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1 year ago

Can I Get a Personal Loan If I Have Bad Credit?

by Vinicius Rocha

If you have less-than-perfect credit, obtaining any kind of loan can feel like a distant, inaccessible dream. Luckily, that’s very much not the case. Thanks to personal loans for bad credit, you can borrow money quickly and conveniently, and use those funds to bolster your financial opportunities in any area of your life.

What is a Personal Loan?

Life is full of hidden and unexpected expenses, from home renovations to weddings to stress-inducing medical bills. Think of a personal loan as a convenient lifeline when you’re facing exorbitant costs in any area of your life, a simple way to avert unnecessary financial stress or hardship.

Once secured, your personal loan can be used to cover just about any cost you’re facing. Unlike other forms of loans, such as a mortgage loan or student loan, you are not restricted in the ways you can use the acquired funds, allowing you maximum financial freedom.

Whether you’re trying to buy a car, move to a different province or pay off pesky credit card debts, a personal loan is an easy way to get the cash you need - when you need it.

Generally speaking, you won’t need to put any assets up as collateral in order to obtain your personal loan. That’s because personal loans are typically unsecured.

Furthermore, personal loans are structured in installments, with you making a predetermined number of scheduled payments to repay the loan, along with any associated interest.

Thanks to the low rates and flexible terms associated with personal loans, they are consistently one of the most reliable ways to acquire the funds you need.

Is Your Credit Good Enough to Qualify you for a Personal Loan?

Don’t panic if your credit score is riddled with reminders of a complicated monetary past. It’s easy to feel helpless when your loan applications are being rejected from every major bank, but it’s not the end of the world.

Bad credit personal loans are specifically designed to help people like you procure the funds you need to live a better life, repay past debts, make investments in your future and take care of your family.

As you contemplate obtaining a personal loan, you’ll first need to understand what a credit score is and why it matters as you look to borrow money from lenders.

Your credit score is calculated by Canada’s two main credit bureaus, Equifax and TransUnion. These private companies take into consideration a number of factors when calculating your credit score, including your payment history, length of credit history, types of credit that you use and the total amount of your outstanding debts. Your score can range from 300 to 900.

Individuals with credit scores at or below 650 will have trouble obtaining access to loans through large banks and financial institutions. That’s where bad credit loans come in.

If your credit is below 650, a personal loan is likely your best option for obtaining the funds you need.

Lenders considering you for a personal loan or bad credit loan will most heavily weigh your current income.

Income can range in type, amount and source. Examples include employment income, government subsidies, pensions and maternity benefits. All of these forms of income can be considered in the equation. So long as you have been employed for at least six months and have never defaulted on a payday loan in the past, you can be considered for a personal loan.

Furthermore, strategically using a personal loan can actually help you to consolidate your existing debts and begin to make your credit score healthier.

How Bad Credit Scores Affect Borrowing

A bad credit score can have varying effects on your ability to take out different kinds of loans from various lenders. That’s because each lender sets their own standards and rules when deciding to whom they will lend money, and under what terms and conditions.

The truth is, some lenders may deny your loan request outright if your credit score does not meet their standards.

Lenders think of your credit score as an assessment of the “risk” associated with loaning you money. As a result, they are most likely to create favourable terms for individuals who are “low-risk” borrowers. In contrast, they are more likely to attach greater restrictions and more substantial interest rates when loaning to borrowers who are considered “high risk,” due to their credit scores.

That’s where bad credit personal loans come in. Bad credit personal loans offer a wide range of borrowers the opportunity to obtain the funds they need to build a more secure financial future. Typically, applicants for bad credit personal loans would be ignored or immediately dismissed by big banks and hot-shot financial institutions.

Big banks will pore through every line of your credit report history in search of “red flags” or warning signs before granting you a loan. That’s typically not what the bad credit personal loan process looks like.

When you’re considered for a personal loan, your present-day financial situation is the main factor being considered, rather than past credit difficulties. That’s why lenders will look primarily at your current income when considering you for a loan.

Bad credit personal loans level the playing field, ensuring that individuals are not rejected outright simply based on some mild blemishes in their credit history.

Some lenders may increase your interest rates slightly based on your credit report and score.

Simply put: Your current credit score need not determine the rest of your financial life. Consider taking out a personal loan as the first step in reclaiming your financial autonomy, and use it as an opportunity to harness your own potential. 

Should You Take Out a Personal Loan if You have Bad Credit?

So, maybe your credit history isn’t perfect. (Whose is?) This reality can sometimes make it feel like your past renders you a financial leper banned for life from borrowing money from trustworthy sources. With some lenders skeptical and wary of loaning you money, it can sometimes feel all but impossible to borrow the money you need to build a better financial future for yourself. Luckily, this isn’t true. Not at all!

In fact, borrowers with bad credit have a number of options when it comes to securing the money they need to cover pressing bills and other financial obligations.

In many cases, borrowers with less-than-stellar credit scores have the option of pursuing a personal loan. Under reasonable and non-punitive conditions, these borrowers can benefit greatly from taking out a personal loan. They can then use that loan to contribute to their greater financial stability, whether paying off substantial bills or credit card debt or making an investment in their home business.

