A low credit score can make borrowing harder, but options may still exist. You can use ClearScore to check your credit report and compare offers. ClearScore is a credit broker, not a lender.

Key takeaways

• A low credit score may lead to refusal, a higher interest rate, a smaller loan or a request for a co-signer, depending on the lender.

• Lenders look at more than your score, including your income, your existing debts and your ability to repay.

• Compare the total cost of borrowing, not just the monthly payment or the advertised rate.

• Payday loans and title loans may not need a credit check, but they can be very expensive and rules vary by province or territory.

• Treat "guaranteed approval" claims and upfront fee requests as warning signs.

• You can use ClearScore to check your TransUnion credit report and score for free and explore personalized offers before you apply.

Concise summary

Yes, you may be able to get a loan with bad credit in Canada, but approval is never guaranteed. Lenders generally review your credit report, credit score, debts, income and ability to repay, and a lower score may mean refusal, a co-signer requirement or a higher interest rate.[^1] The safest approach is to check your credit report for errors, work out what you can afford, and compare licensed lenders carefully. Lower-cost choices from banks and credit unions are usually worth checking first.[^2]

What does a low credit score mean in Canada?

Your credit score is a three-digit number calculated from the information in your credit report held by Equifax Canada or TransUnion Canada. Lenders may use it to judge how risky it could be to lend to you. A lower score can affect approval, your borrowing limit, your interest rate and your loan terms.

What is considered a bad credit score in Canada?

There is no single definition. Each lender sets its own rules. Scores from Equifax Canada and TransUnion Canada usually range from 300 to 900, and lower scores are generally seen as higher risk. Credit bureaus such as Equifax Canada and TransUnion Canada collect and hold information about how you've managed credit, and lenders may use different scores, scoring models and criteria, so the score a lender sees can differ from the one you see on ClearScore.

How Canadian credit scores affect loan applications

A lower score may mean a smaller loan, a shorter term or a higher rate. Some lenders may decline the application outright.

How lenders assess borrowers beyond their credit score

Lenders also look at your income, your job stability, your existing debts and your monthly budget. A strong income and low debts may help your case.

Bad credit vs. no credit history in Canada

Bad credit usually means your report shows negative information such as missed payments, accounts sent to collections or defaults, and it can also reflect high balances relative to your credit limits. No credit history means there is little information to assess. Both can make approval harder, for different reasons.

Does checking your credit score lower it?

No. Checking your own credit report and score is a soft check. It does not affect your score.

Can you get a loan with bad credit in Canada?

Possibly. It depends on the lender, your income, your existing debts and the amount you want to borrow.

Can you get a personal loan with bad credit?

Some banks, credit unions and alternative lenders offer personal loans for bad credit in Canada. Rates and fees are often higher than for borrowers with strong credit.

Can you get a loan with bad credit without a guarantor?

Some lenders do not require a co-signer. Others may ask for one, or for security such as a vehicle. A co-signer agrees to repay the loan if you cannot, so it is a serious commitment.

Can you get a loan with bad credit and no credit check?

Some products, such as payday loans, may be available without a credit check, because the lender usually relies on proof of income and an active bank account instead.[^4] These tend to cost much more, so check the full repayment amount first.

What income and documents do lenders require?

Most lenders ask for government photo identification, proof of income such as pay stubs or a CRA notice of assessment, and recent bank statements.

How much can you borrow with bad credit?

Usually less than someone with a strong credit history. Your income, your existing debt payments and what your credit report shows about your repayment history often set the limit.

Types of loans available for bad credit borrowers

Personal loans for bad credit in Canada

These are repaid in regular instalments over a set term. Terms often run from one to five years.

Secured loans

A secured loan is backed by an asset, such as a vehicle, and if you do not repay, the lender may be able to take and sell that asset, subject to your agreement and the law. If you own a vehicle outright, a title loan may be available despite a low score, but these usually carry high interest rates and additional fees, and the lender can repossess and sell the vehicle if you do not repay.[^3]

Unsecured loans

An unsecured loan does not require an asset. Rates are usually higher because the lender takes on more risk.

Payday loans and high-cost short-term loans

These are short-term, high-cost loans. Payday loan costs are capped provincially, and most provinces now set the maximum at $14 per $100 borrowed; separately, the federal criminal interest rate limit under the Criminal Code fell to 35% APR on 1 January 2025, though licensed payday loans are exempt from that limit.[^4] Payday lending is licensed province by province, so protections differ.

