2025 has seen a significant increase in the awareness of secured loans among UK homeowners, with more people choosing to utilise this borrowing method than ever before. If you’re exploring this option, here’s what it means, and how secured loans can help you strengthen your credit rating.
How Secured Loans Can Impact Your Credit Score — For Better or Worse
Like all borrowing, secured loans can impact your credit score. The impact can be both positive and negative, and whether a secured loan is right for you, will depend on your personal circumstances and current financial situation.
How a secured loan can positively impact your credit score
There are several advantages to taking out a secured loan
- It can help you build a repayment history
- It can be a good option for debt consolidation, streamlining your debt repayments and reducing the amount of interest you pay over time
- It can reduce your credit utilisation ratio
How a secured loan can negatively impact your credit score
However, a secured loan isn’t right for everyone, and it’s important to take into consideration the disadvantages too, such as:
- Applying for a loan requires a hard credit checks, which will show on your file when viewed by other potential lenders
- If you’re unable to keep up with your repayments, you run the risk of your home being repossessed.
Availability of Secured Credit Is Increasing – But Conditions Remain Tight
The availability of secured credit has risen in 2025, and this looks set to continue while default rates remain stable. However, credit conditions remain tight, due to rising interest rates and global uncertainty, and banks can be selective about who can borrow.
Homeowners looking to take out a secured loan against their property may face a stronger demand for home equity, and will need to demonstrate that they can afford the repayments.
Practical Steps to Boost Your Credit Score Before Applying
If you’re considering applying for a secured loan, it’s a good idea to improve your credit profile before applying to increase your chances of success.
Here are a few practical steps you can take to boost your credit score and get it application-ready.
- Ensure you’re registered on the electoral roll at your current address
- Register for credit monitoring services one of the main UK providers and check your reports regularly.
- Make sure all the information held on file with credit reference agencies is correct and up-to-date. Don’t delay in rectifying any mistakes.
- Limit the number of hard searches that appear on your credit file and don’t apply for any other credit in the lead-up to your application for a secured loan.
- If you have credit, whether it’s a credit card, store card, car finance or other loan, make your repayments on time and try to pay back more than the minimum if you can.
If a secured loan is right for your circumstances, the positive impact to your credit rating can far outweigh the negatives, making it a desirable option for many homeowners.