That said, it is vital that you take the responsibility of taking out a personal loan seriously and assume the associated costs with maturity and commitment.

Be truly honest with yourself and consider what sum you can actually afford to borrow, and what repayment terms would be most realistic for your current financial situation.

If you’ve had trouble repaying loans in the past, reflect on what went wrong and how you can avoid similar situations in the future. Come up with a foolproof plan to make sure you hold yourself accountable. Consider options such as automating your monthly repayments, so that being a responsible borrower is an easy, convenient no-brainer.

The best way to ascertain whether you can manage at short-term loan at this juncture? See how the math adds up. For example, you can use a short-term loan calculator to determine what kind of loan is most viable for you. This way, you can determine what your monthly payment schedule would be based upon the loan amount and the duration of the repayment period.

Taking out a loan is a substantial responsibility. Once you take on that responsibility, it is vital that you make repaying your loan a top financial priority. 

What is the Difference Between Payday Loans and Personal Loans?

The differences between payday loans and personal loans are substantial. A payday loan offers a short-term cash advance, which you are typically required to repay on or soon after your next payday.

As a result, most payday loans will last approximately two to four weeks. That means repaying both the borrowed sum and any associated fees, which are usually exorbitant. Indeed, the substantial fees associated with payday loans can be punishing, and you are required to repay the borrowed sum and associated fees in one lump sum amount.

While the annual interest rate on payday loans can range into the three digits, the financial charges are particularly hefty, running the gamut from $10-30 per every $100 borrowed. Then, if you are unable to repay your loan, you’ll stand to accrue additional financing fees for every extension you obtain.

In contrast, a bad credit personal loan is usually repaid through bi-monthly or monthly installments.

The interest rates associated with personal loans are substantially lower than those attached to payday loans. 

Furthermore, personal loans typically come with flexible terms and payment options, allowing you to customize your repayment plan to best suit your unique financial realities.

All of the factors combine to make a personal loan a specifically appealing opportunity for borrowers with bad credit who are trying to make responsible financial changes in their lives. 

How Much Income Do I Need to Qualify for a Bad Credit Loan?

Qualifications vary, with each lender setting their own standards as to whom they’ll consider loaning money. Income is heavily considered by lenders, but they will also consider your debt-to-income ratio. Also, remember that the category of income can include employment income, government subsidies, pensions or maternity benefits. 

What Do I Need to Apply?

The most valuable asset you have is your time. So why waste it filling out a pages-long application for a personal loan at the bank, only to be denied the funds you need?

Applying for a personal loan doesn’t have to be a paperwork nightmare. In fact, lenders make it easy, fast and convenient to apply for your personal loan online. With these streamlined application processes, you can get the money you need as quickly as the same day.

For example, to apply for a Magical Credit loan, you simply fill out your contact information. Then, you can either upload or provide read-only access to your bank statement showing the past 90 days. From there, you fill out your income and loan needs.

Then, you must provide proof of income. If your income comes from employment, that means submitting 2 recent paystubs and 1 recent bill. If your income instead comes from government subsidies, that means providing a letter or statement attesting to your current monthly income. 

Additionally, you’ll need a valid ID and SIN.

All in all, the process should only take a few minutes and you can expect us to follow up with you within 24 hours. Within 48 hours, you could have a brand-new personal loan deposited into your bank account. 


As you can see, personal loans can serve any number of financial purposes depending on your life circumstances. One unifying quality that all personal loans share: They offer the financial flexibility to help you reach your short and long-term goals. While the exact terms of any one personal loan can vary, these loans typically don’t require any collateral and can be paid back in monthly installments.

You can’t change the past, but you can take every available step towards building a more secure financial future with the help of a personal loan. Good luck!


Magical Installment Loans: We offer installment loans in the amount of $1,500- $20,000 that have a 12-60 month term with an APR 19.99% min - 46.8% max. On $1,500 borrowed for a 1 year term at 3.9% per month, the total cost of borrowing including a $194 fee is $896.00. The total amount to be paid back with interest and fee is $2,396.00. AB License #349796 and BC License #83626

NOTE: Our installment loans are open, so you can pay off your loan at any time with no penalty. You will only pay interest up to the date you pay it off.

Magical Cash Loans - Ontario, British Columbia, Northwest Territories, Nunavut, and Yukon Residents only: We offer Magical Cash Loans in the amount of $100-$1,500.00. The cost of borrowing is $15.00 per $100.00 for each $100.00 borrowed. On a $1,000.00 loan for 14 days, the cost of borrowing is $150.00. The total to payback is $1,150.00 which is an annual percentage rate of 391.07%. ON License #4741412. BC License#85919.

The Loan must be paid in full by the end of term, no extensions or exceptions, no automatic renewals. Failure to pay your debt on time will impact your future credit with Magical Credit Inc. and other credit lenders. All delinquencies will be reported to the Credit Bureaus.

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