I Have Bad Credit but Need a Loan – Is there any hope?

get a loan with bad credit

If you’ve been following my blog, you’d be aware that a financial crisis can strike us at any time. An unexpected and unforeseen expense, (like a medical emergency or urgent car repairs) can make every day living all the more challenging.

I usually advise that one of the first steps towards financial security is to build up an emergency fund. However, this can take a long time to accomplish, and some of us might face a financial emergency sooner than others. In such cases, applying for a loan may be the best course of action.

Still, there are several of us who suffer from bad credit scores, which affect our chances of loan approval severely. In this article, I want to share what you can do if you need a loan but suffer from a bad credit score.

If you’ve ever wondered what role your credit score plays while you seek a loan and how to avail a loan despite a bad credit score, then read on to find out more!

How Important is My Credit Score?

The short answer is: very, very important!

Whether you are:

  • Planning to get a student loan for further studies,
  • Intend to get a renovation done to the house, or
  • Need an urgent financial advance for personal reasons

Applying for a loan will always require a lender to undertake a keen analysis of your credit score.

Your credit score is not the only basis for the review of your loan application. Lenders also consider other factors like your employment history, income levels, previous loan repayments, other monthly debts, the size of your loan requirement etc.

However, your credit score does act as a major determinant of how your loan application will be reviewed.

You might be wondering, what is considered an ideal credit score? An excellent credit score is typically 750+, and while a score between 700 – 749 is considered very good, it is still possible to apply for and avail a bank loan with a credit score between 650 – 699. However, a credit score lower than 600 will present problems for you when you seek a loan from most financial institutions and banks.

Why Do I Have a Bad Credit Score?

A blemished credit score could be the result of several possible actions on your behalf, like:

  • Not paying bills on time,
  • Delaying loan repayments (even if due to a financial crisis),
  • Missing a monthly mortgage payment, or
  • A bankruptcy or foreclosure procedure in your past.

Heck, even sharing your card details with a spouse who has bad borrowing habits could result in you having a ‘less-than-perfect’ credit score. In short, higher the “black marks” on your credit report, the lower your credit score can possibly be.

It is possible to improve your credit score over time. Timely repayment of existing debt, payment of overdue credit card bills if any etc. are some of the ways to improve your credit score.

So What Happens When I Apply for a Loan with a Bad Credit Score?

When you apply for a loan with a low or bad credit score, it is entirely possible that your application will be rejected. There also are great chances of your loan request being granted but with a sizeable down-payment clause or worse, extremely high interest rates.

Yikes! Why is it so tough to get good terms with a bad credit score?

It’s tough because a lender will consider you a high-risk customer who may not be able to repay their loan on time. It is advisable to not accept such an offer, as the unfairly high interest rates could potentially land you in deeper financial crisis, and failure to repay the loan could affect your credit score adversely furthermore.

If you have been refused a loan on the grounds of a poor credit score, it is best to not keep applying for the same from different banks or institutions repeatedly, as the high number of credit report searches by different lenders, known as hard pull reflects poorly on your credit score.

What Is a Bad Credit Loan?

Fortunately, there is good news for borrowers with poor credit scores. Introducing the bad credit loan:

A bad credit loan is one of the easiest finance options available in the market which can prevent you from sinking financially. Bad credit loans are unsecured and collateral-free. However, disbursed amounts are relatively smaller with a comparatively higher rate of interest on a short-term basis.

Advantages of a Bad Credit Loan:

  • Safe Application Procedure – This loan option requires minimal paperwork and the shortest possible processing time. The providers genuinely also try to make the funds available at your disposal as quickly as possible. Applicants need to fill in a form and submit their details online. They’ll furnish essential details about themselves, like their photo ID, proof of income, place of residence, bank details etc. The applications are then reviewed by the providers and the loan amount is disbursed quickly (of course once all the details furnished are found to be acceptable and accurate.)
  • Guaranteed Approval – While conventional loan providers sanction loans as per their assessment of the borrowers’ repayment capability, bad credit loans are offered regardless of one’s financial standing and credit score. These loans often come with guaranteed approval, as the lenders understand the financial compulsions of the applicant. However, it is wise to look for a reliable bad credit loan provider to avoid any hassles later.
  • No guarantor/ co-signor required – If you’re not able to put up collateral to secure your loan, then bad credit loans no credit check are the way to go, since these do not mandate any collateral or guarantors. This feature makes such loan options all the more attractive for those seeking immediate financial assistance, as there is need to pledge an asset or collateral for a small financial urgency.
  • Convenient Repayment Schedule – Typically, bad credit loans involve a relatively smaller loan amount for those unavoidable emergency situations, and hence hefty repayment woes are usually not a concern with these loans. Most lenders offer flexible repayment options, and since the loan amount is small, it allows the applicants to schedule repayments with ease. This also allows their credit scores to improve over time, as repayments do not tend to hurt their financial standing.
  • No hard-pulls performed – Lenders offering bad credit loans typically do not engage in hard-pulling your credit score history, which means that your credit score will not be adversely affected when you seek such loans.


Your credit score plays a crucial role in determining your credibility and reliability when it comes to review of your loan application.

A poor credit score often negatively affect the chances of your loan approval. It is possible to avail bad credit loans in times of financial emergencies, as long as you research the lender, interest rates offered and repayment options carefully.

However, the key here is that you need to change the habits that got you into bad credit in the first place. Some pointers: it helps to set timely reminders for repayment of loan instalments and bill payments. Avoiding high outstanding debt on credit cards and other revolving credit also helps you maintain a healthy credit score.

Hope that helps!