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Can People With A Poor Credit Rating Get Personal Loans?

It is still possible in today's economic environment for people with a poor credit rating to get personal loans. It may not be easy to qualify for a personal loan with bad credit but if you currently have an employment history of two years or more with consistent income it is still possible to get a loan. Loans resulting in collateral such as a home or automobile are more likely to be issued than personal or unsecured loans. Whether or not a person with a poor credit rating can get a loan will depend on their income and what steps they have taken to fix any black marks on their credit reports.


Many lenders will take into account an individuals personal financial background when determining whether or not to issue a loan. An examination of a borrowers credit history and FICO score will be an opportunity to explain any difficulties you've experienced and what steps have been taken to prevent them from happening again. Many black marks will stay on a credit report for years even though payments have been made on time in the recent past. This and many other factors are taken into account when evaluating whether or not to issue a consumer a loan.


Mortgages are definite possibility even with a poor credit rating because the house will be considered collateral and can be foreclosed by the lender if the borrower defaults on payments. That's not to say it will be easy as it may require talking with many different lenders. It will also most likely result in a higher interest rate than what could have been obtained if the borrower had perfect credit. Where some borrowers can obtain a mortgage by paying as little as 2% down, people with a poor credit rating will normally require a minimum of 20% down to qualify for a mortgage. This can often seem like an insurmountable obstacle bit if a consumer makes a concerted effort to save 20% for a down payment it will show that even with poor credit the are committed to being financially responsible.

Auto Loans

Automobile loans are another type of collateral based loan which is possible to obtain even with a poor credit rating. As with the mortgage, the underlying asset can be repossessed should the borrower fail to make timely payments as outlined by the loan agreement. This provides a level of security that the lender will not lose everything in the event of default. Again, it might be more difficult to obtain an automobile loan and you may have to speak with multiple lenders who will evaluate your credit reports but it is definitely possible. Those with a poor credit rating are often considered higher risk and therefore if an automobile loan is obtained it will typically be at a substantially higher interest rate than the market average.

Secured Loans

Secured loans such as title loans and payday loans may be available but they will almost always be cost prohibitive due to extremely high interest rates. Under nominal circumstances, consumers with very good to great credit will still pay higher interest rates with these types of loans. Even if it is possible to obtain a secured loan with a poor credit rating the interest rate and terms are bound to be so onerous as to be unrealistic for the borrower. If the amount of the secured loan is small enough and you are willing to accept the terms it might be possible to obtain a secured loan.

Unsecured Loans

Unsecured loans are difficult to obtain in the best of times unless you are a consumer which has impeccable credit and a lengthy history with the lender. These types of loans which have no underlying asset means the lender will have to sue in order to obtain the outstanding balance or simply accept the loss and report it to the three major credit reporting agencies. People with a poor credit rating are unlikely to obtain an unsecured loan. That doesn't mean a consumer should not attempt to qualify and receive an unsecured loan but it will take an organization willing to place a lot of trust and accept a lot of risk in the consumer.


Credit is available for people with a poor credit rating but it requires a little more effort to obtain personal loans than would otherwise come easily if they had above-average credit. Financial institutions ideally would offer loans to virtually all consumers because they make money on the interest charged. But when they are determining whether or not to issue a loan they evaluate many different factors such as current employment status as well as any tangible assets. It is never black and white when obtaining a personal loan but your success rate will depend specifically on how the lender perceives your financial stability and responsibility.