Borrowing Money With Bad Credit Starts With a Plan
Set a monthly payment you can afford, then look at your options and their full costs before you apply.
To borrow money with bad credit, set a payment limit first.
Bad credit may mean fewer offers, higher rates, and smaller loan amounts. Work out what you need and what you can repay each month before looking at loans. Then compare the full cost of offers that fit. If none fit your plan, borrowing more will not solve the problem.
How bad credit changes your choices
Some lenders may decline your application or offer less than you need. Check credit unions and lenders that consider bad credit, but do not count on approval.
A lower monthly payment can come from a longer term. That may leave you paying more overall, so compare both the payment and total cost.
A cosigner may help you qualify, but they must repay if you do not. Missed payments can also hurt their credit.
What you could realistically do next
Start with credit unions and lenders that consider bad credit. An unsecured loan puts no pledged asset at risk, but offers may cost more or fall short of what you need.
What to check: Compare the rate, fees, term, monthly payment, and total repaid.
Best if: You can cover the payment without pledging an asset.
Pledging an asset may give you another route if unsecured offers do not fit. Missed payments could put that asset at risk.
What to check: Check the full cost and when the lender could take the asset.
Best if: You understand the risk to the asset and can keep up with payments.
Set payments can make the due dates easier to plan for. A personal loan may also be an installment loan, so compare terms rather than treating this as a separate kind of deal.
What to check: Check the rate, fees, number of payments, and total repaid.
Best if: The set payment fits your budget and the full cost is reasonable.
Check whether a loan fits your plan
- 1Set the amount
Confirm how much you need, without adding extra cash that would raise what you owe.
- 2Set the payment
Confirm the payment fits after rent, food, bills, and other debt payments.
- 3Compare the offer
Confirm the rate, fees, term, total repaid, and whether the amount covers your need.
- 4Check the credit pull
Ask whether an initial rate check uses a soft inquiry and when a hard inquiry may occur.
- 5Check added risk
If you use a cosigner or collateral, confirm who must repay and what happens after missed payments.
These checks help you weigh an offer, but they do not promise approval or a set rate.
Three numbers to compare
Borrow enough for the expense, not the most you are offered. A larger loan means more to repay.
Check the payment against your money plan, including months when bills run high.
Add up payments and fees. A longer term may lower each payment while raising the full cost.
More ways to borrow can mean more cost or risk
An unsecured personal loan lets you borrow without pledging an asset.
With bad credit, the amount offered may be small or the cost too high.
A cosigner may help you qualify for an offer you could not get alone.
They owe the debt if you do not pay, and missed payments can hurt their credit.
Collateral may open another route when unsecured offers do not fit.
You could lose the pledged asset if you fail to repay, subject to the loan terms and law.
Good to know
Where can I borrow money with bad credit?+
Check credit unions and lenders that consider applicants with bad credit. Compare offers against your payment limit and total cost, not just the amount offered. Neither route guarantees approval, and terms will depend on the lender and the rest of your application.
Will checking loan rates hurt my credit?+
It depends on the lender's process. An initial rate check may use a soft inquiry, which does not affect your score. A formal application may use a hard inquiry, which can affect it. Ask what happens at each step before you submit your details.
Will a cosigner help me get a loan?+
A cosigner may help, but they do not guarantee approval or better terms. They take on a real duty to repay if you cannot. Talk through that risk together before either of you signs, and check how missed payments could affect both credit records.
Is guaranteed approval a warning sign?+
Yes. Be wary of anyone promising approval before reviewing your application. A demand for money before a promised loan is released is another scam warning. That is different from a fee clearly disclosed as part of a legitimate loan offer.
What if no loan payment fits my budget?+
Do not stretch your budget to make an offer work. Return to your money plan and see whether you can borrow less or delay the expense. If you must pay soon, focus on the amount you truly need rather than taking a larger, costly loan.