Often yes, but expect fewer lenders, higher costs and more questions. Specialist lenders look hardest at your recent bank statements and current trading, and products backed by an asset, your invoices or your card takings tend to be more forgiving than an unsecured loan. Nobody can honestly guarantee approval.
"Bad credit" covers a lot of ground. A single missed card payment three years ago is a very different story from an unsatisfied county court judgment last month. Lenders know this, and the better ones look at what happened, when, and what has changed since.
This guide explains what lenders actually see, how they weigh it, and where you stand a realistic chance.
Two credit files, not one
If you run a limited company, there are usually two files in play.
- The business credit file. This belongs to the company. Business credit reference agencies, including Experian, Equifax, Creditsafe and Dun & Bradstreet, build it from Companies House filings, court judgments against the company, payment data shared by banks and suppliers, and previous credit searches.
- Your personal credit file. This is held by the three main UK credit reference agencies: Experian, Equifax and TransUnion. It shows your own borrowing, repayment history, defaults, CCJs and insolvencies.
For a young or small company, lenders lean heavily on the directors' personal files, because the company's own history is thin. And if you're asked to sign a personal guarantee, your personal file matters even more, since you're promising to repay if the business can't.
If you're a sole trader, there's no separate business: your personal file is the one lenders look at.
What counts against you, and for how long
| Mark | What it is | How long it shows |
|---|---|---|
| Late payments | Missed or late payments on credit accounts | Usually six years on a personal file |
| Default | A lender has formally closed an account after missed payments | Six years from the date of default, even once paid |
| CCJ | A county court judgment for an unpaid debt | Six years, unless paid in full within one month |
| IVA or bankruptcy | Formal personal insolvency | Usually six years, though some lenders ask if you've ever had one |
| Hard searches | Credit checks from applications | Around a year, visible to other lenders |
A few details are worth knowing:
- CCJs and the public register. In England and Wales, judgments go on the Register of Judgments, Orders and Fines, which credit reference agencies and lenders can see. If you pay the full amount within one month of the judgment, you can have it removed from the register. Paid later, it stays for six years but is marked as satisfied, which looks much better to a lender than an unpaid one. Scotland and Northern Ireland have their own equivalents.
- A paid default still shows. Settling it doesn't remove it, but a "satisfied" default tells a lender you dealt with it.
- Age matters. Most lenders care far more about the last 12 to 24 months than about something four or five years ago.
One hard limit: an undischarged bankrupt can't act as a company director without the court's permission. If that applies to you, take advice before going any further.
How specialist lenders think
High street banks tend to rely on credit scoring, and a low score can mean an automatic no. Specialist lenders, and the brokers who know them, are more willing to look at the whole picture. They usually ask three questions.
Is the business trading well now? Recent business bank statements, often the last three to six months, carry a lot of weight. Lenders look for steady money coming in, a balance that doesn't live at its overdraft limit, and no bounced payments or returned direct debits. Strong current trading can outweigh an old mark.
Can it afford the repayments? They'll compare the repayments with your monthly income and existing commitments, including any other loans or advances.
Is there a story, and is it over? A default from a divorce, an illness or a customer that went bust, followed by years of clean payments, reads very differently from a pattern of missed payments that's still going on. Be ready to explain, briefly and honestly.
What lenders find hardest is recent, unresolved trouble: unpaid CCJs, missed payments in the last few months, or arrears with HMRC.
Products that tend to be more forgiving
Some types of finance rely less on your credit history because the lender has something else to lean on.
| Product | What the lender relies on | Why it can help |
|---|---|---|
| Asset finance | The vehicle or equipment itself | The lender owns or has a claim on the asset, so it can recover it if you stop paying |
| Invoice finance | Your customers' ability to pay | Your customers' credit can matter as much as yours |
| Merchant cash advance | Your card takings | Repaid as a share of future card sales, so the lender watches your card income |
| Secured loan | Property or other assets | Security reduces the lender's risk, though it puts the asset at risk too |
Asset finance, such as hire purchase or leasing, is often the most accessible route for a business that needs a van, a machine or a piece of kit. See hire purchase vs leasing.
Invoice finance suits businesses that sell to other businesses on credit terms. If your customers are solid, a provider may help even when your own history is patchy. See invoice finance vs a business loan.
A merchant cash advance suits businesses that take a lot of card payments, like restaurants and shops. It's usually one of the more expensive options, so compare the total cost carefully. See how a merchant cash advance works.
More forgiving doesn't mean cheaper. Expect a higher price and, often, a personal guarantee.
