Bad Credit Loans

A bad credit loan is a personal loan taken out by a borrower with bad credit. Even though consumers with high credit scores will have more favorable terms, it is possible for borrowers with bad credit to obtain a loan. Whether you’re looking to consolidate credit card debt, build up your savings account, or pay off bills, can help you get the funds you need.

Get a Personal Loan Despite Having Bad Credit

Sooner or later, everyone needs help financially. When you have bad credit and are applying for a personal loan, it can feel like the cards are stacked against you. Borrowers with high credit scores are more likely to be approved and typically get better terms. But it isn’t all bad news. Even if you have bad credit, it is still possible to obtain a loan. You just need to shop around to make sure you find the best loan for your circumstances.

In the past, this meant going to various banks and credit unions, but now you can explore options on websites that connect borrowers to lenders. Keep reading to learn how to improve your chances of being approved.

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How Bad Credit Affects Your Loan

If you have bad credit, you're not alone. In fact, 30% of Americans have low credit scores. You may encounter a few speed bumps along the way, but that doesn't mean you won't get a bad credit loan in the end.

Credit scores typically range between 300 and 850 (the higher the score, the better). Anything below 630 is generally considered “bad credit.”

Lenders use your credit score when evaluating your application. Borrowers with bad credit are viewed as a higher risk making it more likely that the lender will deny your application or offer you a loan with unfavorable terms.

Of course, bad credit impacts your life in other ways too. As this Dallas Morning News article explains, your credit score can even affect your car insurance rates and utility bill.

How Credit Scores are Calculated

If you don’t know your score, you can check it for free once a year at

Equally important to knowing your score is understanding how it is calculated. Here are the factors that make up your credit score.

35% Payment History: Paying bills on time boosts your score and missed or late payments will harm it.

30% Credit Utilization: Amount of available credit you use. To calculate, add up what you owe on each credit card and the limits. Divide the total balance by the total limit and multiply by 100.

15% Length of Credit History: How long your accounts have been open, and when each was last used.

10% Types of Credit Used: What credit cards, loans, and accounts a person has.

10% New Credit: How many accounts you have applied for and/or recently opened. Too much new credit can be seen as risky and hurt your overall score.

Video – Learn More About Bad Credit

In this video, we'll explain how credit scores work and how you can start repairing your credit.

Benefits of a Bad Credit Loan

As long as you can afford the monthly payments, a loan can improve your credit score by contributing positively to your payment history.

If you used a credit card instead of a loan to make a large purchase or pay for an emergency you could max out your cards. This would drive up your credit utilization rate, harming your score further.

Plus, even though it is only about 10% of your credit score, a loan diversifies your credit mix. Having a positive track record of paying back different types of debt may cause your score to improve.

Negative Side Effect

One drawback is that when you apply for a loan, lenders will do a “hard” pull to check your credit history. This can hurt your credit, but you can mitigate the risk by only applying for one loan at a time.

Hard pulls typically only happen when you apply. As you explore options, make sure sites are doing a “soft” pull which does not hurt your score and lets you see potential loan rates.

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How to Improve Your Chances of Getting Approved

A higher credit score is the best way to improve your chances of approval, and CNN Money has great tips on how to improve your credit score.

But that will take time. Here are five other ways to approve your chances of being approved

1. Prepare Your Documents

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Lenders will want to know things like proof of income, identity, etc. Get your documents ready now so that when you apply you can provide requested items like recent tax returns or pay stubs.

2. Get a Cosigner

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If you know someone with good credit who is willing to be a cosigner on your loan, it might boost your chances of being approved. Plus, since the lender considers your cosigner’s credit score, you could get better terms.

3. Only Ask for the Amount You Need

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If you need $5,000 don't apply for a $20,000 loan, especially if you have bad credit. A larger amount is riskier, and the lender will question your ability to repay the loan.

4. Only Apply for One Loan at a Time

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Applying for multiple loans at once can make your bad credit score worse and hurt your approval chances. Lenders will be able to see that you’re applying for other loans and this may make them less likely to loan you money.

5. Pay Off Debt

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Lenders often look at your debt-to-income ratio when evaluating you for a loan, which is your monthly debt payments divided by your monthly gross income. Aim for a debt-to-income ratio of 36% or less to increase your chances of approval.

Extra Resources and Tips

When sharing personal information online, be sure the site is secure. Look for it to start with https, not http.

Regularly check your credit report for errors. If you do find mistakes, follow the instructions outlined by the Federal Trade Commission and file a dispute. credit reporting survey animated image

Always make sure your lender is linked to a bank and registered with bureaus like Equifax. Look at reviews, accreditations, and rankings on and The Better Business Bureau (BBB) to see what past customers have to say.

Now that you know everything about bad credit loans, why not apply for one? Since 1998 we've been a resource that over 750,000 consumers have used to get the funds they've needed and we can help you too. In fact, you could have access to the funds in as little as 24 hours, and CreditLoan® charges absolutely no fees for this service.

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