Bad Credit Loans

Get the Funds You Need,
from $250 - $5,000

There are bad credit loans available for those that have less than perfect credit. Since 1998,® has been a resource that over 750,000 consumers have used to get the funds they've needed and we can help you too. Whether you’re looking to consolidate credit card debt, build up your savings account, or pay off bills, we can help you obtain the funds you need.

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Updated: October 2018

If you have bad credit, you're not alone. In fact, 30% of Americans have bad credit. 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.

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Get a Loan Despite Having Bad Credit

Sometimes life throws you a curveball and suddenly you have unexpected expenses and bills. But if you have bad credit you may be wondering what your loan options are. Millions of Americans have bad credit and there are many ways to borrow money when you have a low credit score.

We know it can be hard to understand your options, so we put together this overview to explain the benefits of taking out a loan and what steps to take to get approved. We’ve also included information about credit scores, and tips so you can start rebuilding your credit since a better credit score may make getting a loan easier in the future.

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Bad Credit Loans Overview

A bad credit loan is simply a personal loan taken out by a borrower with bad credit. Even though the terms will not be as favorable as those offered to people with high credit scores, it is possible for borrowers with bad credit to obtain a loan.

Loans Can Help Rebuild Bad Credit

The funds will ease your financial concerns and the loan can possibly help you rebuild your credit. To understand how this works, it is important to know how credit scores are calculated. Scores typically range between 300 and 850 (the higher the score, the better) and are made up of 5 main components:

Payment History: Making up 35% of your score, this is the largest factor. Paying bills on time boosts your score and missed or late payments will harm it.

Amounts Owed: 30% of your score is determined by what you owe on revolving accounts, like credit cards.

Length of Credit History: 15% of your score is determined by how long your accounts have been open, and when each was last used.

Types of Credit Used: This looks at what credit cards, loans, and accounts a person has. It makes up 10% of your score.

New Credit: The last 10% is based on new credit. Applying for and/or opening multiple new accounts can be seen as risky and hurt your overall score.

Video – Learn More About Bad Credit

Bad credit happens, and approximately 25% of Americans currently struggle with it. In this video, we'll explain how credit scoring truly works, what to avoid, and how you can start repairing your credit.

How Bad Credit Loans Can Help You

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. Most loans are installment loans and are paid back in fixed monthly payments.

To learn more about this, check out the great article The Dallas News put together: The Effects of Bad Credit and Why It Should Matter to You. It provides an overview of credit scores and explains that consistently making on-time payments is an excellent way to improve your credit score.

Plus, you’ll be able to keep amounts owed low while financing a large purchase or paying for an emergency. If you relied on a credit card, your score may decline because constantly maxing out credit cards signals risky behavior to the agencies.

Agencies don’t only look at whether you’re maxing out cards, they also consider your credit utilization rate. You can calculate this number by taking your credit card balance, dividing it by the card limit, and multiplying by 100. This makes up about 30% of your credit score. Trying to make a large purchase or pay for an emergency could max out your cards, driving your utilization ratio up.

Lastly, 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

There is one con to applying for loans: too much new credit hurts your score. One reason is because when lenders check your credit history, they do a “hard” pull. You can mitigate this risk by only applying for one loan at a time.

When exploring loan options, you can do a “soft” credit pull. This allows you to see potential loan rates and does not have negative consequences on your score.

Where to Find a Loan When You Have Bad Credit

Your credit score will be a factor when the loan terms are calculated. Typically, interest rates on the loans will be higher for a borrower with a lower credit score. Take your time to shop around in order to find the best rates and loan terms. Here are a few options for your loan search:


Bank Graphic

Banks are the most traditional place to get a loan, and borrowers with bad credit should expect higher interest rates. Always shop around to find the best lender for your situation.

