What You Need to Know About Short-Term Bad Credit Loans

Here is your advice.


Bad credit loans are really helpful for people who have low credit scores. Financial missteps like maxing out credit cards or paying bills late can reduce your credit score. That doesn’t mean that people in these situations shouldn’t have access to financing when they’re in need. That’s where bad credit loans come in. 

They are an option for people who haven’t made all the right choices financially, are in the process of recovering from past mistakes or are currently building credit. There are two main kinds of bad credit loans: secured and unsecured. Secured loans are those that require some kind of collateral, like your car or house. They offer better rates and higher loan limits, but if you could lose your car or house if you default on the loan. 

Unsecured loans, on the other hand, do not require collateral, and the rate you get is based on how creditworthy you are. Unsecured by any asset, this loan has lower loan limits and higher interest rates. 

Credit unions, online lenders and banks all offer loans to people with poor credit, the variation comes with the limit for what each lender considers a creditworthy borrower. As you probably already know, some lenders’ requirements are much stricter than others. 

That’s why it’s important that you take the time to shop around before agreeing to any loan’s terms and conditions. 


Short Term Bad Credit Loans Aren’t a Bad Thing 

The most first and most important thing you need to know about short term bad credit loans is that you are not stuck with the worst options. There is a myth that bad credit loans lead to financial ruin but that is not true. When used responsibly, they not only get you out of a tough situation or emergency, they can also help you rebuild your credit. 

You will not permanently rely on these kinds of loans to make ends meet, but when you do need them, spend time looking for the best short term bad credit loans you can find. 


Types of Short-Term Loans

If you are tired of being shut down by traditional banks, you have other options.


  • Cash Advances 

The posterchild of short-term loans, these loans carry short repayment periods averaging from around a week or two, but some can be found that extend up to as many as three months in some instances. 

When you apply for these, bad credit is not a problem because they don’t check your credit. You will need to show proof of income, however. If you are using a credit card that is unsecured, remember that this option will carry a very high interest rate, much higher than your card’s regular purchase APR. 


  • Payday Loans

These are loans that typically are no higher than $1000. Payday lenders tend to skip credit checks, only requiring that you have an active bank account, valid ID and proof of income – no collateral needed. 

Most lenders require that you pay service fees and interest, called a finance charge, in order to get the loan, and it is usually do two weeks later, which coincidentally will most likely end up being your next payday. 


  • Installment Loans

Most people can’t afford to repay a loan in a single repayment, which is the way payday loans and cash advances are typically structured. Instead of single payment loans, installment loans should be something you consider when you’re in need of money fast. 

These loans provide borrowers with a specific amount of money upfront and the money is repaid with interest in monthly installments, until the loan has been paid in full. 

Credit unions provide some great options as well as banks. To find installments loans that work with people with poor credit history, look for online tools at sites like LetMeBank which also help you improve your credit in general so you build healthy financial habits for you and your family and aren’t relying on short-term loans in the long-term. 


  • Credit Card Loans 

Sometimes if the high interest rates of payday loans can make you want to try another route altogether, and a below average credit card issuer is a great alternative, especially when compared to cash advance loans. 

If you don’t need months and years to pay off a debt, the key to using this method is the credit card’s grace period – the time you have to pay your balance off before interest is charged. If you pay the entire bill before the due date, often you aren’t charged interest at all. 


  • Bank Agreements 

Depending on the policy of your particular bank, they may approve you for a short-term loan or even a minimal overdraft agreement. Keep in mind, this may still be based on your ability to keep an active account and decent banking history with the institution.



Don’t let bad credit let you think help is not available when you need a cash injection. There are plenty of options outside of traditional banks that can help you if you know where to look and are willing to do just a bit of research. 


Next up, How to Reclaim Financial Independence