4 Loan Types for People with a Bad Credit Score

Bad Credit Score Loan

Unplanned emergencies happen. Whether your geyser breaks, the car breaks down, or you get sick, there may not always be enough money in your paycheck to cover these expenses. In these situations, a small loan will go a long way in seeing you through the month.

For folks with a good credit score, it’s easy to get a personal loan, with favorable terms like a low interest rate and a good amount of time to pay it off comfortably.

For your credit score to be considered good, it should be above 660. Your credit score is determined by the following:

  • Payment history
  • Amount of credit you use every month
  • Credit history and how long you’ve been using credit
  • New credit
  • Mix of credit

Bad Credit Loans

If your credit score is poor, meaning it’s below 650, you’ll probably have difficulty securing a personal loan the traditional way, like going through a bank. This does not mean you’re out of options, though.

You can get a loan that does not require a credit check. But bad credit loans usually come with unfavorable terms like higher interest rates and a shorter time frame to repay the loan. 

Some loan options available if you have a bad credit score include:

1. Using Your Existing Line of Credit

If you have a credit card and need cash, the easiest thing to do is to use your existing line of credit. This is super convenient since you don’t have to apply for a loan.

You can withdraw cash from an ATM or transfer money into your check account if you use online banking. You need to have a pin code linked to your credit card if you want to withdraw money from an ATM.

You can set up a pin code online or go to the bank or credit card issuer to set it up for you. The amount you’re permitted to withdraw or transfer is usually lower than your swiping amount and has its own balance. 

2. Payday Loan

You can apply for a payday loan in person or online with lenders like offers $300 loans. The process of applying is quick and easy.

You must be 18 or older to apply, and you have to have a checking account and provide a cell phone number, identity document, and proof of income. 

Payday loans are typically small loans between $100 to $1000, but the amount you can borrow is based on your income. If approved, you can get the money almost immediately. The money is either given to you in cash or transferred into your account. 

You must think carefully before taking a payday loan, as seamless as the process is. The interest rates are high, and you have a short window to repay the loan.

In most cases, it has to be repaid as a lump sum with your next paycheck. If you can’t pay back the loan and elect to have it roll over, you’ll be liable for additional fees. 

3. Pawnshop Loan

Opt for a pawnshop loan if you have something valuable that you can use as collateral. Popular items you can use to secure a pawnshop loan include electronics, laptops, tools, and jewelry. 

For a pawnshop loan, take your item to your local pawnshop for the dealer to evaluate. The dealer will offer you a loan between 25% to 60% of the value of the item.

Like payday loans, you have a short time to repay the loan – usually between 30 to 60 days. If you can’t pay the loan, the dealer will see the item you put down as collateral. Pawnshop loans also come with high-interest rates and additional fees like storage and insurance. 

4. Credit Union Loan

If you’re a credit union member, the best option would be to get a small personal loan through the union. Credit unions often offer loans with lower interest rates and fees.

Since they’re community-based, they don’t follow the same approval process as banks. In most cases, they don’t look at your credit history when you apply for a loan but look at your history as a member of the union.


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