An illustration. Priya runs a three-year-old catering company with steady card and invoice income. She has a satisfied CCJ from two years ago, after a supplier dispute, and has paid everything on time since. A bank's automated check turns her down for an unsecured loan. A specialist lender looks at six months of healthy bank statements, hears the explanation, and offers hire purchase on the new oven she needs, with a personal guarantee. The oven itself secures the deal. This is an example, not a promise: every lender decides differently.
Soft searches and hard searches
When you apply for credit, the lender checks your file. There are two kinds of check:
- A soft search lets a lender or broker see whether you're likely to qualify. It isn't visible to other lenders and doesn't affect your credit score.
- A hard search happens when you make a full application. It's recorded on your file and other lenders can see it, usually for around a year.
One hard search is normal. Several in a short space of time can look like you're being turned down everywhere, and that can make the next lender more cautious. With a weaker file, this matters even more. Start with eligibility checks that use soft searches, and only make a full application where you have a realistic chance. If you've already been turned down, our guide to what to do after a business loan is declined covers the next steps.
How to improve your file
Some fixes take minutes. Others take months. All of them help.
- Check all three personal files. You have a legal right to see your personal credit file for free, and lenders don't all use the same agency. Look for accounts you don't recognise, debts marked unpaid that you've settled, and wrong addresses.
- Get mistakes corrected. Raise errors with the credit reference agency, which will check with the lender that reported them. If something is accurate but has a reason behind it, you can add a short notice of correction to explain.
- Register on the electoral roll at your current address. It helps lenders confirm who you are.
- Break old financial links. If you once had a joint account with an ex-partner, their credit history can be linked to yours. Once you have no joint accounts left, you can ask the agencies to remove the link.
- Deal with CCJs and defaults. Pay what you can. A satisfied CCJ or default looks far better than an unpaid one.
- File on time at Companies House. Late accounts and confirmation statements drag down a company's credit score, and they're easy to avoid.
- Pay suppliers on time. Some suppliers share payment data with business credit agencies, so prompt payment can build the company's file.
- Keep your bank account tidy. For the next few months, avoid bounced payments and staying at your overdraft limit. This is often what lenders look at first.
- Use less of your available credit. Running close to the limit on cards and overdrafts suggests strain, even if you always pay.
Red flags to walk away from
People with poor credit are a target for scams and for lending that does more harm than good. Be wary of:
- Upfront fees. Anyone asking you to pay a fee before you've received a formal offer, especially to "unlock" or "secure" a loan, should set off alarm bells. This is a well-known scam. Legitimate lenders' fees are set out in the offer and usually deducted from the loan or added to it.
- Guaranteed approval. No responsible lender can guarantee approval before checking your circumstances. The claim alone is a reason to walk away.
- Pressure to decide today. A real offer will still be there tomorrow. Take time to read it.
- Vague costs. If you can't get a clear figure for the total amount you'll repay, in pounds, don't sign.
- Unregulated firms doing regulated lending. Loans of £25,000 or less to sole traders and small partnerships are regulated by the FCA, so the lender and any broker must be authorised. You can check a firm on the FCA register. Lending to limited companies is generally unregulated, which makes reading the terms yourself even more important.
Questions people ask
Can I get a business loan with a CCJ?
Sometimes. Specialist lenders may still help if the CCJ is satisfied, a year or more old and your current trading is strong. An unpaid or very recent CCJ makes approval much harder, so paying it off is often the first step.
Do lenders check my personal credit for a limited company loan?
Usually, yes. For small and young companies, lenders look at the directors' personal credit files as well as the company's file. If you give a personal guarantee, your personal history matters even more.
Will checking my eligibility hurt my credit score?
Not if it's a soft search, which other lenders can't see. A full application usually involves a hard search, which is recorded on your file and visible to other lenders for around a year.
Which business finance is easiest to get with bad credit?
There's no guaranteed route, but asset finance, invoice finance and merchant cash advances tend to be more forgiving, because the lender can rely on an asset, your customers or your card takings. They aren't always cheaper, so compare the total cost.
How long does bad credit stay on my file?
Defaults, CCJs and most personal insolvencies stay on your personal credit file for six years. A CCJ paid in full within one month can be removed from the register. Most lenders give more weight to the last year or two than to older problems.
Is a lender offering guaranteed approval legitimate?
Be very cautious. No responsible lender can guarantee approval before assessing your business, and offers like this often come with upfront fees. Never pay a fee to secure a loan before you've received a formal written offer.
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This guide is general information, not financial advice. Rates, rules and lender criteria change, so check the details with your broker or lender before you sign anything. Lending Lenny is not a lender.