What is a small loan?
The two credit unions we partner with, My Community Bank and Castle Community Bank offer loans from £1,500; however, the sizes of small loans offered can vary depending on the lender and type of loan.
Small personal loans are typically available with shorter repayment terms than large loans and may be easier to qualify for, depending on your credit score and personal circumstances.
What can I use a small loan for?
There are several different reasons why people take out a small loan. These include:
- Covering the costs of a repair to your home
- Consolidating debts into one single monthly repayment to help manage payments more efficiently and save on higher rates of interest
- Paying for unexpected bills like vehicle repairs or a replacement boiler
- Paying for an important event
It’s important to carefully consider if you can afford a loan before taking one out.
You can use our loans calculator to get an estimate of what your monthly repayments could be.
How much can I borrow with a small loan?
The two credit unions we partner with, My Community Bank and Castle Community Bank, offer loans from £1,500 to £25,000.
The amount you’ll be able to borrow will depend on your credit score and how much you can afford to pay back each month.
Use our loans calculator to get an estimate of what your monthly repayments could be or request a personalised quote to check whether you are likely to be accepted and the interest rate you would be offered.
Using our loan calculator or getting a personalised quote will not impact your credit score.
How do I apply for a small loan?
The whole process of applying for a small loan with one of our credit unions can be done entirely online.
- You’ll tell us how much you want to borrow and for how long, and we’ll perform a soft credit check which won’t affect your credit score, and other lenders won’t be able to see a record of it on your credit report.
- We’ll pass your information to the credit union we’ll match you with, and they’ll check your affordability and credit score. If you’re eligible, you’ll be given a quote which includes the APR of your loan.
- If you’re happy with your quote, you’ll need to sign your loan agreement, and we’ll perform a hard credit check on your credit report.
- The credit union will aim to make a decision within approximately two working days. If you’re happy to proceed, you should receive your money within three to four working days of your application.
You won’t need to speak to anyone about applying for a small loan online - however, if you have any questions before you apply online, you can talk to a member of our team Monday to Friday, 8 am to 6 pm on 0203 375 0221.
Can I get a small loan with bad credit?
The credit unions we partner with are designed for borrowers with lower credit scores, also known as “Fair” credit scores.
Your credit score is influenced by how you've previously managed credit products, for example, making your credit and store card repayments on time and paying back overdrafts and loans.
The UK's three major credit reference agencies are Equifax, Experian and TransUnion. They each have different scoring methods, but all borrowers fall into one of the following categories:
- Bad
- Fair
- Good
- Excellent
A fair credit score falls between 439-530 out of 1000 for Equifax, 566-603 out of 710 for Transunion and 721-880 out of 999 for Experian.
You can check your credit score for free using Experian, Clearscore and Credit Karma. It’s a good idea to use all three websites to get a holistic view of your credit score from all three main credit reference agencies.
If you fall into the ‘Bad’ credit score category, there are some steps you can take to help improve your score:
Registering to vote - Being on the electoral roll helps to prove where you live. Even if you do not intend to vote in the elections, it could still help boost your credit score.
Be a responsible borrower - Paying your bills on time will help to build your credit rating; being late for just one payment could harm your credit rating.
Keep your credit card utilisation low - Try to spend no more than 25% of your credit card limit. The closer you are to the limit, the more it looks like you are in financial difficulty.
Avoid withdrawing cash on your credit card - Doing so harms your credit rating, so avoid doing this - you’ll typically be charged a fee for withdrawing money too, so it’s best to avoid this altogether.
Check for mistakes on your credit report - Mistakes do happen, so it’s important to check your credit report regularly. You can check it using websites like Experian, Clear Score and Credit Karma.
Avoid making more than one application for credit within six months - Every time you apply for credit, doing so will affect your credit score. Try to limit the number of applications you make to one application every six months.
Consider using a credit builder credit card - If you have little or no credit history, a credit builder credit card can help you to build or improve your credit score. These cards are designed to help borrowers improve their credit by making small repayments each month.
