How to Find a Poor Credit Loan

If you have poor credit, it may be difficult for you to qualify for a loan. The good news, however, is that obtaining loan with poor credit loan is not impossible–even if you have a credit score between 620 and 659.

By doing some research and understanding all of your options, you may be able to find a poor credit loan to help you fund an unexpected car repair, a home improvement project, medical bill, or anything else that you can’t pay for with cash. A poor credit loan may be a less expensive way to borrow money than charging a credit card, but before you apply for one of these loans, it’s important to understand how they work and the risks that could come with them.

What is a Poor Credit Loan?

A poor credit loan is a loan that’s specifically designed for borrowers with poor credit. And usually, that means that they can be expensive. Here’s why: From a lender’s perspective, if you have poor credit, that means that you don’t have a good track record of paying your debts. Therefore, it’s risky for them to lend money to you. To make up for the risk they’re taking, they’ll charge you a higher interest rate, which will increase the overall cost of your loan.

Lower interest rates and favorable loan terms are reserved for borrowers with good to excellent credit scores. This is because lenders consider these borrowers less risky and believe they are likely to pay their loans back.

Types of Poor Credit Loans

Poor credit loans are available online through personal lenders or peer-to-peer lenders. You may also find them through a local bank or credit union. The two main types of poor credit loans are unsecured loans and secured loans. Here’s a brief overview of unsecured and secured loans.

What are they? Pros Cons Who are they best for?
Unsecured Loans Offer funds that are not secured by collateral like a house or car
  • No need to put down collateral to borrow money
  • A fixed repayment schedule, fixed interest rate, and fixed monthly payment
  • Easy to shop around and compare unsecured loans online
  • Higher interest rate
  • Could negatively impact your credit score if you stop making payments and default on your loan
  • Less flexible repayment periods
Borrowers who do not want to put any of their assets at risk and are able to qualify for favorable terms
Secured Loans Require collateral like a house or car to back them up
  • Easier to qualify for than unsecured loans
  • Lower interest rates than unsecured loans
  • Could help you build your credit score over time
  • Puts your collateral at risk if you default on your loan
  • Some secured loans are very expensive and risky
Borrowers who do not qualify for unsecured loans, have a valuable asset like a car or house, and want to build their credit

How Do You Find a Poor Credit Loan?

You can find a poor credit loan online or in person. Let’s take a closer look at both of these options.

Finding a Poor Credit Loan Online

To find a poor credit loan online, begin by performing a simple Google search. Go to Google and type in “poor credit loans.” Once you do, you’ll be provided with various online lenders that offer these types of loans. Be sure to compare the interest rates and terms of these lenders before deciding on the right one for you.

After you’ve determined the lender you’d like to go with, you can go to their website and complete the online application process. In most cases, the application only takes a few minutes to complete and will provide you with offers right away. You’ll need to review the details of the offers available to you and accept the one that is best for your budget and lifestyle needs.

Finding a Poor Credit Loan In Person

If you prefer to find a poor credit loan in person, you’ll need to visit a local bank or credit union. Bring various documents like your tax returns, pay stubs, and list of assets so that can prove your worthiness and increase your chances of getting approved for a loan.

First, you’ll meet with a loan representative to learn about all the options available to you. Once you find one you believe is a good fit, you can fill out the application. Then, you’ll need to review your offer and sign for the loan.

Tips for Getting a Poor Credit Loan

Even though poor credit loans come with certain risks, they may still be one of the only options available to you. To increase your chances of qualifying, follow these tips.

Check Your Credit Report

Before applying for a poor credit loan, you should check your credit report. You can visit and obtain reports from Equifax, Experian, and TransUnion, the three major credit bureaus for free once a year. When you receive your reports, search for any errors or inaccurate information that may be lowering your credit score. If you find them, be sure to file a dispute as soon as possible.

Try to Increase Your Credit Score

If you need the loan for a kitchen renovation, vacation, or another investment that can wait, focus on increasing your credit score first. You can do this by paying your bills on time, paying off debt, and keeping credit card balances low.

It’s also a good idea to keep your credit utilization ratio (the amount of credit you’re using) below 30%. Once you’ve increased your credit score, you’ll appear as a more responsible borrower and may be able to land a lower interest rate and better terms when you apply for a loan.

Apply with a Co-Signer

Applying for a poor credit loan with a co-signer can make it easier for you to get approved. However, there are risks involved with this strategy. If you do not pay back your loan, your co-signer’s credit score will suffer and they’ll be on the hook to pay it back. You should only apply with a co-signer if you believe you’ll be able to make on time payments and will not default on your loan.