Credit Unions

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Owned by their members, credit unions are nonprofits, and tend to look at your overall situation when you apply for a loan, not just your credit score. A loan from a credit union could have lower interest rates than what a bank. To read more about the difference between banks and credit unions, take a look at the following Money Crashers article: Credit Unions VS Banks. Differences, Pros and Cons

Peer-to-Peer Lending

two people with arrows in middle

Using an online platform known as peer-to-peer, or P2P lending you can get a loan directly from an individual investor as opposed to a credit union or bank. To learn more about how peer-to-peer lending plaforms work, visit: Peer-to-Peer (P2P) Lending: What Is It? How Does It Work?

Alternative Lenders

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P2P Lenders are just one kind of alternative lender on the market today. Private lending organizations provide offline and online loans to individuals with bad credit and a number of online alternative lenders specialize in fast microloans. If you need a small loan right away, microloans may be a better option than a cash advance company.

Family and Friends

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A family member or close friend may be willing to directly loan you money. These won't have interest rates, and the payback terms can be flexible. You’ll still want to document everything, specifying the loan amount, terms, and consequences if you don’t repay. Since money can damage relationships, ask yourself if this is really the best option. To read more about the pros and cons of approaching a friend or family member for a loan, Intuit offers a handy article: Pros and Cons of Accepting Loans From Friends and Family

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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, but that will take time. To read more about how to improve your credit score, check out Kathryn Vasel’s article on CNN Money: 5 Easy Steps to Improve Your Credit Score. Here are six ways to improve your chances of being approved:

1. Provide Proof of Income

pencil with application pad

Lenders need to know you can pay back what you borrowed, plus interest. Have proof of income documents prepared in case the lender asks as part of the loan application. This may include recent tax returns, pay stubs, or 1099 forms.

2. Get a Cosigner

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A cosigner with excellent credit makes your loan less risky to lenders. The lender will consider your cosigner’s credit score during the application, and this person will be responsible for the loan if you fail to pay. Only ask someone you have a long-standing relationship with and who is in a stable financial situation.

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. Even if you did get approved, you’d be making higher interest rate payments.

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 have had several recent hard credit checks. 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 the amount of 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.

6. Be Honest

Loans are based on trust and intentionally submitting wrong information is a fast way to get denied. A lender won’t assume everything on your application is true and will check your information. Even if you think something hurts your chances of getting approved, it's better that the lender hears about it from you as opposed to you trying to lie about it.

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Stay Vigilant When Applying for a Loan

Any lender you choose needs to be legitimate trustworthy. Don't fall for a cash advance scam from a "lender" that's promising you an unrealistic amount and rate based on your bad credit score.

When Looking for a Lender, Watch Out for These Red Flags:

Unsecured websites. Never send sensitive information through an unsecured website. Look for it to start with https, not http.

No fine print or terms listed. A legitimate lender should include their privacy policy, terms and conditions, and other legal disclosures somewhere on their website.

Look for a clear amortization schedule or listing of loan terms, explaining what your loan is going to cost you and what happens if you are late with your payments.

Poor online presence. Most lenders have information about themselves online, such as a website, customer reviews, a social media presence, etc. If you can't find any of these things, it might be a good idea to look elsewhere.

They pressure you or demand deposits. A true lender will allow you to review paperwork and won’t pressure you to sign papers or push you to sign-up.

Also, be wary of online lenders that demand an upfront deposit. There are legitimate institutions that may ask for security—but this can also be a scam.

Along with these red flags, 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.

If the company is questionable, you'll likely see a lot of comments about it being a scam. If you have a concern about a lender, a local consumer protection agency might be able to assist you. To locate a consumer protection agency near you, click here: State Consumer Protection Offices

Extra Resources and Tips

Benefits of a good credit score extend beyond getting a loan. Landlords and potential employers often run credit checks and use your credit score when deciding if you can rent an apartment or be hired at their company.

With so many other people looking at your credit report, it is important that you know what it says as well. You can check your score for free once a year at:

When you review your report, check for errors and dispute any mistakes. If you do find mistakes, follow the instructions outlined by the Federal Trade Commission and file a dispute.

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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