price cap on October 1.

It means around 28million billpayers on standard variable tariffs will see bills rise 10% according to Ofgem, or around £149 a year on average.

Though remember this is for typical usage for dual fuel, and your bill can still be higher or lower depending on how much energy you use.

British Gas was one of a handful of suppliers which extended its deadline for customers so that they could have extra time to make sure their readings were accurate on their next bill.

People on a standard variable tariff (SVT) who fail to supply a reading risk their next bill being estimated – meaning they could be overcharged, or undercharged and owe money later on.

The reading, which should be taken as close to the first day of the month as possible, must be submitted by the end of today via the British Gas app, its automated phone line, or the meter reading page on its website.

British Gas is the last supplier to close its deadline – for example, EDF Energy extended until October 9 submissions are now closed.

This gives suppliers enough time to calculate an accurate energy bill which reflects its customers’ usage.

British Gas told The Sun: “Our customers can take and submit readings anytime.

“If customers took a reading on October 1, but didn’t get a chance to provide it on the day, a form on our website, including on our meter reading page is available until October 14.

“This will allow them to submit the read they took on October 1 and we’ll use that reading to calculate what they pay before the rates changed.”

If you miss the deadline you can still submit a reading later on, but this may not be applied until the bill after your next one.

The energy price cap changes every three months – in June, the cap fell to the lowest level in two years, from £1,690 to the current rate of £1,568.

According to Ofgem, who sets the limit, an average household bill of £1,568 will now rise to £1,717 as of this month.

The cap places a limit on what suppliers can charge households for energy usage and makes sure that prices for people on an SVT are fair and reflect the cost of energy.

It is calculated base on a range of factors including the current wholesale energy prices, VAT, and network, operating and policy costs.

Households on fixed tariffs or prepayment plans do not need to submit as their rate is either locked in or predetermined and will not be subject to any changes.

Those who have a smart meter also do not need to worry as their device will send automatic meter readings.

If you are unsure what plan you are on, go to your suppliers website or revisit paperwork from when you entered your energy deal.

And if you have missed your supplier’s deadline or are concerned about the price cap change as well as other factors affecting your cost of living – help is available.

ENERGY HELP IF YOU’RE STRUGGLING

The British Gas Individual and Families Support Fund has been reopened just in time for the energy price cap change.

And the current package is bigger than ever, with British Gas setting aside a whopping £140 million to help those who are struggling financially.

In the past the trust has helped more than 21,000 customers write off energy debts of up to £2,000.

And unlike many other supplier grants, the fund is open to both British Gas customers and non-customers.

However British Gas asks that households go to their supplier for whatever help is available first.

Applicants must match a range of criteria which can be read on the British Gas website – as well as be able to prove they will reach a sustainable position moving forward.

If you are eligible, British Gas can offer:

• Free energy grants
• Energy advice for vulnerable households
• Tailored support for households and small business customers
• Funding for small businesses and charities

To find out how to apply you can access a form via the British Gas website if you search “Individual and Families Support Fund”.

How has the Household Support Fund evolved?

The Household Support Fund was first launched in October 2021 to help Brits pay their way through winter amid the cost of living crisis.

Councils up and down the country got a slice of the £421million funding available to dish out to Brits in need.

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It was then extended in the 2022 Spring Budget and for a second time in October 2022 to help those on the lowest incomes with the rising cost of living.

The DWP then confirmed a third extension of the scheme through to March 31, 2024.

Former chancellor Jeremy Hunt extended the HSF for the fourth time while delivering his Spring Budget on March 6, 2024.

In September 2024, the Government announced a fifth extension.

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Other individual suppliers are offering support to their customers this winter amid growing concerns about the cost of living.

For example, Octopus Energy has recently launched a scheme for pensioners which offers fresh discretionary credit of between £50 and £200.

While Scottish Power‘s Hardship Fund has also handed out more than £60 million to struggling customers.

And Utilita also offers grants to its customers to help clear of minimise debt, by operating through its charity partner, Utilita Giving.

Utilita Giving also partners with other charities such as IncomeMax, which helps customers make sure they are claiming what they are entitled to, and Let’s Talk, which provides replacement white goods.

E.ON’s Next Energy Fund also provides grants and appliance replacement services to struggling customers.

To find out what support your energy supplier is offering this colder season, visit their website or ring their helpline (which can be found online).

Further help is available to all households through the Household Support Fund which has renewed a fresh pot of £421 million funding across local councils.

How much each council gets, and the way it deals with its funding, is different – so how much you can get will vary depending on where you live.

To find out whether you are eligible contact your local council.

And if you’re unsure which council you are living in you can use the location tool on the Gov.uk website to find out.

Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.

Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories