Bad Credit – How To Get Loans?

What Is Bad Credit? 

Bad credit refers to a person’s history of failing to pay bills on time, and the likelihood that they will fail to make timely payments in the future. It is often reflected in a low credit score. Companies can also have bad credit based on their payment history and current financial situation. 

Bad Credit
Bad Credit

A person (or company) with bad credit will find it difficult to borrow money, especially at competitive interest rates, because they are considered riskier than other borrowers. This is true of all types of loans, including both secured and unsecured varieties, though there are options available for the latter

Key Takeaways

  • A person is considered to have bad credit if they have a history of not paying their bills on time or owe too much money.
  • Bad credit is often reflected as a low credit score, typically under 580 on a scale of 300 to 850.
  • People with bad credit will find it harder to get a loan or obtain a credit card.

Examples of Bad Credit 

Your credit score is based on five different factors, each of them weighted differently. All of them can contribute to bad credit. 

  • Payment history (35%): If you have a history of delinquent debts or credit cards that you haven’t paid off, you are likely to have a lower credit score.
  • Amounts owed (30%): A bad credit score is often due to owing large amounts of money. The more you already owe, the less likely you are to be able to pay off the new debt.
  • Length of credit history (15%): If you have been reliably paying off debts for several years, you are a less risky borrower. A shorter credit history, however, will lead to a lower credit score. This is also influenced by how long individual credit accounts have been open and whether you have inactive accounts.
  • Credit mix (10%): Having a variety of types of credit—such as a credit card, a retail card, a rental history, and a car loan—improves your credit score. Having only one type of credit account will lower it.
  • New credit (10%): People who open multiple new credit accounts in a short period of time are statistically riskier borrowers and are more likely to have bad credit.2
  • While your credit score gives you and lenders a quick indication of your credit standing, you don’t have to check your credit score to know whether you have bad credit. A few signs of damaged credit can include: 
  • Having your application for a loan, credit card, or apartment denied
  • Unexpected credit limit cuts
  • Interest rate increases
  • Receiving communications from a debt collector

If you’ve been more than 30 days late on a credit card or loan payment, or you have multiple maxed-out credit cards, your credit score has likely taken a hit. 

Ordering your credit score from is one of the best ways to confirm your current credit standing. There are also a number of free credit score services you can use to check at least one of your scores from the most widely used credit bureaus (Equifax, Experian, and TransUnion). 

Free credit score services don’t always provide a FICO score, and usually only supply a limited view of your credit. For example, you may only get a credit score from Experian and not TransUnion or Equifax.

To understand what’s affecting your credit score, you’ll have to take a look at your credit report. This document contains all the information used to create your credit score. 

Until April 2021, you can get a free weekly credit report from all three predominant credit bureaus through

How to Improve Bad Credit 

To improve your scores, start by checking your credit scores online. When you get your scores, you will also get information about which factors are affecting your scores the most. These risk factors will help you understand the changes you can make to start improving your scores. You will need to allow some time for any changes you make to be reported by your creditors and subsequently reflected in your credit scores.

Of course, certain credit score factors are typically more important than others. Payment history and credit utilization ratios are among the most important in many critical credit scoring models, and together they can represent up to 70% of a credit score, which means they’re hugely influential.

Focusing on the following actions will help your credit scores improve over time. A credit score reflects credit payment patterns over time, with more emphasis on recent information.

1. Pay Your Bills on Time

When lenders review your credit report and request a credit score for you, they’re very interested in how reliably you pay your bills. That’s because past payment performance is usually considered a good predictor of future performance.

You can positively influence this credit scoring factor by paying all your bills on time as agreed every month. Paying late or settling an account for less than what you originally agreed to pay can negatively affect credit scores.

You’ll want to pay all bills on time not just credit card bills or any loans you may have, such as auto loans or student loans, but also your rent, utilities, phone bill, and so on. It’s also a good idea to use resources and tools available to you, such as automatic payments or calendar reminders, to help ensure you pay on time every month.

If you’re behind on any payments, bring them current as soon as possible. Although late or missed payments appear as negative information on your credit report for seven years, their impact on your credit score declines over time: Older late payments have less effect than more recent ones.

2. Get Credit for Making Utility and Cell Phone Payments on Time

If you’ve been making utility and cell phone payments on time, there is a way for you to improve your credit score by factoring in those payments through a new, free product called Experian Boost.

Through this new opt-in product, consumers can allow Experian to connect to their bank accounts to identify utility and telecom payment history. After a consumer verifies the data and confirms they want it added to their Experian credit file, an updated FICO® Score will be delivered in real-time.

Visit now to register. By signing up for a free Experian membership, you will receive a free credit report and FICO® Score immediately.

3. Pay off Debt and Keep Balances Low on Credit Cards and Other Revolving Credit

The credit utilization ratio is another important number in credit score calculations. It is calculated by adding all your credit card balances at any given time and dividing that amount by your total credit limit. For example, if you typically charge about $2,000 each month and your total credit limit across all your cards is $10,000, your utilization ratio is 20%.

To figure out your average credit utilization ratio, look at all your credit card statements from the last 12 months. Add the statement balances for each month across all your cards and divide them by 12. That’s how much credit you use on average each month.

Lenders typically like to see low ratios of 30% or less, and people with the best credit scores often have very low credit utilization ratios. A low credit utilization ratio tells lenders you haven’t maxed out your credit cards and likely know how to manage credit well. You can positively influence your credit utilization ratio by:

  • Paying off debt and keeping credit card balances low.
  • Becoming an authorized user on another person’s account (as long as they use credit responsibly).

4. Apply for and Open New Credit Accounts Only as Needed

Don’t open accounts just to have a better credit mix it probably won’t improve your credit score.

Unnecessary credit can harm your credit score in multiple ways, from creating too many hard inquiries on your credit report to tempting you to overspend and accumulate debt.

5. Don’t Close Unused Credit Cards

Keeping unused credit cards open as long as they’re not costing you money in annual fees is a smart strategy, because closing an account may increase your credit utilization ratio. Owing the same amount but having fewer open accounts may lower your credit scores.

6. Don’t Apply for Too Much New Credit, Resulting in Multiple Inquiries

Opening a new credit card can increase your overall credit limit, but the act of applying for credit creates a hard inquiry on your credit report. Too many hard inquiries can negatively impact your credit score, though this effect will fade over time. Hard inquiries remain on your credit report for two years.

7. Dispute Any Inaccuracies on Your Credit Reports

You should check your credit reports at all three credit reporting bureaus (TransUnion, Equifax, and Experian, the publisher of this piece) for any inaccuracies. Incorrect information on your credit reports could drag your scores down.

Verify that the accounts listed on your reports are correct. If you see errors, dispute the information, and get it corrected right away. Monitoring your credit on a regular basis can help you spot inaccuracies before they can do damage.

Best Credit Repair Co, of 2020

Ovation Credit Services 


Your Credit Report might have inaccurate information impacting your financial life.

  • 79% of credit reports contain mistakes of some kind and could be affecting your credit score.
  • 25% of all credit reports contain errors serious enough to result in the denial of credit.

They would like to offer you a FREE Credit Consultation with a Professional Credit Analyst who will review your reports with you and get you set up on the path to a Better Credit Life. Simply fill out this form and one of our Credit Analysts will contact you to review your credit report.

Submit here

By submitting my information, I request and grant my consent to be contacted by a live phone agent or pre-recorded phone message, by email, or SMS text regarding credit repair. Submitting my personal information above constitutes my electronic signature.

    “This is the best Money that I ever spent. They are just awesome and for half the price of the competition.”

Javier Talavera


    “I had such a great experience with Ovation Credit Services. They were able to clear almost every negative mark off my credit and t went from a 395 to 650. I know it will keep going up if I pay a bill on time.”

Chris Beal


Sky Blue Credit 

Their Services: One Price. Every Feature

These services include everything you need to find and dispute errors on your credit reports and to make the most of your credit scores. There are no upgrades needed. There is no better value.

Pro Analysis 

Unlike some companies that provide no help selecting items to dispute, they identify even the most subtle dispute candidates for you.

Learn more: Benefits of Pro Analysis

Faster Disputes

They start fast and work smart. They dispute 15 items (5 items per bureau) every 35 days to deliver the best value in the industry.

Learn more: Faster disputes

Custom Disputes

Their customized dispute and re-dispute letters are designed to make the process as smart and effective as possible.

Learn more: Better disputes

Statute of Limitation Research

Collection accounts should not be disputed without knowing the SOL. Avoid issues and gain the advantage.

Learn more: SOL research

Score Assistance

Your credit scores matter! When we review your report, they will pinpoint specific actions you can take to optimize your scores.

Learn more: Personalized score guidance

Credit Rebuilding

They will give you the guidance you need to successfully open new credit cards and to manage the balances for the optimal FICO score benefit.

Learn more: Rebuilding for success

Extra Services

If you need it, they have you covered. Debt validation, goodwill letters, cease & desist letters, and debt settlement/negotiation consultations, as needed. No extra cost.

Learn more: Extra services and how they are used

Credit Saint 

What does the consultation include?

They will help recover your credit report and email it to you. Then they’ll go over the specific details of your credit history with you and identify what items in your history are damaging your credit. They will also analyze your positive credit and explain how to optimize your report using techniques for paying bills and opening or closing credit. You are billed nothing until this is complete and you’ve decided to move forward with our service. Truly no obligation. Whether or not you sign up, They bet you’ll learn something.

Help to Understand Your Credit

Credit damage is only half of what influences your credit report. You need to build a balanced report by continuously generating new months of positive history. They will show you how.

Their Services:

Best Bang for Your Buck 

Dollar for dollar Credit Saint will release more challenges for its clients than any other credit service company.

BBB rated A+ for 10 years

Google the other companies you are shopping against there. Many of them are either “Not Rated” NR status, or “F” Rated. 

They stand behind their work

If you don’t have deletions in the first 90 days you will get a full refund. 

Personal Service

You will get to know your team. They will be in touch with you to make sure you are taking the necessary steps to optimize your report while we work to correct the damage.