Credit union loans

Credit unions and community lenders may offer small-loan programs. FCAC research points to credit union small-loan products with rates of no more than 19% APR and terms of up to 24 months, which can be far cheaper than payday loans.[^5]

Loans with a co-signer or guarantor

A co-signer may improve approval prospects, but missed payments can affect both people's credit.[^2]

Debt consolidation loans for bad credit

These combine several debts into one payment. Check whether the total cost is actually lower.

How to get a personal loan with bad credit

• Check your credit report and score. Look for errors before you apply.[^1]

• Review your income, debts and monthly budget. Work out a payment you can manage.

• Decide how much you need to borrow. Borrow only what you need.

• Compare lenders without making multiple hard applications. Use comparison tools first.

• Check eligibility with a soft credit search. A soft search does not affect your score.

• Prepare proof of identity, income and banking information. This can speed things up.

• Read the loan agreement before accepting. Check fees, penalties and prepayment terms.

• Compare terms, eligibility and risks across lenders. Several applications at once can each add a hard inquiry.

Where to get a personal loan with bad credit in Canada

Banks and traditional financial institutions

Often the lowest cost, but approval rules can be stricter. It is still worth checking them first.[^2]

Credit unions and community-based lenders

Membership is often local. Some run small-loan or credit-building programs.

Online personal loan providers

These may be more flexible, but costs vary widely. Confirm the lender is licensed in your province or territory.

Licensed loan brokers and comparison services

A broker searches on your behalf. Ask how they are paid, and treat any demand for an upfront fee or a guaranteed approval as a likely advance-fee loan scam, which the Canadian Anti-Fraud Centre warns about.

How ClearScore can help you compare personal loan offers

You can use ClearScore to view personalized loan offers based on your credit profile. ClearScore is a credit broker, not a lender. Offers are provided by third-party lenders, and ClearScore does not decide approval.

Are pre-approved loan offers guaranteed?

No. Pre-approval is an indication only. The lender still completes full checks before any final decision.

How much does a bad credit personal loan cost?

Interest rates and annual percentage rates

The annual percentage rate (APR) is the yearly cost of borrowing, including interest and certain fees. It is the fairest way to compare offers.

Loan fees and administration charges

Watch for administration fees, late fees, and optional insurance added to the balance.

Total cost of borrowing

Add every payment together, covering principal, interest and any applicable fees, to get the total amount you will repay. Subtract the amount you borrowed and what is left is the cost of borrowing, which shows what the loan really costs.

Monthly payments and loan terms

A smaller monthly payment can still cost more overall, because a longer term means interest accrues for more months.

Fixed-rate vs. variable-rate loans

A fixed rate keeps payments predictable. A variable rate may rise or fall.

Why longer terms can cost more overall

Figures are generic examples for illustration only. Your actual rate and payments may differ, depending on your circumstances.

Can you get a car loan with bad credit?

How bad credit affects car-finance approval

You may still qualify, but the rate may be higher and the lender may ask for a larger down payment.

Dealership financing vs. direct lender financing

Dealership financing is convenient. Direct lenders may be cheaper. Compare both.

Can a larger down payment improve approval chances?

It may. A bigger down payment reduces the amount borrowed and the lender's risk.

Choosing an affordable vehicle and loan term

Choose a vehicle that fits your budget, including fuel, insurance and maintenance.

How to compare car-finance offers

Compare the APR, the term, the total cost and any fees for early repayment.

Risks of rolling existing debt into a car loan

Rolling the balance of an old car loan into a new one increases what you owe and can leave you owing more than the vehicle is worth, which the FCAC describes as negative equity.

ClearScore car-finance comparison tools

ClearScore may show car-finance offers matched to your profile. ClearScore is a credit broker, not a lender. Approval and final terms rest with the lender.

Can you get a student loan with bad credit?

Government student loans and provincial or territorial aid

Canada Student Financial Assistance and provincial or territorial aid are assessed on financial need, and federal rules no longer apply a credit screen to student loan applicants.

Private student loans and lines of credit

These usually involve a credit check. A limited credit history may affect approval.

When a co-signer may be required

Private lenders often ask for a co-signer if your credit file is thin.

Applying for student funding with limited credit history

Government student aid, grants and bursaries are all options to explore, and eligibility and terms vary by program.

Alternatives to high-cost education loans

Scholarships, part-time work, and payment plans offered by your school may reduce borrowing.

How to avoid overborrowing for education

Build a budget for each study year and borrow only what the budget shows you need.

How to improve your chances of getting a loan with bad credit

• Correct errors on your credit report with Equifax Canada or TransUnion Canada.

• Make payments on time where possible.

• Lenders may consider your existing debt and how close your credit card balances are to their limits.

• Avoid multiple hard credit checks in a short period.

• Apply for an appropriate loan amount.

