How to Get a Loan With Bad Credit in Canada?

When it comes to loans, credit is king. Your credit score is the difference between getting a loan approved or rejected. A common misconception is that borrowing from lending institutions is impossible with a poor score.

The reality is that you can get a loan with bad credit in Canada. Bad credit loans are possible but you need to be careful. There is a prevalence of predatory debt that comes with poor decisions. With more information, you can make a well-informed decision concerning. That being said, here’s how to get a loan with bad credit in Canada.

What is a Bad Credit Loan?

Bad credit loans are something to fall back on if your poor credit score restricts your options.

So at their core, bad credit loans are ways to navigate emergencies. They are essentially personal loans and you can get them even if you have a credit score lower than what majority of banks or lending institutions would like.

When it comes to bad credit loans it’s simple: you repay the amount you borrowed regularly every month. You could go to a bank, but they will charge high-interest rates. For low rates and flexibility, there are more choices available. Trying to get a loan with bad credit in Canada is a case of finding individual solutions for problems that are personal.

Is My Credit Score Bad?

Poor credit is very overworked and misjudged in today’s world. Because it’s a matter of perspective, the distinction between bad credit and good credit is in the mind of the lender. For most, bad credit is a score below 660 and in this case, you qualify as a risk. For most private lenders poor credit falls between 560 and 650.

The worse your score the higher the interest rate so the people who lie on the upper-end of that range will get more favorable rates. One thing is for certain, if someone’s score is lower than 560, they will probably not get the loan.

This is why, when considering how to get a loan with bad credit in Canada, it is best to approach other lenders apart from banks and credit unions.

How Bad Credit Score Impacts Your Eligibility

Bad credit scores impact your eligibility for loans very directly: it’s about judgments and trust. Banks, credit unions or any other institutions look at your credit score as a reflection of your ability to pay back. A low score reflects poorly on you, while a good score is an indicator of reliability.

Again, it’s important to remember that bad credit loans are possible and you can get a loan with bad credit in Canada. Another thing to consider is that credit scores are not set in stone. There are steps you can take to build your score: pay your bills on time; stay under 30% of your credit card limit; keep your old cards open; pay your debts; think about consolidating.

Bad Credit Loan Providers

Here’s how to get a loan with bad credit in Canada, and specifically, who you should go to. Before we go any further, it is important to understand both the advantages and disadvantages of bad credit loans.

The advantages are that bad credit loans in Canada are fast; you have many lender options and you have the opportunity to improve your credit scores.

The negatives that come with bad credit loans: high-interest rates; fees and penalties are usually drafted in; collateral is sometimes needed as further accountability; not every lender may be officially licensed. They could use certain illegal, underhanded tactics. Make sure you do your research and make an informed decision about who to go to for a bad credit loan in Canada.

With that said, here is our list of alternative loan providers that can help you when you most need it. These companies are the next best option for those Canadians with low credit scores who keep getting rejected by the banks and lending unions.

NameInterest RateLoan TermMonthly PaymentWebsite
easyfinancialFrom 29.99%9-120 monthsFrom $127.34Visit Website
fairstoneFrom 19.99% to 39.99%6–60 monthsFrom $111.48 to $144.31Visit Website
Ferratum Oyj logoFrom 18.9%12 months to 60 monthsFrom $109.82Visit Website
progressaFrom 19% to 46.95%6 to 60 monthsFrom $109.97 to $156.74Visit Website
refresh financialFrom 7.26% to 29.95%36 to 60 monthsFrom $92.99 to $127.27Visit Website

* For monthly payments calculation purposes, the following parameters were used: $3000 loan size and 36 months loan term.

Easy Financial

Getting a loan with Easy Financial is quite simple – you can apply online in a matter of minutes, then submit your documents, and get approved for a loan. They have 94% customer satisfaction rating and they have been in business for 13 years.


FairStone has been helping Canadians with bad credit loans since 1923. They offer personal loans up to $30,000, debt consolidation, mortgage solutions and retail financing.


Ferratum is an international provider of mobile banking and digital consumer and small business online loans in Canada distributed and managed by mobile devices. Their process is entirely online, requires no documents and you get the funds the next day. A great option when requesting bad credit loans.


Progressa is Canada’s fastest growing financial technology lender focused on changing the way pay Canadians access and build credit. They pay your online loans in Canada for you directly and in doing so, whittle away at your debt.

Refresh Financial

With a goal to help Canadians retake control of their finances, Refresh Financial offers bad credit loans to those who need it, irrespective of background.

What Types of Interest Rates Will I Pay With Bad Credit?

As you’ve already figured, the lower the credit, the greater the rate of interest. The types of interest rates you pay on bad credit depend on which loan you get. When you get a loan with bad credit in Canada, payday loans have a higher level of interest than personal loans that you use commonly.

