Why loans don't have to be out of reach for those with bad or no credit rating in Estonia

  • 2020-06-09
  • Alice Taylor

There are a number of reasons why someone may consider taking out a loan. Home renovations, starting a business, buying a property, or just going through an economically unsure time - credit offers a solution for thousands of people in Estonia every year.

However, taking out a loan can be a complicated and stressful process, particularly if you haven’t had one before or you have a poor credit score. Before granting you any funds, loan providers will take your personal circumstances into account, as well as your history of paying back credit. 

In this article, we will take a look at the different kinds of loans that are available as well as how to find a provider if you have no credit history or a poor credit rating.

Types of Loan

There are many kinds of loans available to people in Estonia, but for the purposes of this guide, we have broken it down into the three most popular options.

Personal Loan

A personal loan is one that is taken out by an individual from a bank, online lender, or other financial institution. It is taken in the name of a person and is paid back in fixed monthly payments over a pre-specified period of time. Personal loans can be secured or unsecured, depending on the size of the loan and the credit rating of the individual. Interest is included in the repayments at a rate predetermined at the time of the loan being agreed upon.

Business Loan

A business loan is one that is specifically for business purposes. They can be obtained via banks, non-profit microlenders, and online lending services. Depending on the situation, they may ask that the loan is secured against collateral, or left unsecured with no guarantee. Like with a personal loan, business loans also have interest payable on the monthly instalments.


A mortgage is a loan, usually provided by a bank that helps individuals finance the purchase of a residential or commercial property. A deposit - usually a percentage of the total value - is put down by the purchaser and the mortgage lender provides the rest. Each month, the property owner pays back an instalment, plus interest until the balance is cleared. 

Bad Credit Rating

If an individual has a bad credit rating, they may struggle to get any of the above loans in Estonia. Retail banks are hesitant to loan to those who have struggled in the past, and those that do charge higher interest rates and give less favorable terms. In other words, those with bad credit often struggle to get a good deal.

There are, however, a growing number of providers that offer credit to those with a poor credit rating. Instead of heading to traditional brick-and-mortar financial institutions, people are looking to the internet to find online business loans for bad credit. These loans often offer better terms, lower interest rates, and amounts of up to $50,000. 

The growth of this online sector has been a huge positive for those struggling to get loans from retail banks and lenders.

No Credit History

Those without a credit history often find themselves lumped with those that have a bad credit score. The truth is that young people, or those that have never had any form of credit before, may be trustworthy debtors but are often penalized for their lack of not having credit before. As a result, they are often made to pay higher interest rates or are not given loans of high value. 

Now, thanks to online lenders, they do not need to resort to unfavorable conditions with Estonian retail banks. There are plenty of low cost, low interest, long-term, and high-value loans available with lenders that provide loans to those with ‘bad credit’. These will also give individuals a chance to build their credit in a positive way for the future.

Having bad credit doesn’t have to mean there are no loan options available. Nor does it mean people have to settle for unfavorable terms. Thanks to the internet, there are plenty of online options available for people in Estonia, most of which are a better option than conventional retail banks.