How To Qualify For A Personal Loan When You Have Bad Credit

Photo of author

By David

When it comes to borrowing money, there are many options that could apply to you. Each has their own pros and cons to be aware of, and it is worth acknowledging the role that poor credit can have. It can be harder to apply for a personal loan if you have bad credit history, or if you haven’t been able to create a credit profile yet.

Because of this, it is easy to feel like there are fewer options to borrow money. Here are some of the ways you can qualify for personal loans for bad credit.

Look For Secured Loans

Firstly, it is worth looking for a personal loan with some kind of collateral. This means that you won’t need to provide evidence that your credit score is high. Instead, you just need to give the bank or money lending company proof that you own a certain asset that is worth the amount you want to borrow.

This works similarly to the pawn process, because it acts as a way of guaranteeing that the sum borrowed will be returned in some way. For larger loans, you may need to give access to the deed of your house, or proof of authenticity if you are using historical items or artifacts, for example.

The value of the item will be sold if you do not repay the loan within the pre-approved timeframe. Because of this, it is important that you are not handing over something that you cannot live without.

Try to avoid using the deed of your home as collateral, unless you have another place that you can stay, or if you can guarantee your ability to repay the loan in full. As long as this is done within the agreed timeframe, your item, or possessions, will be returned to you.

Secured loans are ideal for someone who has not been able to work on their credit score yet, because they can provide access to higher amounts of money within a short time period. This is because there is no need to carry out a vigorous background and credit check, which are relatively time-consuming.

Co-Sign With Someone

Alternatively, you could ask a close friend or family member to apply for a joint loan with you. These allow you to benefit from someone else’s good credit history, and access a loan with better interest rates as well as more flexible repayment options.

Each person is named as a co-signer, and they are both responsible for the loan. The main risk that this option has is that the other person involved will need to repay the amount borrowed plus interest if you are unable to. This can place strain on your relationship with this person, leave you in their debt, and potentially damage their credit score.

There is also a big difference between a co-signer, and a co-borrower when you get a joint personal loan. When someone is a co-borrower, they are given access to a portion of the money borrowed. However, a co-signer acts as a guarantee that the money will be repaid in full if needed.

Credit Builder Loans

Another option if you have poor credit is a credit builder loan. These are great for working on your credit over time, because you will be able to access the different types of credit building resources available to you.

You can apply for these loans when you set up a credit card, or with a particular money lender. It is certainly worth researching these types of loans if you want to work towards a better credit score in the future.

Short-Term Personal Loans

There are also certain personal loans available that have set amounts and high interest rates, which do not need a background or credit check to be done. As a result, the time taken to approve applications is much shorter than other loans.

Consider a personal loan like this if you need to access cash fast. The biggest drawback of these loans is that there are relatively high interest rates. Because there is no flexibility based on a person’s credit score, short-term personal loans can have a more drastic impact on your credit score if you fail to repay the amount borrowed within the agreed timeframe.


There are a range of different routes that you can take when it comes to getting a personal loan if you have bad credit. These include using a short-term personal loan, applying with a co-signer that has high credit, or using collateral to ensure repayments.

Of course, each approach has its own potential risks to be aware of. However, it can be comforting to know that there are different options available to someone who needs a personal loan with bad credit.