Payday loans are generally to be avoided because they can lead to a cycle of predatory debt. If you’re looking for personal loans and have poor credit, interest rates can be ranging somewhere between from 25% to 65%.

While it does appear paradoxical to issue those with greater rates of interest, understanding risk and reward is important. Those with low credit signify a greater level of risk when it comes to defaulting and in the process, hit the lending institution hard. As a means of guarding themselves against loss, lenders issue greater rates of interest as a proactive stopgap. This way they recover the loss expected once they loan to people with bad credit.

How to Get a Loan With Bad Credit in Canada: Options

If it’s not an emergency, the first step to get a loan with bad credit in Canada is to improve your score so you can comfortably afford the loan you need. Whether short term loans or personal loans for bad credit, Canada and certain institutions will be more welcoming if your score, and thereby your reputation, are strong.

Start by making timely payments, especially on your credit card and reduce the balance to under 30% of your limit. Don’t apply for new credit. These three factors account for 75% of your credit score so it is vital that you understand the impact they could potentially have on a strong credit score.

If it is an emergency however, there are measures you could take to get bad credit loans in Canada that do not involve banks, credit unions or even the alternative sources that we have already mentioned.

Approach Family and Friends

Risky in terms of rapport, but approaching family and friends is intelligent if you look at it from a monetary and stress perspective because it would be simpler to get approved and the terms would also be a little more lenient.

You can almost be sure that the people closest to you won’t subject you to the rigorous qualification procedure and would probably be gentler with the rate of interest compared to what lending institutions providing personal loans for bad credit in Canada would charge you.

However, if you get a loan for bad credit in Canada from your friends or family, ensure you take into account the possibility of default. Failing to pay someone close to you a loan can be toxic to relations and destroy lives.  This runs deeper and further than a poor credit report.

With a loan received from a person you know, handle it like an important transaction between two people who don’t know each other. For all intents and purposes, make it official with clear documents and legally record it. Avoid problems down the road and draft up a written agreement including the terms of the loan, rates of interest, and what happens if the debt cannot be repaid. While you are getting a loan from a friend or family, you should not treat it as such.

Get a Co-Signer

If you cannot get a loan with bad credit in Canada from friends or family, you could always ask an associate to co-sign a bad credit loan with you.

Alongside a competent co-signer, those institutions providing the loan will value the interest rate depending on your co-signer’s score (the better score), but now the co-signer is equally liable for repayment. You can think of a co-signer as a sort of character witness. If you evade a loan or are late on payments then – because payment information is recorded on both credit reports – both you and your co-signer will face duress.

There is more responsibility on your shoulders because your actions have direct consequences for someone else. Although with punctual payments, you won’t need a co-signer in the future because your credit score will improve and getting a loan will be easier.

For example, if you need a short-term loan in Canada and bad credit is affecting your ability, Lending Mate provides you with up to $10,000 provided you have a guarantor. They have a chat over the phone with both you and your guarantor and make their decision based on what they find out and using common sense. It is a less taxing qualifying process when considering what certain institutions put you through when applying for personal loans for bad credit in Canada. But there is a lot more responsibility put on you.

Personal Loans Online

The rise of tech and a schism in the industry has created a space for Personal Loan Lenders, a new space that provides an avenue for those with poor credit scores.

These companies are essentially lenders without a physical presence. In our context, this means online loans in Canada. They go about their jobs online and offer online loans in Canada for bad credit scores when it comes to things like consolidating debt and loans for minor expenses. The reason they are so attractive is because they do their job quickly and have funds at the ready. Decisions take little or no time and the money you request reaches your account in a couple of days. Majority of these lenders do not charge for applications and they do not issue pre-payment penalties.

When considering online loans in Canada for bad credit, these agencies are your go-to. The request for a loan is intuitive and quick to complete. Credit scores play a minor role in the administrative process – if that – so this is an appealing option for people with bad credit. More factors that come into play include your education and employment history.

Final Words

When it comes to it, a lot more needs to go into consideration to answer how to get a loan with bad credit in Canada. One factor is whether or not it’s an emergency. If you have time and room to maneuver, consider taking steps to better your credit score before applying for the loan.

If it’s an emergency, then you can apply for bad credit loans in Canada. You then need to figure out who you want to borrow from. Traditional lenders, alternative agencies, people you know and online loans in Canada are all options that come with their respective pros and cons. When the chances are better for your loan request to be expected, the collateral is usually higher, and vice versa.

There are many ways to get a loan with bad credit. Personal loans for bad credit are almost the same as short term loans in Canada for bad credit. At the end of the day, all you can do is try your best to maintain a strong credit score, do your research and know your own capacity to pay back the debt, make a well-informed decision regarding who to borrow from and who you want to represent you.

That’s how to get a loan with bad credit in Canada.

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