Today, I’ll be discussing loans that you can obtain without having to produce a guarantor even if you have bad credit.

While such loans may seem convenient due to the fact that you don’t have to get another person involved, there are certainly other aspects of them which you definitely have to take into account.

I’ll be comparing loans with guarantors with loans without guarantors if you have bad credit and determining which one could be more suitable for you depending on your financial circumstances.

Is it Possible to Get a Loan without a Guarantor if I have a Bad Credit History? 

Your credit history is something that pretty much every lender checks when you apply for any type of loan.

It’s a great summary of how well you handle your finances and whether you’ll act responsibly enough when making repayments towards your loan.

Having a bad credit score will certainly reduce your chances of getting approved for a traditional loan.

That being said, that’s why guarantor loans exist. Guarantor loans work by you producing another person (who has a good credit score) who will step in and handle your repayments if you start to fail to make them. 

Guarantor loans are a great way of obtaining a loan if you have bad credit

However, some people are not able to produce a guarantor. They may not have anyone in their lives who they trust enough to become their guarantor or they may simply be uncomfortable with the idea of depending on another person in case they fail to make their repayments. 

Whatever the reason may be, it’s important for you to know that it’s not impossible for you to obtain a loan without a guarantor if you have bad credit. 

Your options may be much limited and you may have to search the market a whole lot more but you can definitely find specialised lenders that offer loans to people with poor credit scores without requiring them to produce a guarantor. 

Do not apply to many lenders at once. Lenders perform a credit check which is mentioned in your credit file. If mentions like these pop up too many times in your file in a short span of time, it can severely affect your credit and lenders will be less likely to approve your loan because of this.

Hence, it’s a good idea to go through different lenders’ eligibility criteria and loan offers first, determine which lender is most suitable for you and then solely apply to that single lender. 

Always be sure to check whether or not the lender you’re approaching is authorised and regulated by the Financial Conduct Authority (FCA). This is important because lenders who are regulated by them have to follow FCA guidelines which ensure that you, the borrower, is treated fairly throughout the lending process. 

There do exist loan sharks who operate illegally and try to take advantage of individuals with bad credit scores. You must know how to identify them and avoid them at all costs. 

If you’re having trouble finding specialised lenders, you can contact an independent charity such as Payplan for further advice.

No Guarantor Loans for Bad Credit

What Are Some Things I should Know about Loans that Require No Guarantor even with Bad Credit? 

Obtaining a loan with no guarantor and that too with a bad credit score seems too good to be true. You may be thinking to yourself, “There has to be some sort of catch.” 

The truth is that there definitely is a catch. In fact, there’s more than one catch: 

Firstly, the loans you’ll be offered by these specialised lenders will typically have very high interest rates. 

Due to the high interest rate, you will most likely end up paying more than double the original loan amount by the end of your repayment period. 

This is something that you should definitely think about before opting for such a loan. 

If you don’t want to pay double (or sometimes even more) than the original loan amount, then you may be better off going for a guarantor loan.

While it’s true that guarantor loans also have fairly high interest rates, they’re not as high as loans that require no guarantor even if you have a bad credit score. 

When you provide a guarantor, who has a good credit score, when applying for a guarantor loan, this reduces the risk for the lender and you are able to secure a significantly lower interest rate. 

The second thing to note is the loan amount you’ll be offered will typically be quite low compared to the amount you’d be offered if you were opting for a guarantor loan. 

The reason for this is the same as what I mentioned for the high interest rate: producing a guarantor with a respectable credit score significantly reduces the risk that the lender is taking on.

Thus, they are more confident in lending you a higher amount of money because they’re fairly confident they will get it back through your guarantor if you fail to make the repayments.

Lenders have no such guarantee when you opt for a no guarantor loan. Thus, they only offer you lower loan amounts. 

If you need a higher loan amount for emergency expenses or any other important purchase, you may find that no lender will loan such an amount to you due to your poor score.

Hence, in situations like that, you may have to opt for a loan where you have to produce a guarantor. 

How do Loans Affect Credit? 

Your credit file is a record of all of your financial dealings in the past.

When you opt for a loan, this gets recorded in your credit file and initially, it can affect your credit score in a negative way by lowering it.

However, you can rebuild and improve it simply by making your repayments on time. 

Guarantor loans with bad credit and no guarantor loans with bad credit are actually both great loans in terms of rebuilding your credit score. 

As long as you are making your repayments towards your loans on time and in full, your credit rating will start to improve over time. 

After some time, your rating may even reach a point where you can approach traditional lenders and easily get approved for the loans that they offer. 


In conclusion, all I have to say is that while it’s definitely true that loans for people with bad credit without the requirement of a guarantor do exist, they’re not always the best option. 
They have extremely high interest rates and you can typically only borrow fairly low amounts of money using these loans.

Hence, if you’re opting for one, make sure to scour the market and ensure that they definitely are the most suitable option for you.

About the author

Scott Nelson

Scott Nelson is a financial services expert, with over 10 years’ experience in the industry, including 6 years in FCA regulated companies. Read more