Poor Credit Loan

Types of bad credit loans and their uses

What is a bad credit loan?

Bad credit loans are loans for consumers with credit scores that are below the desirable number to get approved for funding elsewhere. You can expect higher interest rates and more fees with this loan type. The reason your interest rate is higher is because the risk of you defaulting becomes more problematic.

Poor credit is often categorized as having a FICO score of 300 to 579. Fair credit is often categorized as being from 580 to 669. While these loans are costly for the borrower, the upside is that the cash that you need becomes available immediately. If an unexpected expense comes up than you can have the funds available to deal with whatever situation you may be facing. Some lenders can offer you same or next day lending with a streamlined application process allowing great flexible to receiving a cash loan.

Secured Loan

Secured loans cater to consumers with credit scores that are less than ideal and may require you to put up some type of collateral in order to get approved. Secured loan options are known as title loans or home equity loans. The major risk involved here is that you can lose an asset such as your house or your home if payment is defaulted.


This type of loan does not require a credit check to get approval as the name implies. This is favorable to some borrowers that have low credit and may have been denied by previous lenders. No-credit-check-loans often come with very steep interest rates so you have to be careful and do your research beforehand.

Some lenders may extend the loan term in order to give you a lower monthly payment. This is usually fine and can help get you what you need while allowing you to meet a monthly budget that fits your financial needs. Be aware that while your monthly payment is lower, this means you’ll usually pay more interest over the life of the loan.



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Sierra Pacific Mortgage NMLS# 1788. Michael Shotnik NMLS: 218281, CO License: 100017466. Not licensed in Alaska or New York.  To check license status of mortgage loan originator, visit D.O.R.A. and NMLS consumer access.