Can I get a personal loan with bad credit?

If you need to borrow money, here’s some good news: you may still be able to qualify for a personal loan with bad credit. Your credit can, however, affect your likelihood of approval, how much you can borrow, and the rates and terms you’re offered.

This guide explains how to get a loan with bad credit, including what lenders consider when reviewing your application, how to improve your chances of approval, and what your options are if you don’t qualify.

Can you get a personal loan with bad credit?

Yes, it’s still possible to get a personal loan even if you have bad credit. However, a lower credit score can lead to loan offers with higher rates and/or less favourable terms.

That’s because your credit score is one of the factors lenders use to assess your application. Different lenders have different eligibility requirements, and some alternative lenders may have more flexible credit requirements than traditional lenders.

Lenders may also consider factors such as:

• Current employment and income: Lenders may look at your income and employment to determine whether you can afford to repay the loan.
• Existing debt and payment history: How much debt you already have and your history of making payments can help lenders assess the risk of lending to you.
• Requested loan amount: The amount you want to borrow, along with how much debt you have relative to your income, can also affect your application.

What credit score do you need for a personal loan in Canada?

There is no universal minimum credit score required to get a personal loan in Canada. Each lender sets its own eligibility requirements, although traditional lenders may have stricter credit requirements than some alternative lenders.

Canadian credit scores generally fall into the following ranges:

• 760+: Excellent. You have a history of using credit responsibly, have a mix of different types of credit, consistently repay your debts on time, and keep your account balances low.
• 725 to 759: Good. You generally make most of your payments on time, and your credit balances are relatively low compared to their limits.
• 660 to 724: Fair. You may have a history of late payments, higher levels of debt or an account in collections. You may still qualify for a loan, but could be offered higher interest rates or less favourable terms.
• Below 660: Poor. You may have more difficulty obtaining new credit and could be offered higher interest rates or less favourable terms.

How to get a personal loan with bad credit

To get a personal loan with a bad credit score, you’ll need to be prepared. Here’s what you can do to improve your chances of success.

1. Check your credit score and report

You can request a free credit report from Canada’s credit bureaus, Equifax and TransUnion. These provide details like past credit inquiries. Check for any errors that you can rectify, which will improve your score.

2. Compare lenders and eligibility requirements

Different lenders have different credit requirements, rates, fees and terms. However, don’t make multiple applications just to see whether you'll qualify – this may temporarily bring down your credit score. Instead, try using a tool like LoanFinder, which compares lenders based on your personal financial history, so you can focus on personal loans with the best terms and approval rates.

3. Apply for an amount you can afford

When comparing personal loan options, check if the loan payments can comfortably fit your budget. Make sure to include origination fees and any other fees that add to the total borrowing costs. If you go beyond what you can afford, delaying or defaulting on a loan payment will result in added late fees, interest charges, and further damage to your credit score.

4. Strengthen your application where possible

To present yourself as a trustworthy borrower, prepare documents to show that you have stable employment or income. Where possible, reduce your existing debt – even a small amount helps.

In some cases, you may have the option to include a co-signer to your loan, but note that the co-signer is responsible for the outstanding loan if you’re unable to pay. You may also be able to secure your loan using collateral like a vehicle or other assets; the lender can take possession of these if you’re unable to repay your loan.

What if you can’t get approved for a personal loan?

If you’ve applied for a few personal loans without success, it’s time to pause and look for other ways to secure funds. 

First, consider why you were declined: Is your income inconsistent, or do you have a history of late or missed payments? Try to resolve lenders’ concerns by applying for a smaller amount, or paying down existing debt – especially revolving debt like credit card balances – to improve your credit. If the expense isn’t urgent, wait and save up. If it is (for example, an emergency dental or vet visit), ask if a payment plan is possible before resorting to a loan.

If you own property, a vehicle, or other assets that can be put up as collateral, these can assist you in getting a secured loan. Lenders consider secured loans to be less risky, since they can sell the collateral to recover their funds if you’re unable to pay back the loan.

If you're trying to consolidate credit card debt, a balance transfer card may work better since they often offer very low promotional interest rates. If you’re eligible and can repay the balance within the promotional period, a balance transfer can be highly effective for reducing debt.

If existing debt is making it difficult to qualify for a loan, credit counselling or debt restructuring may help you explore other ways to manage what you owe.

Above all, be cautious of “guaranteed approval” payday loans or no-credit-check loans with high borrowing costs and hidden fees. These often cause your debt to balloon within a short time, making it even harder to recover from debt.

Should you get a personal loan if you have bad credit?

Getting approved for a personal loan doesn’t always mean that it’s the best – or only – option for your needs. Before getting a loan on bad credit, consider the following factors:

• Interest rate. Is the interest rate below the criminal interest rate of 35% APR? 

• Fees and total cost of borrowing: What fees do you have to pay to take the loan? Can you pay upfront, or do fees accrue interest along with the loan amount?

• Repayment term: How much time are you given to pay off the loan, and what is the payment frequency? Most personal loans require monthly payments, but watch out for weekly or fortnightly terms – this means interest will accrue more quickly.
• Monthly payment amount: Can you comfortably afford the payments, or will this loan lead to more debt?
• Urgency of loan: Can taking a loan wait until your credit improves, or do you truly need the money urgently?

Even if you do need money to get through a challenging time, don’t rush to accept the first loan offered to you. Instead, compare all loan options available to you and also consider alternative sources of borrowing, such as a secured loan or a balance transfer.

Also read: Should you take out a loan?

The bottom line

Bad credit doesn't automatically prevent you from getting a personal loan. However, you’ll need to understand and manage your finances carefully. Make sure to compare lenders and borrowing costs – not just the amount you can borrow – and ensure the loan will help you rather than hurt you. In the long run, timely loan payments will help improve your credit score and financial stability.

Also read:

• Best personal loans in Canada 2026
• Debt consolidation calculator
• Personal loans vs. line of credit: What’s right for you?
• Personal loan vs. HELOC: What’s right for you?