How to get approved for a personal loan with less than perfect credit

Why approval is still possible with imperfect credit

Securing a personal loan with less than perfect credit is achievable in the UK if you understand how lenders assess risk and how to present your finances. While headlines focus on credit scores, underwriting goes deeper. In 2025, many mainstream lenders look for a minimum score of around 580, yet decisions are rarely based on score alone. Experian categorises scores above 881 as good and below 720 as poor, which affects price and choice, but it does not make approval impossible. Lenders weigh stability, affordability, and your recent financial behaviour alongside your score.

Income and employment matter. A regular income, whether employed, self-employed, or retired, makes a case for affordability. Lenders also check how much of your income already services debt. This debt-to-income view can tilt a borderline case into an approval at a fairer rate. Address history is another foundation stone. Most lenders want at least three years of UK addresses to verify identity and residency status. If you are new to the UK, providers may still consider you, but options narrow and rates often rise.

Soft-search eligibility tools are your ally. Using UK comparison platforms or credit reference agency tools lets you test the waters without affecting your score. They map your profile to lenders that are more likely to say yes. If your profile is thin or stretched, consider a joint application or a suitable guarantor. This can lift your approval odds materially and unlock lower APRs, though both parties share responsibility for repayment.

Understanding APR is not just about percentages - it is about knowing the total you will pay. Fees, term length, and whether the loan is secured or unsecured all influence the outcome. Unsecured loans are common but price in risk for lower scores. Secured options can be easier to obtain, but they place an asset at risk if repayments falter. The right path depends on your tolerance for risk and your ability to afford repayments comfortably.

With a clear approach, you can improve your chances quickly: tidy your bank account conduct, reduce small debts, correct credit report errors, and only apply where you are genuinely eligible. Kandoo, as a UK retail finance broker, works with a panel of lenders and can help you compare options responsibly. The goal is a sustainable approval at the best rate you can qualify for - not simply the first yes.

The strongest applications balance score, stability, and affordability - and avoid unnecessary hard checks while shopping around.

Who benefits from this guide

If your credit is fair or poor and you are worried about being declined, this guide is for you. It suits applicants with limited credit history, a few late payments, or rising balances who still have steady income and a realistic plan to repay. It also helps those returning to the UK or changing jobs who need to understand how residency checks and employment continuity affect decisions. If you are considering a joint application or a guarantor to improve terms, you will find practical steps here. Finally, if you want to compare unsecured versus secured personal loans without damaging your credit score, you will learn how to use UK eligibility tools effectively.

Jargon made simple

• APR: The annual cost of borrowing including interest and most fees - used to compare loans.

• Soft search: A credit check visible only to you that does not affect your score.

• Hard search: A full check recorded on your file that can slightly reduce your score for a short period.

• Debt-to-income ratio: The share of your monthly income used for debt repayments - lower is better.

• Secured loan: Borrowing backed by collateral, such as home fixtures - typically lower rates, higher risk to the asset.

• Unsecured loan: No collateral required - quicker, but rates rise with risk.

• Cosigner or guarantor: Someone who agrees to repay if you do not - improves approval odds and pricing.

• Eligibility checker: A tool that estimates approval odds and likely rates using a soft search.

Paths you can take

1. Apply for an unsecured personal loan with soft-search prechecks

   • Works for many applicants around or above the 580 threshold, with pricing shaped by score, income, and stability.

2. Use a joint application with a stronger-credit partner

   • Can materially improve approval odds and lower APR, though both applicants are responsible for the debt.

3. Add a guarantor or cosigner if available

   • Suitable when your income is stable but credit history is weak. Expect better lender choice and potentially longer terms.

4. Consider a secured personal loan

   • Useful if your score is lower and you have an asset to secure against. Understand the risk of asset repossession for missed payments.

5. Improve and wait strategy

   • Pay down revolving balances, correct report errors, and use eligibility tools to time your application for better pricing.

What it could cost and what is at stake

Meeting what lenders look for

Most UK lenders set a minimum annual income between £10,000 and £12,000 and expect a consistent income stream. Employment can be salaried, self-employed with recent accounts, or pension income for retirees. Age must be at least 18, with some lenders preferring 21 or older and setting upper limits around 70 to 75 at application or at loan end. Address history is critical. Expect to provide three years of UK addresses and proof of residency. Some providers require any residence permit to extend beyond your loan term.

Your bank account typically needs to be a UK current account with a Direct Debit facility. Basic accounts are often excluded. Affordability checks review your incoming and outgoing transactions, including existing credit commitments and regular bills. A lower debt-to-income ratio strengthens your case, so clearing small balances and avoiding new credit in the weeks before applying can help. While a score near or above 580 may be considered, Experian’s banding means applicants below 720 should plan for steeper pricing and those above 881 will access stronger offers. Using an eligibility checker lets you match to lenders that align with your profile without adding hard searches to your file.

From idea to approval in clear steps

1. Check your Experian report and fix any inaccuracies.

2. Calculate affordability and reduce high-interest balances first.

3. Use UK soft-search eligibility tools to shortlist lenders.

4. Decide between unsecured, secured, joint, or guarantor routes.

5. Gather payslips, bank statements, and proof of address.

6. Ensure a UK current account supports Direct Debits.

7. Apply to one suitable lender, then compare final offers.

Weighing it up at a glance

Avoid missteps before you apply

Rushing in without a soft-search can lead to avoidable hard checks and a cascade of rejections. Tighten everyday banking conduct for at least one full statement cycle - regular income, stable balances, and no unarranged overdrafts help. If your score sits below 720, plan for higher pricing and consider reducing card utilisation to below 30 percent before you apply. Confirm you have three years of UK address history and the right to reside for the full term. If you are on a basic bank account, upgrade to a current account with Direct Debit capability. Finally, compare the total cost, not just the monthly payment, and read early settlement terms carefully.

If this route is not a fit

1. Use a credit-builder card and pay in full monthly for 6 to 12 months.

2. Consider a smaller loan amount or shorter term to improve affordability.

3. Explore a credit union loan with capped rates if eligible locally.

4. Build savings and revisit once your score and DTI improve.

Frequently asked questions

Q: What credit score do I need for a UK personal loan? A: Many lenders consider applications from around 580 upward. Experian rates above 881 as good and below 720 as poor, which affects approval odds and rates.

Q: Will using an eligibility checker hurt my credit score? A: No. Reputable UK tools use soft searches that do not impact your score. A full application usually triggers a hard search.

Q: Can I get approved with a basic bank account? A: Often not. Most lenders require a UK current account with a Direct Debit facility. Consider upgrading before you apply.

Q: Is a joint or guarantor loan easier to get? A: It can be. Adding a stronger-credit applicant or guarantor can improve approval odds and pricing, but both parties are responsible.

Q: Do I need three years of UK addresses? A: Typically yes. Lenders use address history to verify identity and residency. Limited history narrows options and may increase rates.

Q: Are secured loans cheaper for poor credit? A: Often. Collateral reduces lender risk and can lower APR, but your asset is at risk if you miss repayments.

What to do now

Review your credit file, reduce revolving debts, then use a UK soft-search eligibility checker to identify real options. Compare total cost across unsecured, joint, guarantor, and secured routes. If you want guidance across multiple lenders, a UK broker like Kandoo can help you match to suitable products without unnecessary hard checks.

Important information

This guide is general information, not personal advice. Eligibility, rates, and terms depend on your circumstances and may change. Always check lender criteria and read the agreement before applying. Borrow responsibly and only what you can afford to repay.