Join a Credit Union

Credit unions are usually a great option for borrowers with poor credit. They’re similar to banks but look at more than just your credit score when considering you for a loan. While a credit union will look at your financial history before granting you membership, they’ll also take other factors like your location, place of employment, and education history into consideration. If you’re looking for credit unions in your area, is a great resource.

Do Not Borrow More Than You Need

If you need $1,000 to pay for a car repair, take out a poor credit loan for exactly $1,000. Even if a lender approves you for $3,000 or more, do not take out more than you need.

It can be tempting to collect the extra $2,000 and spend it on something else you need or want, but if you do, you’ll be setting yourself up for higher monthly payments and may have a difficult time making your payments on time. This can lead to a serious debt problem and make it difficult for you to accomplish your financial goals.

Compare All Offers

Although it can be tempting to accept the first poor credit loan that comes your way, doing so could be a mistake that can cost you hundreds or even thousands of dollars. Take the time to shop around and compare all of the offers available to you. When comparing offers, pay attention to interest rates, monthly payments, and loan repayment periods.

You should also look at loan minimum and maximums as these vary from lender to lender as well. In addition, consider the lender’s reputation by checking out their profile on the Better Business bureau and reading reviews online.

Think Twice Before Taking Out a Payday Loan

A payday loan is a short-term loan for a small amount of money (usually less than $500) that is typically due on your next payday. It’s best to avoid taking out payday loans if possible because payday loan lenders are known to charge incredibly high interest rates. You should only consider them if you are in an emergency situation, have no other way of getting money, and cannot wait until your next paycheck.

Risks of Taking Out a Poor Credit Loan

While it is possible to take out a poor credit loan, know that doing so comes with some risks, including:

High Interest Rates

If you have poor credit, any lender will view you as a risky borrower. For this reason, you can expect high interest rates if you do choose to pursue a poor credit loan. While interest rates vary from lender to lender, some lenders offer interest rates of almost up to 36%.

Higher Monthly Payments

Higher interest rates lead to higher monthly payments. This can be a real issue if you’re struggling financially and already having trouble keeping up with your rent, mortgage, car loan, and other monthly bills.

Fees and Penalties

Do not sign on the dotted line for a poor credit loan until you read the fine print. Determine whether there is an origination fee, late fee, early repayment fee, and other fees or penalties that may end up costing you a great deal of money.

Credit Risks

Taking out a poor credit loan could take a significant toll on your credit if you don’t make your monthly payments and default on your loan. If you aren’t confident you can pay a poor credit loan back in time, it’s better to find an alternative way to get cash fast.

Predatory Lenders

Unfortunately, there are many predatory lenders that market to borrowers with poor credit. If a lender guarantees you’ll be approved, is not registered in your state, pressures you to act immediately, requires an upfront payment, do not go with them.

If a lender is legitimate, they should be associated with a bank and registered with a major credit bureau like Experian. Additionally, they should have accreditation and positive reviews on websites like

Hard Credit Checks

If you apply for a poor credit loan, a lender may perform a hard credit check, where they review your credit report as part of their decision-making process. You can expect every hard credit check to appear on your credit report and lower your score by a few points each time.

To prevent hard credit checks from impacting your credit too much, only apply for credit when you need it and check your credit report regularly to make sure the hard credit inquiries on there are ones that you really did initiate.

Consider Other Options

Depending on why you’re searching for a poor credit loan, there may be other options available. For example, if you’d like to take out a poor credit loan to consolidate debt, debt settlement may be a better alternative. Or, if you have equity in your home, a cash-out refinance or home equity line of credit may make more sense. Consider all your debt relief options before committing to a personal credit loan.

Determine If Heavy Debt is the Problem

If you have poor credit and need a poor credit loan because of overwhelming heavy debt, you may be a good candidate for bankruptcy. Chapter 7 bankruptcy involves selling your assets to clear away your debts while Chapter 13 restructures your debt and creates a repayment plan for three to five years.

Should You Take Out a Poor Credit Loan?

While you can find a poor credit loan and get approved for one, it’s important to understand the risks before going this route. Do your research, compare all offers available to you, and consider alternatives to poor credit loans to ensure you’re making a wise financial decision.

In addition, focus on improving your credit score so that you’ll be able to land loans with lower interest rates and more favorable terms down the road.