If you have bad credit and are in need of financing, you may be concerned that your poor credit profile will get in the way of securing a loan. In this situation, you may want to seek out bad credit loans. More specifically, you may want to look for lenders that guarantee loan approval. The question is, do guaranteed approval loans exist, and are they legitimate?
Key Points
1. Guaranteed approval loans are not exactly legitimate and should be approached with caution when a lender guarantees loan approval without any vetting.
2. Legitimate lenders will always vet loan applicants to some extent, particularly regarding minimum income requirements.
3. If you have poor credit, you can still get approved for a loan with online or alternative lenders who may not have any credit requirements, though approval is not guaranteed.
Can You Get Guaranteed Approval Loans For Poor Credit In Canada?
Legitimate lenders will never guarantee loan approval without some sort of vetting process. Only fraudulent lenders will promise “guaranteed approval loans,” particularly to bad credit borrowers who may have difficulty accessing credit through conventional means. Other than that, guaranteed approval loans are not offered by reputable lenders.
That said, there are lenders who do offer loans to those with poor credit. These lenders place more emphasis on your income and overall financial health than your credit score.
What Does “Guaranteed Approval” Actually Mean?
When a lender advertises a guaranteed personal loan in Canada, it rarely means what it sounds like. In almost every case, guaranteed loan approval is a marketing phrase for more flexible approval criteria, not a promise that every application will be accepted. In fact, many loans advertised as guaranteed approval still run a credit check or verify your income before saying yes.
The honest truth is that no reputable lender can promise approval before seeing your application. What a good lender can do is look beyond your credit score and focus on whether your income can comfortably support the payments. So while true guaranteed loan approval does not exist in Canada, loans with easier, more flexible requirements absolutely do, and those are what you should be looking for.
How To Check If Your Lender Is Legitimate
Always vet a lender before you sign anything or provide sensitive personal or financial information. The easiest way to do this is to use the internet.
- Do an online search. Start by checking the lender’s online ratings, including Google Ratings and Better Business Bureau (BBB) ratings. Scan reviews to see if there are any complaints registered against the lender. If there are lots of bad reviews, you may want to look elsewhere.
- Check for a lender license. You might also want to verify whether the lender is licensed, especially if you are dealing with a high-cost lender, such as a payday lender. These lenders are required to have an active license in the province where they lend. You can find their license number on their website or storefront, or by checking the search directory on the respective provincial government website.
Best Legitimate Lenders For Poor Credit
Filters
Can I Be Refused A Payday Loan For Any Reason?
While guaranteed approval loans are not exactly legitimate, there are some lenders available that do not turn you down solely because of poor credit. Known as “no refusal payday loans,” these small, short-term loans do not require a credit check.
That said, you will still need to meet other criteria, such as minimum income requirements. After all, you will still need to show the lender that you have the financial capability of covering your loan payments. No refusal payday loans simply mean you will not be denied a loan strictly because of a bad credit score, but you may still have to meet other loan criteria, as mentioned.
Can I Get An Instant Loan In Canada?
Yes, instant loans are available in Canada, though they do not guarantee approval. With an instant loan, you will be provided with funds almost immediately after you have been approved. While it often takes days for traditional lenders to process loan applications, instant loans are typically approved and funded within hours.
However, instant loans are not guaranteed. You will still need to meet other requirements, particularly regarding your income.
Loans That Come Closest To Guaranteed Approval
While nothing is truly guaranteed, a few types of loans are among the easiest to get approved for, even with bad credit. These lenders lean on your income and other factors rather than your credit score, and some will even offer loans without employment verification. That is why you will often see them advertised with guaranteed loan approval for bad credit.
| Loan Type | Why Approval Is Easier | Keep In Mind |
|---|---|---|
| Payday loan | Usually no credit check; based on your income | Very expensive, so use it only as a last resort |
| No credit check loan | Verifies your income instead of your credit | Advertised as guaranteed loan approval with no credit check, but rates are higher |
| Secured loan | Collateral lowers the lender’s risk | Your asset is at risk if you default |
| Guarantor or co-signer loan | A co-signer’s good credit backs your application | Your co-signer is on the hook if you cannot pay |
| Cash advance app | Small, interest-free advances with light verification | Only small amounts are available |
None of these are truly guaranteed, but each removes a common roadblock, so they are worth considering when your credit is the main barrier.
Is There Any Way To Guarantee Loan Approval With Poor Credit?
As mentioned above, there is no way to guarantee loan approval, but there are many ways to increase your chances of qualifying for one. Essentially, you need to make yourself as creditworthy as possible, and thankfully, there are several ways of doing this.
