How to get a loan with bad credit from a lender you can trust

Category: Questions & Answers

People with bad credit often find themselves shut off from bank and mainstream credit loans. Can they still take out a loan? Vince wants to know.

“I thought that after paying off my overdue debts my credit score would be okay. I was wrong. I’ve been carrying this black mark for two years now. Banks are still turning me down because of some loans I failed to pay on time years ago. In case I should need cash in an emergency, I’d like to know how to get a loan with bad credit.” – Vince, Chicago, IL

Today even people with bad credit can take out small loans from a direct lender. This segment of borrowers is fueling the surge in the number of online loans–they’re likewise popular in the UK and Canada–where lenders promise quick and easy approval even for people with bad credit. Many lenders understand that there are borrowers who are financially better off now than they were during the recession because people are getting back their jobs.

In fact, try a simple Google search of “how to get a loan with bad credit” and you’ll get about 130 million results! The challenge is to find the direct lender that subscribes to, not only legal, but ethical lending practices. The Howard University School of Law defines predatory lending as having excessive fees, abusive penalties and kickbacks to agents, among others. Be extra vigilant to spot these unethical practices especially with loans that promote discounts or gimmicks.


The general requirements on how to get a loan with bad credit are quite simple. First, you need a steady income. It can be a job or a small business that you can prove to give you a regular stream of revenues. A utility bill or rent receipt to show you’re capable of paying monthly fees are often good enough as proof of income. Second, you need a bank account. If you’re taking out an online loan, the bank account is where the cash will be transferred. Third, you must be at least 18 years old to get approval from lenders.

Things to consider

Getting a loan is easy and quick, but before you sign up for one, consider the following:

Do you really need a loan? Small loans are expensive to pay back. The interest is often above industry average and the penalties are hefty. You’re better off if you can wait until your next payday.

If you need to take out a loan, make sure to get just the exact amount you need. When thinking how to get a loan with bad credit, also think how much loan you’ll exactly need to avoid paying up for more than what is necessary.

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Pay on time. Never default on payday loans, short-term loans and similarly type of small loans. A late payment can put you in a debt spiral where the borrower takes out another loan to pay for the previous one; or a borrower keeps refinancing the loan until he ends up paying as much as three times than the original loan.


Getting approval from a direct lender even with a bad credit doesn’t mean your cash problem is solved. It’s a temporary solution to your real problem: your bad credit score. Always pay on time no matter how small the loan is to gradually improve your credit.

By Jenny Chang

Senior writer at FinancesOnline who writes about a wide range of SaaS and B2B products, including trends and issues on e-commerce, accounting and customer service software. She’s also covered a wide range of topics in business, science, and technology for websites in the U.S., Australia and Singapore, keeping tabs on edge tech like 3D printed health monitoring tattoos and SpaceX’s exploration plans.

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Peter Lesnar says:

I took a similar loan like this and I made sure that by next payday I was clean. I just paid for a home repair, which was kind of urgent. Anyway, these loans are pretty useful if you know when to use them and more so, when to pay them back. Once you borrow, make repaying your top priority on your next paycheck, and I mean top, even if it means surviving on packed noodles for the next two weeks. At least that’s temporary, unlike when you default, it can take months to get you back on your feet.

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Mara Wailer says:

Robin, you didn’t mention that these loans are often paid back in two weeks like a payday loan. If you borrow today, you’ll be asked to return it on your next paycheck. That’s really a small window to allow you to recoup enough income to pay back. Remember, you’re already short of cash when you take out this loan. Will two weeks be enough to get you over that shortage PLUS pay the loan? In many cases, no. So you end up borrowing again. Do the math first before getting a loan. You should have a clear exit strategy.

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Jeron Tan says:

Of course people with bad credit can also take out these loans. These lenders don’t give a damn about credit history. But they do if you have a steady income. That’s their only assurance that you can pay back. So that should be your first qualification—do you have a job? Don’t borrow if you don’t. These loans are not welfare and they extract a hefty interest. Plus, your loan amount will depend on your salary. So even if lenders are offering $1,000 loans, they’ll still check if your salary scale can afford the loan. Otherwise, you’ll be offered a much lower amount. They’re just ensuring their welfare, but if you think about it, also your welfare, your financial health, that is.

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