Can You Get a Loan With a Credit Score of 450?

Written by Kale Havervold
Fact-checked by Caitlin Wood

Updated October 23, 2020

Can You Get a Loan With a Credit Score of 450?

Categories

Bad Credit Loans Credit Score Loan

Taking out loans is something most of us will need to do at some point in our lives. If you have a great credit report or a high credit score, securing a loan is often not a problem at all. Unfortunately, things can happen that can lower our credit scores. Whether it’s missed payments, carrying too much debt, or anything else in between.

To learn about consumer debt, click here.

If you have a low credit score, you might be wondering if it eliminates you from being able to get a loan in Canada. Thankfully, it doesn’t. There are bad credit loans that are accessible to all and some loans that don’t even require a credit check. So, what are these loans and how do you get them? Well, this article will answer that question and many more as we take a closer look at how to get a loan with a low credit score.

Want to know how applying for new credit affects your credit score? Check this out.

What is a Bad Credit Loan?

As you can likely guess, a bad credit loan is a loan that is accessible to those who have a bad credit. The term “bad credit” is subjective, but here is a quick guide that you can follow to see where you are at. Generally, bad credit scores range anywhere from under 500 up to about 620. In the 600s is about average and in the low-mid 700s is good, with the high 700s and above considered excellent.

Generally, bad credit can make it more difficult to get standard loans from banks or other more traditional lenders, as they will generally use your score and credit report as one of the biggest indicators of your financial stability. So if your score is low, they might not consider you. However, today’s alternative lenders aren’t quite as strict as they once were, so most people with a low credit score will actually have a variety of different options.

Here are some ways of increasing your credit score immediately.

What Are the Different Types of Bad Credit Loans?

Personal Loans

The option you choose will depend on your situation. Many lenders will offer standard personal loan to those who have a bad credit. Sure, the interest rates might be a little higher and the rules a little tighter, but getting a loan with a low credit score is definitely easier now than it has been in the past.

Secured Loans

Another option you can choose is a secured loan. These will often have lower rates, but you will need to put some form of security, typically your home, a piece of property, or your vehicle as collateral. However, these are quite risky as you could potentially lose your home or vehicle or if you default on your loan.

Guarantor Loans

If you don’t have any collateral to offer, but you’d still like to avoid the high interest rates that come with an unsecured loan, you can also apply for a guarantor loan. Here, your credit would not typically be a factor. Instead, you’ll need to seek the help of a co-signer, someone with better credit and healthier finances, and who would willingly take on the responsibility of your payments in the event that you can’t afford them. Having a guarantor on your side can be extremely beneficial, because this will allow you to access a loan without your own credit being checked (the co-signer’s credit will be checked instead), but you’ll still be able to build and improve your credit as long as you’re making payments on time and in full.

Not sure if a guarantor loan is the right option for you? Make your decision easier after reading this. 

Payday Loans

Of course, another option is to go with a payday loan, but this should really be the last option for most people. These are often seen as predatory as they are designed for people who have bad credit. Sure, they can get you money incredibly fast and are a decent option if you need emergency money quickly, but these often come with massive interest rates, so be sure to think of other options before you agree to go to a payday lender for your loan.

Need debt relief for your payday loans? Click here.  

There are other options, but these are the most popular. As you can see, there are plenty of loan options for those with bad credit. Whether these loans require a credit check or not will depend on your unique situation, as well as which lender you decide to work with.

What Do These Lenders Look at Instead of a Credit Score?

So, if these local or online lenders that offer bad credit loans don’t pay any mind to your low or bad credit, what do they look for? Well, this will, of course, depend on the lender. Many of them will actually look to ensure you have a decent steady income and if you do, they will likely be willing to provide you with a personal loan. They will also look at your financial and life situation, as well as enquire about what you need the loan for.

Of course, if you go with a secured loan, they will use your car or home for collateral, which means they don’t really care about your credit score, as the collateral makes you a less risky investment for them.

What Can You Use a Bad Credit Loan For?

Just like a standard loan, you can use a bad credit loan for anything you can think of. If you need money for an emergency, for car repairs, to cover this month’s bills or anything in between. Keep in mind, just because it’s possible to get a loan when you have bad credit, it doesn’t mean you definitely should. Regardless of your credit, loans can be expensive and you should only get a loan if you need it and not just to have some extra cash kicking around.

Of course, some lenders will want to know why you need the loan in order to decide if they want to take the risk, while others will treat this similar to a standard loan that anyone can get, and won’t ask too many questions. Each lender is different, so do some research on which lender to work with and reach out to them if you have any questions.

Trying to get a loan without employment verification? Read this.

Why Do People Require a Bad Credit Loan?

Just because you have a low credit score doesn’t mean you are immune from many of the situations in life that most people go through. You still have emergencies pop up, you probably still need a car and a place to live. As a result, loans are sometimes needed, no matter your financial situation.

And since a bad credit can sometimes disqualify you from getting approved for certain types of loans from certain lenders, many people need to find alternatives lenders who specialize in working with bad credit borrowers. And bonus for those with bad credit, these types of loans can often help you rebuild your credit.

How Can You Use a Bad Credit Loan to Improve Your Credit?

One of the better ways to improve your credit is to show that you can handle credit responsibly and pay your bills on time. As a result, using a bad credit loan responsibly can actually help build up your credit back to an average or even great level.

Experienced a late payment? Click here for more ways to rebuild your credit.

You also want to verify that the lender is reporting to the credit bureau to ensure you are being recognized for the good work you are doing at trying to rebuild your credit. Of course, if you have other things holding your credit back such as a high utilization or outstanding payments, you should be sure to take care of those to ensure that your credit score will grow.

Final Thoughts

Yes, you can indeed get a loan with a less-than-perfect credit score like 450. While there might be a few more restrictions and rules and you generally won’t get as good an interest rate as someone with a score of 700+; these bad credit loans are easily attainable from many different lenders. Also, having these bad credit loans and keeping on schedule with the repayments can actually help you raise your credit score so you will have an easier time getting a loan in the future.