According to the 2019 Consumer Credit Review by Experian, 16% of Americans have bad credit. While the number isn’t that big, it’s still a lot of people. And, considering that bad credit can make it challenging to get a loan, buy a car, or even rent an apartment, it’s essential to understand what bad credit is and how it can be fixed.

Bad credit is essentially a low credit score. Credit scores are calculated using several factors, such as payment history, credit utilization, and length of credit history. A score below 580 is considered bad credit.

Having poor credit can hold you back from getting approved for loans at fair interest rates and terms. However, it’s not impossible to qualify for a loan with bad credit. Here are five tips for boosting your chances of getting a loan with bad credit. 

Maintain A Good Credit Utilization Ratio

The credit utilization ratio is the debt amount you have compared to the credit available. For example, if you have a $500 credit card balance with a $1,000 limit, your credit utilization ratio would be 50%.

A lower credit utilization ratio signals to lenders that you’re using your credit responsibly and are less likely to default on a loan. Conversely, a higher credit utilization ratio will make you a risky borrower for lenders.

Ideally, you want to keep your credit utilization ratio below 30%. However, some experts recommend keeping it below 20%. The lower your credit utilization ratio, the better your credit score.

And it’s especially important for people with bad credit. Even if you have poor credit, a low credit utilization ratio may boost your chances of getting approved for a loan or credit card. 

Make All Of Your Payments On Time

Another way to improve your chances of getting a loan with bad credit is to make all your payments on time. That means paying your rent, car payments, utility bills, and other debts on time.

Showing a history of timely payments is one of the best things you can do to improve your credit score. And, as your credit score goes up, you get a better chance of qualifying for better loans with more favourable terms. 

Keep Your Credit Card Balances Low

In addition to maintaining a good credit utilization ratio, it’s also essential to keep your balances low. It signals to lenders that you’re not overextending yourself financially and are less likely to default on a loan, even with bad credit.

Keeping your balances low also helps you avoid paying costly interest fees. The lower your balance, the less money you’ll have to pay in interest. So, if you’re carrying a balance on your credit card, it’s in your best interest to pay it off as soon as possible. Or, better yet, avoid carrying a balance altogether.

Paying your balances in full each month is the best way to control your credit card debt. If you can’t do that, aim to keep your balances below 30% of your credit limit. That’s the sweet spot for maintaining a good credit score. 

Get Pre-Approved For A Loan

Getting pre-approved for a loan from a lender is another excellent way to boost your chances of securing a loan even with poor credit. It shows lenders that you’re a serious borrower committed to getting a loan from them.

If you’re interested in getting pre-approved for a loan, you should start by shopping around with different lenders. Each lender will have its process and requirements, so it’s important to compare your options before deciding on a lender. Once you’ve found a suitable lender, you can begin the pre-approval process.

Consider, CreditNinja’s loans for bad credit and other subprime lenders that offer loans to poor credit borrowers.

Apply For A Secured Loan

A secured loan is backed by collateral, such as a savings account, CD, or piece of property. Since the lender has less risk with a secured loan, you’re more likely to get approved, even with bad credit. The downside is that you could lose your collateral if you don’t repay the loan.

There are a few things to consider before taking out a secured loan. Make sure you have the collateral to back up the loan, and if you fail to repay the loan, the lender will take your collateral.

Secured loans usually have lower interest rates than unsecured loans because they’re less risky for the lender, so you will not have to worry about an expensive loan. Finally, consider the terms of the loan. These loans usually have shorter terms because the lender wants to get their money back as soon as possible.


Bad credit can make it challenging to get a loan, but it’s not impossible. Many lenders may be willing to work with you, even if you have bad credit. Still, the interest rates on loans for people with bad credit are usually higher than those for people with good credit. That’s why it’s essential to shop around and compare rates before taking out a loan.