Loans for bad credit: Your options (with or without a guarantor)

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Unfortunately, loans for bad credit can be tricky to find – and it’s often even trickier to find a deal that suits you. Even if your credit score is a little beaten-up, it’s important to remember that there’s always going to be loans for bad credit that offer fair terms and attractive repayment plans – you just need to know your options.

However, there are so many ways to borrow – payday loans, guarantor loans, unsecured loans, secured loans, overdrafts, etc… that it’s often impossible to tell which one is right for you.

While we can’t offer individual advice for every single person, we thought we’d choose three people, write a bit about their situation and the advice we’d give them.


Without further ado, let’s meet our people* who searched: “loans for bad credit”


Linda, aged 43, full-time nurse

Linda works full-time at her local A&E department taking care of injured and sick people from the local community. She is married, owns her own home and has a teenage son. After a tricky few months between jobs a few years ago – which resulted in some missed credit card payments and a period of applying for lots of credit – Linda has had a bad credit rating, which has meant that she’s been unable to borrow the money she needs, to remodel her kitchen.

She’s been to her local bank, but they’ve been unable to help – and now she’s not sure what options for loans for bad credit there are. All she knows for certain is that she doesn’t want to use her family home as collateral.

Bamboo’s Advice:

Linda’s situation isn’t uncommon. Lots of people in full-time employment can find themselves with poor or damaged credit scores after a period of bad luck. While Linda could remortgage her house to get the money to remodel her kitchen, she doesn’t want to lose her family home if anything happens to her job.

So, while there are lots of loans for bad credit, there’s only one option that really suits Linda – an unsecured loan.
With an unsecured loan she could borrow up to £5,000 with affordable monthly repayments that would allow her to remodel her kitchen and rebuild her credit score at the same time.


Paul, aged 21, graduate

Paul has just graduated from university with a degree in Business Management. While at university, he worked part-time to fund his studies and built up a small amount of savings. Now he has left university, he has found himself a job at a large local firm, but the position doesn’t start for three weeks and payday is four weeks after that.

Before starting the job, he needs to find a new flat, pay the deposit and first month’s rent, and pay for his monthly train ticket to work. His bank account only stretches to cover the first month’s rent and half of his train ticket – leaving him with £1,000 to find in a hurry.

Bamboo’s Advice:

Obviously, Paul can’t find himself another job for three weeks to bridge the financial gap. He has no option but to borrow money. And Paul has another problem that makes him unlike the other two people with bad credit – it’s not that he has a bad credit score, it’s that he doesn’t have any credit at all.

Because he worked at university, he didn’t have an overdraft and his parents have always paid his phone bill for him. Luckily for Paul, there are lots of loans for bad credit people options to help him (and others like him) out.

  • Option 1: the Bank of Mum and Dad
    There are lots of benefits to borrowing from friends and family. They’re often willing to help, the repayment terms aren’t so strict, they’re understanding of your situation. They’re also happy to wait until you’re back on your feet to be paid back and often, they won’t charge interest.
    However, Paul will be asking his family to dip into their own pocket – which always has the potential to get messy. Plus, borrowing from friends and family doesn’t improve his credit score.


  • Option 2: an overdraft
    Although his lack of income and credit score might harm his chances of getting accepted, if Paul’s bank allow him an overdraft then he could use it bridge the gap before his first payday, and slowly pay it back to the bank. This would help build his credit score, too.


  • Option 3: a guarantor loan
    By getting his parents to guarantee his loan, Paul would be able to borrow the money he needs at a good rate (despite not having a credit score himself). This would allow him to get the money he needs to secure his flat, buy his train ticket and build his credit score all at the same time.


Tom, aged 26, sales executive

The last of our people with bad credit, Tom has struggled with his credit rating over the years, with spells of reliance on payday loans and credit cards. Although he has paid off all his debts and started to manage his money carefully, his credit score has taken a bit of a beating.

Like many people with bad credit in the UK, Tom now struggles to be accepted for loans. Tom and his partner rent a house and are expecting their first child in a few months, and they’ve decided that it’s time to buy a family car.  Unfortunately, with all the baby expenses, they’re unable to afford a new, safe car on their own and can’t find a bank willing to lend to them.

Tom’s parents have said that they’d love to help him out, but they can’t afford to lend him the money.

Bamboo’s Advice:

Tom is stuck in a cycle of being unable to fix his credit score until he borrows more money. And he finds this hard to do because of his credit score. Luckily, Tom is an ideal candidate for a guarantor loan. He has a steady income, a good, recent history of financial responsibility and – importantly – a family willing to help him out.

Using a guarantor loan, Tom would be able to borrow up to £8,000 towards the cost of a new car – with affordable repayments and a fair interest rate – because his parents agree to pay the repayments if he, for whatever reason, cannot.
This makes Tom a much safer bet in the eyes of the lender, and allows him access to more favourable lending packages.

And, because he has a good job, the chances of him using his parents are slim. 80% of all guarantors don’t have to pay a penny towards helping their guarantees out. Once Tom starts repaying his guarantor loan, he’ll be rebuilding his credit score so, if he ever needs to borrow again, he’ll be able to do so without using his Mum and Dad.


* The people in this article have been cobbled together from anonymised marketing data. Any co-relation to an existing customer of Bamboo loans is coincidental.

If you couldn’t identify with Linda, Paul or Tom – and would like to get an idea of which of the loans for bad credit is best for you – why not take our quiz?


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