How It Works 

  • Credit Saint performs a full analysis of your credit history, challenges the damage you disagree with, and sets you up with a plan to build positive credit.
  • The credit bureaus investigate the challenges received and press your creditors to defend the items they placed in your history that you disagree with. During this period, you will be implementing our plan for building the necessary credit to boost your credit score.
  • The credit bureaus release new credit reports to show the changes made. Your account page at is updated with a progress report showing the overall changes. New challenges are released.

The right ways to get a loan with bad credit

1- Check your credit reports and credit scores

“If you don’t know where your finances stand, it’s best to do some personal digging to figure out what’s in your accounts,” says Cody Green, co-founder of USA Drives.

One way to find out what you owe on your current credit cards is by checking your credit reports (if your credit card issuer reports to the consumer credit bureaus). Checking your credit reports is important because some of the information contained in them is used to calculate your credit scores.

You’ll want to make sure there are no incorrect derogatory marks on your reports before applying for a loan. The three major consumer credit bureaus Equifax, Experian, and TransUnion aren’t perfect, so it’s important to read your credit reports carefully. If there are false negative marks, you should contact the specific credit reporting company generating the report along with the information provided to get the error removed.

Quick Tip

You can see what’s on your TransUnion® and Equifax® credit reports, as well as your credit scores from the two bureaus, by signing up for a free Credit Karma account.

Knowing your credit scores is important, too. Your credit scores, along with other factors, such as your debt-to-income ratio, can affect your approval odds for a loan and the terms you qualify for. Don’t be discouraged if your scores are not what you’d like. A little bit of work could help put your scores in better shape.

2. Improve your credit health

Once you have a better idea of your credit, it’s time to start improving your credit health. Your credit scores are calculated using different credit factors and scoring models. Try to focus on the factors with the most impact, like payment history, but do your best to improve your credit health overall. Factors that can impact your credit scores include …


  • Payment history: While you can’t change the past, making all of your current payments for at least the minimum amount and on time is key for this portion of your scores.
  • Credit usage: Do your best to keep the amount of debt you owe low compared to your total credit limit, ideally less than 30%. Maxed-out or over-the-limit lines of credit can be particularly harmful.
  • Length of credit history: Keeping old accounts open instead of closing accounts after they are paid off can help increase your credit history length.
  • Credit mix and types: While you shouldn’t apply for a new type of credit to influence this portion of your scores, it can naturally grow over time as you experience major financial events, such as buying a home.
  • Recent credit: Opening or applying for several new credit accounts in a short period of time can make you seem risky to lenders. Opening new credit accounts only when necessary and when you know you can handle them responsibly is usually the best bet.

3. Shop around with multiple lenders to compare options

Once you’ve worked on improving your credit health as much as possible ahead of applying for a loan, it’s time to start shopping around for the best loan for you. While some people may simply choose the first loan they’re approved for, that could be a major mistake.

Different lenders may offer varying interest rates and loan terms depending on their assessment of your creditworthiness and risk. Lenders have their own methods for evaluating these factors.

“While there is a selection of lenders and loan facilitators who can help low-credit applicants obtain affordable and reputable financing, not all loan features are created equally,” says Green.

For example, one lender may offer you a loan with a 20.99% annual percentage rate while another can offer you a loan with a 16.99% APR. If you don’t shop around and accept the first offer of 20.99% APR, you would be overpaying by 4 percentage points.

Shopping around for loans is easier than ever today thanks to the internet. While you should still check into your local options, such as banks and credit unions in your area, you can easily view the estimated loan terms of various online lenders in one place using Credit Karma.

4. Know the different types of loans you can consider

The types of loans you want to consider will vary based on your goals, but there are two major classes of loan products.

Unsecured loans, such as personal loans, can be used to refinance high-interest-rate debt, finance an unforeseen expense, or cover most other expenses you may want to finance. However, unsecured bad-credit loans usually have higher interest rates than secured loans and can be more difficult to obtain.

Secured loans, such as a home equity line of credit, are secured by collateral and may provide you with an alternative to an unsecured loan at a lower interest rate. However, secured loans put your collateral at risk of being repossessed if you don’t repay the loan as agreed. These loans can be easier to get than unsecured loans.

Whether you decide to apply for a secured or unsecured loan, you may want to consider loans that allow a co-signer. If you’re able to find someone with healthy credit to co-sign a loan, you may be able to secure a lower interest rate than by simply applying for the loan in your name alone.

5. Understand the types of loans to avoid

If you’re in the market for a loan, you should evaluate your finances to see how much you can afford to borrow responsibly. But even if you desperately need access to money, there are some types of loans you should do your best to avoid. For instance, payday loans and auto title loans often have short terms, high-interest rates, and high fees that can harm your finances.

When evaluating a loan, try to avoid loans that have high origination fees, steep fees or interest rates, and extremely short loan terms. These types of loans may aim to take advantage of people who desperately need the money and have few other options.

2 thoughts on “Bad Credit – How To Get Loans?

Leave a Reply

Your email address will not be published. Required fields are marked *