by Aidan Kang, CFA
Senior Writer
UPDATED: September 27, 2022

Whether it is a medical emergency, your car breaks down, a funeral, or any other unanticipated expense, you may find yourself in need of a loan. However, your lender financing options may be limited if you have no credit history or bad credit. Most lending companies prefer working with individuals with a proven track record and earning a substantial income to repay their debts. This does not mean you cannot get a loan with bad credit. Depending on the amount you want, various providers specialize in bad credit loans. Read on for ways to get a loan with bad credit.

1. Determine your loan options

The first step to getting lender financing when your credit falls in the negative credit zone is evaluating your options to start applying. Here are some bad credit loans you could qualify for:

Personal loans

Personal loans can be secured or unsecured and are often offered by online lenders, credit unions, or banks. Some lenders offer personal loans to borrowers with bad credit scores but limit the amount you could secure.

Payday loans

These are short-term loans due by the next paycheck. Payday lending companies do not check your credit, so a payday loan is perfect when you do not have a credit history or have bad credit. However, these loans have extremely high-interest rates, usually a 400% annual percentage rate.

Car title loans

A car title loan is a short-term loan where lenders use your vehicle title as collateral. Since you hand over your vehicle’s title to the lender, they may overlook your negative credit score.

Guarantor loans

A guarantor loan is designed for individuals with abysmal credit and with limited other lender financing options. The borrower is often guaranteed by a close friend or family member who promises to repay the loan should you default payments.

P2P lending

P2P lending, also known as peer-to-peer or marketplace lending, is a lending system where an investor finances a loan to a would-be borrower. 

2. Check your credit

Before you apply for lender financing, check your credit behavior for free at Most bad credit lenders have a minimum credit score requirement, so determining your credit behavior will ensure you only apply for loans you qualify for. If you discover any errors in your credit report, contact the bureaus to have them fixed to improve your credit score.

3. Get pre-qualified

Be sure to prequalify with different lenders to determine the loan amount, interest rate, and expected terms. Prequalification does not hurt your credit score. It just helps you check and compare rates.

4. Compare repayment terms and interest rates

Different lending companies charge distinct interest rates and have varying repayment terms. Take time to check various lenders, including banks, online lending companies, and credit unions, to mention a few, to determine which organizations offer the best deals.

5. Complete the application process

Gather all documents you need to apply for a bad credit personal loan, including financial statements, W-2s, social security numbers, and pay stubs, and fill out the application form. Depending on the lending company’s policy, your loan application could be approved or declined instantly or within a few days.


Bad credit does not have to get in the way of securing lender financing to consolidate your debts or cover unanticipated expenses. Determine your loan options, check your credit, get prequalified, compare rates and terms, and complete your application to get a loan with bad credit.