• Consider a co-signer or security carefully, since both carry real risks.

• Demonstrate stable income with clear documents.

• Consider waiting while you build stronger habits over time.

How to compare bad credit loans safely

• Verify the lender's licence, address and contact details.

• Check the APR and the total repayment amount.

• Understand late-payment fees and what happens if you default.

• Treat upfront fees and "guaranteed approval" claims as warning signs.

• Never share online-banking passwords or security codes.

• Confirm whether the lender runs a hard or soft credit check.

• Review cancellation, renewal and prepayment terms.

What to do if you are refused a loan

• Ask the lender why the application was declined.

• Check your credit report for errors.

• Avoid applying to several lenders at once.

• Consider a smaller loan, or take more time to prepare.

• Explore options that do not involve borrowing.

• Speak to a non-profit credit counsellor before reapplying.

Alternatives to getting a loan with bad credit

• Build an emergency fund gradually, even in small amounts.

• Negotiate a payment arrangement with the company you owe.

• Ask your employer about a pay advance.

• Borrow from family or friends with a written agreement.

• Use existing credit carefully, if the cost is lower.

• Contact a licensed or non-profit credit counsellor.

• Check government or community support programs in your province or territory.

How to manage a bad credit loan responsibly

• Set up automatic or scheduled payments.

• Pay more than the minimum when you can afford it.

• Contact the lender before you miss a payment.

• Avoid taking a new loan to repay an existing one.

• Monitor your credit report and score for changes.

• Track your progress toward paying off the balance.

How ClearScore can help you find and manage credit

ClearScore is a credit broker, not a lender. It is a tool you can use alongside your own comparisons.

• Monitor your TransUnion credit score and report for free.

• Receive personalized credit-improvement tips and insights.

• Check personalized personal-loan offers from third-party lenders.

• Use soft credit searches to explore eligibility without affecting your score.

• Compare credit cards designed for credit building; each card issuer sets its own eligibility criteria and makes the approval decision.

• Review car-finance offers based on your profile.

Offers shown depend on the information available, and approval always rests with the lender.

Frequently asked questions

How can I get a loan with bad credit? Check your credit report, work out what you can afford, then compare licensed lenders. Banks and credit unions are a sensible starting point.[^2]

How can I get a personal loan with bad credit? Gather your identification, proof of income and bank statements, check eligibility with soft searches and compare terms before making a full application.

Can you get a loan with bad credit in Canada without a co-signer? Possibly. Some lenders do not require one, though a co-signer may improve approval prospects in some cases.[^2]

Can you get a car loan with bad credit? Often yes, but the rate may be higher. A larger down payment may help.

Can you get a student loan with bad credit? Government student aid is generally based on need rather than credit. Private loans usually involve a credit check.

Can I get a personal loan with bad credit and no credit check? Some high-cost products skip the credit check, but they are expensive and should be a last resort.[^4]

What personal loan credit score is needed in Canada? There is no universal number. Each lender sets its own criteria.

Does applying for a bad credit loan hurt my credit score? A hard check may have a small effect, and several in a short time may have more.

How can I improve my chances of approval? Fix report errors, lower your balances, pay on time, and ask for a realistic amount.

What should I do if I cannot afford my loan payments? Contact your lender early and speak to a non-profit credit counsellor.

Is ClearScore free to use in Canada? ClearScore offers free access to your TransUnion credit score and report.

Does ClearScore decide whether I get a loan? No. Lenders make all approval decisions and set the final terms.

Ready to see where you stand? You can check your credit report and score with ClearScore for free, explore personalized loan offers, and compare your options before you apply. ClearScore is a credit broker, not a lender.

[^1]: Financial Consumer Agency of Canada, Personal loans (2025) https://www.canada.ca/en/financial-consumer-agency/services/loans/personal-loans.html

[^2]: Financial Consumer Agency of Canada, Loans and lines of credit (2025) https://www.canada.ca/en/financial-consumer-agency/services/loans/loans-lines-credit.html

[^3]: Financial Consumer Agency of Canada, Title loans (2025) https://www.canada.ca/en/financial-consumer-agency/services/loans/title-loans.html

[^4]: Financial Consumer Agency of Canada, Understanding payday loans (2025) https://www.canada.ca/en/financial-consumer-agency/programs/research/understanding-payday-loan.html

[^5]: Financial Consumer Agency of Canada, Understanding payday loans (2025) https://www.canada.ca/en/financial-consumer-agency/programs/research/understanding-payday-loan.html

This article provides general information only and does not constitute financial advice. Individual financial circumstances vary, and you may wish to seek independent advice before making financial decisions. Information is accurate at the time of writing and may change.