Borrowing money

Find out what you need to consider when borrowing money. Choose the cheapest type of borrowing and plan how you will make your repayments.

Borrowing money to pay your debts

Before you consider borrowing money, think about any other options you may have. This could include:

  • making sure you are getting all the income you are entitled to, including any benefits;
  • budgeting and saving money, if possible
  • claiming on insurance and pensions, if you have them
  • using money you have saved for an emergency.

It is also important to make sure you can afford to pay back the money you plan to borrow.

If you already have debts

It is usually not a good idea to borrow more money to pay off an existing debt. You could talk to a trained debt adviser first about options for paying back your debts or credit commitments. You can speak to one by contacting StepChange Debt Charity.

We have more information about managing debts.

Paying back the money

If you borrow money, it is important to work out how you will pay it back. You could use our budget planner [PDF, 47KB] or an online budget calculator to help you.

Types of borrowing

There are lots of ways to borrow money. These include:

  • friends and family
  • bank overdrafts
  • credit unions
  • credit cards and store cards
  • personal loans
  • payday loans.

The best type of borrowing for you depends on your personal situation. It also depends on your credit score.

Secured and unsecured loans

It is important to understand the difference between secured and unsecured loans.

  • A secured loan is money that is secured against something you own, for example your home or your car. The lender can take (repossess) it if you cannot pay the loan back. A mortgage is a type of secured loan.
  • An unsecured loan is not secured against something you own. This means there is not the same risk of your property being taken (repossessed) if you miss payments. But the interest rates may be higher, making the loan more expensive. If you do not keep up with your repayments, this could damage your credit rating.

For more information about borrowing, contact StepChange Debt Charity, Citizens Advice or the Money Advice Service.

Borrowing tips

  • Check what other options you have before borrowing.
  • Talk to your bank to see if they can help
  • If you decide you need to borrow money, try to find cheap ways to do it and get some advice. You can get free advice from MoneyHelper on 0800 138 7777.
  • Try not to use types of borrowing that can be very expensive. These may include store cards, payday loans, door-to-door lending or unarranged (unauthorised) overdrafts.
  • Before you borrow, make sure you can afford the repayments. You could use the MoneyHelper loan calculator to help you work out how much you will need.
  • Do not use illegal lenders (loan sharks). They charge very high fees and may become aggressive if you cannot repay the money.

You can check if a lender is legal by using the Financial Services Register. If you have already borrowed money from an illegal lender and need support, you can speak to our financial guides.

You can report illegal lenders to government Illegal Money Lending Teams on:

  • 0300 555 2222 in England
  • 0800 074 0878 in Scotland
  • 0300 123 3311 in Wales.

In Northern Ireland, you can call the Trading Standards consumer line on 0300 123 6262.

Your credit score

Your credit score is one of the main things lenders use to decide how likely you are to keep up with repayments. Things that might affect your credit score include:

  • how much debt you have
  • if you have a bank account
  • how well you have kept up with credit payments in the past
  • whether you pay bills on time – for example, your mobile phone bill
  • how much of your available credit you are using – this is money you can borrow on a credit card or store card.

Your health does not directly affect your credit score. But your credit score may be lower if you have:

If you have a low credit score and the lender decides you are high risk, they may refuse to lend to you. Or they might charge you an interest rate that is higher than average. This means the loan will be more expensive.

Your credit score is not looked at for loans that are:

  • from your local authority, which is called welfare assistance
  • made through Universal Credit, which is called budgeting advance.

This means you may qualify for these if your income is low and you are claiming certain state benefits. We have more information about Universal Credit.

Related pages

Checking your credit score

When looking at your credit score, a lender may check information held about you at the 3 main UK credit reference agencies. These agencies are:

These agencies hold publicly available information about you. This may include your name and address from the electoral register. It could also contain private information from lenders about how you have managed loans and credit in the past. This is called your credit report.

When applying to borrow money, you can ask the lender whether they have used a credit reference agency. They may do this when assessing your application. If they have, you can ask which agency they used. You can contact the credit reference agency at any time and ask to see your credit report. This will cost you £2.

Checking your report lets you see if there are any errors. You can also check your credit score online for free, using websites such as:

If you find any mistakes on your credit report, the credit reference agency will tell you how to correct them. All 3 credit reference agencies may hold a report about you. The information they have may be different, depending on which financial organisations they get information from.

About our information

  • Reviewers

    Our financial information has been written, revised and edited by Macmillan Cancer Support’s Cancer Information Development team. It has been reviewed by finance, housing and energy experts and people living with cancer. It has been approved by Amanda South, Macmillan Financial Guidance Service Manager.

    Our cancer information has been awarded the PIF TICK. Created by the Patient Information Forum, this quality mark shows we meet PIF’s 10 criteria for trustworthy health information.

The language we use

We want everyone affected by cancer to feel our information is written for them.

We want our information to be as clear as possible. To do this, we try to:

  • use plain English
  • explain medical words
  • use short sentences
  • use illustrations to explain text
  • structure the information clearly
  • make sure important points are clear.

We use gender-inclusive language and talk to our readers as ‘you’ so that everyone feels included. Where clinically necessary we use the terms ‘men’ and ‘women’ or ‘male’ and ‘female’. For example, we do so when talking about parts of the body or mentioning statistics or research about who is affected.

You can read more about how we produce our information here.

Date reviewed

Reviewed: 01 November 2022
Next review: 01 November 2025
Trusted Information Creator - Patient Information Forum
Trusted Information Creator - Patient Information Forum

Our cancer information meets the PIF TICK quality mark.

This means it is easy to use, up-to-date and based on the latest evidence. Learn more about how we produce our information.