Can You Get A Personal Loan if You Have Bad Credit?

Maybe you want to buy a new home for your family. Or you would like to pay another outstanding debt whose deadline date is about to reach. The truth is, whatever reason you are taking a loan for, it can be lifesaving if you access a large number of funds that you wouldn’t initially.

Whenever you approach any lender or a financial institution, they will always take time to analyze your credit situation. If you have bad credit, there’s a huge chance that you may not get a loan. However, does it mean that you can’t get a loan? Not necessarily.

Read further to learn whether or not you can get a loan with bad credit.

The process of getting a loan

Before a lender approves any loan (whether it’s an emergency, personal, or a payday loan), they will want to know several details from you. They will assess your income or cash flow, collateral, debt-to-income ratio, any other outstanding debt, and of course, your credit history. All these factors will determine whether you will qualify for the loan or not.

If you have a bad credit score or history, the result is obvious. The lender may not give you the loan, especially if they don’t approve requests from clients who have bad credit. Others will give you. However, the approval process might be slow, and the lender may increase the interest rate. Eventually, this makes the loan expensive and difficult to pay.

What to do if you have a bad credit

The good thing is that you can still get an ideal loan from a lender that offers bad credit loans. Business loans bad credit are no different from personal loans. However, the only difference is that it may be a bit expensive compared to if you had a good credit score.

Lenders offer two types of bad credit loans. They can be either secured or unsecured. Secured options mean you have to offer one of your assets as collateral if you fail to pay. Lenders will not require any of your assets if the loan is unsecured, but banks will rely on your promise to pay.

Some of the institutions that offer these types of loans include:

  • Credit unions: These include lenders who may have an affiliation with your workplace. Normally, they will look at other factors, including your workplace character and your ability to pay.
  • Family and friends: Instead of going to a financial institution, you can ask a friend or relative to give you a loan and offer to pay with interest. However, you should treat it as a business transaction; otherwise, you can put your relationships at risk
  • Convincing your bank: You can negotiate a good deal with your bank
  • Online loans: All you need is to apply for a bad credit loan online and get the funds in your account quickly. Some take a whole day, while others may approve within a few minutes
  • Borrow from your home’s equity: You can apply using the equity in your home using the home equity line of credit or a home equity loan
  • Peer-to-peer lending: It’s a form of lending where the borrower will seek investors online. They will post the amount they need and its use.

Other places where you can get a bad credit loan include your retirement fund, life insurance, payday loans, and cash advance from your employer. If you choose to take from your retirement fund or life insurance, you will need to pay on time to avoid penalties.

The best place to get a bad credit loan

It will depend on so many factors. However, any financial expert will tell you that considering your budget is essential. 

Besides that, don’t take the loan if you really don’t need it. Another thing you need to know is that all these lenders have different credit score limits for their clients and requirements. Hence, it’s something you need to consider before you approach any lender to avoid problems. You can do your research before settling on any lender to increase your chances of getting a deal.


As you can see, getting a loan if you have bad credit is possible. Nonetheless, you have to keep your eyes open when applying for a bad credit loan to avoid getting another loan that you cannot pay and ruin your credit score further. If possible, seek help from a financial expert to ensure that you make an informed decision when applying for the loan.


Nishi Singh is a professional journalist and editor in New Delhi. She has studied Mass Communication from National Institute of Mass Communication.