When you have a poor credit history, you’re usually not eligible for a loan from a bank or traditional credit lender. However, there are other loan options available. All you’ll need is to show that you can repay the loan by providing evidence of a regular income.
Tips on being approved for a loan with bad credit
There’s no one surefire way to ensure you are approved for a loan application. When you’re considering applying for a loan and your credit history isn’t perfect, keep the following tips in mind:
- Check the eligibility criteria before applying. Lenders have set eligibility criteria which you can check on finder.com review pages. Check to see if you meet these criteria, and if you’re unsure, you can call the lender to discuss your situation.
- Order a copy of your credit file. While you may think you have a good idea of your credit history, your credit file is the only true record of your financial history and what lender’s will use to judge your creditworthiness. You can order a free copy of your credit file from the main credit reporting agencies in the US.
- Compare your loan options before you apply. Every application you make shows up on your credit file, so make sure you compare your options before you apply to minimize the amount of applications you make.
Options for a $5,000 loan with a good credit rating
If you have good credit (usually a minimum score of 680 or higher) you could be eligible for a loan from a bank, credit union or standalone lender at a more competitive interest rate than providers who lend to people with bad credit. You may be able to borrow up to a limit of $5,000 without providing collateral.
Loans for up to $5,000 you could apply for today
The loans below allow you to borrow cash for a short period when you may need the emergency money.
Benefits and drawbacks to consider when comparing $5,000 loans
- Online applications are convenient. The convenience of online application forms and quick approval systems can save you time. You’ll also have a chance to compare a range of credit providers, improving your choices.
- There are minimal or no credit checks for bad credit personal loans. Getting a bad credit unsecured loan gives you access to lenders who look at your current financial situation when considering you for a loan, and if you have major credit problems you can consider a no credit check loan.
- Simple repayment terms. You’ll generally have your repayments lined up to when you get paid, and some lenders will give you the option of how to make repayments. Direct debit repayments are offered by most lenders as you don’t have to worry about making the repayments yourself, you just need the money available in your account.
- The loans can be high-cost. Due to high risk of bad credit loans, the lender will usually charge a higher fees. Keep in mind that fees are capped by ASIC.
- Bad credit loans over $2,001 come with high interest. While loans under this amount do not come with interest rates, only set fees, loans above this amount come with much higher rates than that of fair or good credit personal loans.
- Disreputable lenders operate in the bad credit loans space. There are many disreputable lenders operating online who prey on people with bad credit, so make sure you evaluate the lender before you apply.
- Direct debit can lead to overdrawing your account. While direct debit can be positive, it can prove costly if your account becomes overdrawn by your lender automatically withdrawing owed funds.
Things to avoid with bad credit unsecured loans
There are several risks associated with bad credit loans that don’t require collateral. Here’s what to avoid:
- Not being cautious. Taking out a bad credit personal loan can come with high fees and inflexibile terms.
- Not considering the affordability. Make sure you check twice before applying for a bad credit unsecured personal loan up to $5,000–the repayment period is much shorter than standard loans, meaning your repayments can be quite high. Lenders usually offer calculators to show an indication of your repayments.
- Not considering the fees as well as the interest rate. Lenders may charge you an interest rate as well as fees and other charges. Check these before you apply and consider the total cost of the loan.
Four quick ways to borrow money compared
|Type of Lender||Typical Interest Rate||Estimated Turnaround Time|
|Traditional Bank||14%||Preapproval decision in 1-3 business days|
Funding within 7 business days
|Bad Credit Online Loan||29.20%||Preapproval decision same day|
Funding within 1-3 business days
|Payday Loan||319.38%||Preapproval decision right away|
Funding as soon as next business day
|Peer-to-Peer Loan||8.86%||Preapproval decision same day|
Funding within 7 business days
Need a little less? Compare installment loans from top online lenders
Explore even more loan amounts and repayment terms