Improve Your Credit Score
If you have time and are not in a rush for some extra money, consider taking a few months to give your credit score a boost. Your credit score is a key factor that lenders examine when you apply for a loan, and it is an indication of the likelihood that you will make timely loan payments.
While some lenders do not check your credit, improving your score is still a good way of gaining fast approval and securing a lower interest rate.
How To Improve Your Credit
Some ways to improve your credit score are as follows:
Ways To Improve Your Credit
- Make timely, full payments for all your outstanding credit products.
- Reduce your credit utilization ratio to 30% to 35% of your available credit. Your credit utilization ratio is the amount of credit you are using relative to the total amount you can access.
- Review your credit report at least once per year with Equifax and TransUnion, and dispute any errors you find that could be damaging your credit scores. You can check your credit score and report through Loans Canada’s Compare Hub.
- Keep new loan applications to a minimum.
- Keep old credit accounts open to extend the length of your credit history.
While it may take some time, the benefits of having healthy credit will be worth the time and effort.
Add A Cosigner To Your Loan
Adding a cosigner to your loan can increase your chances of securing a loan quickly. Their role is to cosign the loan, meaning they promise to repay the debt if the primary borrower defaults. This reduces the lender’s risk, and as such, makes it easier for you to get approved. However, the cosigner is on the hook for the loan if you default.
Note
Before adding a cosigner to your loan, make sure your cosigner is aware of the consequences of you defaulting. A lack of understanding can lead to severe damage to both of your financial and credit profiles.
Reduce Your Debt
Not only can bad debt ruin your finances, but it can also get your personal loan application rejected. Most lenders will evaluate your overall finances, including your debt levels, particularly your debt-to-income (DTI) ratio, which is a measure of your debt relative to your income.
Generally speaking, a DTI of no more than 44% is acceptable to lenders. If your DTI ratio exceeds this level, take some time to pay down your debt to lower this ratio.
What To Do When You Need Access To Fast Cash
Traditional lenders, like banks, tend to take longer to provide loan approval and funding compared to non-conventional lenders, like online and subprime lenders. Going the traditional route for funding typically means waiting days and even longer before you see any money.
Instead, you may have some luck securing loan approval and accessing your funds in as little as the same business day when you apply for a loan from an online or alternative lender. Here are some advantages to applying for a loan with these types of lenders:
- Flexible loan requirements. Unlike banks that put a great emphasis on credit scores, bad credit lenders assess your eligibility on other factors. These include your income, employment stability, and DTI ratio.
- Easy application. Traditional banks require a lot of unnecessary paperwork that can make the loan application process a nightmare. Instead, bad credit lenders are designed to get you cash when you need it. Applications are often very simple and only take a few minutes to complete.
- High approval rates. A bad credit lender’s whole business relies on providing loans to borrowers with less than perfect credit. As such, their approval rates are much higher than traditional banks.
- Fast approval and funding. Many online lenders who work with bad credit borrowers can provide loan approval within a few minutes of application submission. Funding can then be made accessible within hours of approval, often on the same day. This is great for those who need extra cash urgently.
- Build credit accepted. When you have bad credit, it can be hard to rebuild your credit score because the banks are not willing to work with you. Alternative lenders give you the opportunity to rebuild by giving you access to different credit products.
Learn more: Personal Loan Eligibility Requirements For Bad Credit Lenders
Can You Get An Emergency Loan With Bad Credit?
Yes. When an unexpected cost hits, such as a car repair or a medical bill, an emergency loan can get you funds fast, even with bad credit. You will often see these advertised as emergency loans for bad credit with guaranteed approval, but the same rule applies: no lender approves everyone. What makes them accessible is that online and alternative lenders focus on your income and can frequently approve and fund you the same day.
To give yourself the best shot, apply with a lender that clearly works with bad credit, borrow only what you can comfortably repay, and have your income documents ready before you apply. And if your situation allows for even a little time, a small boost to your credit score can help you qualify for a lower rate.
Are Guaranteed Approval Loans For Poor Credit In Canada A Scam?
This is where credit users need to be cautious. No loan can be legitimately 100% guaranteed.
Some “lenders” may offer this, but beware. They may be scam artists who prey upon those desperate for loans. Scam artists are getting more creative all the time. They can be extremely convincing, so it is important to do research when comparing lenders in Canada.
How To Spot A Loan Scam
Offering guaranteed approval is one way that scammers attempt to take advantage of you. Here are a few signs that the lender you are dealing with is a scammer.
Warning Signs Of A Loan Scam
An upfront loan insurance fee is demanded. One way scammers try to manipulate you is by claiming they are risking something by taking you on as a client, so they demand an advance loan insurance fee upfront in exchange for that “risk.” In Canada, it is illegal for a lender to ask for any upfront fees for a loan, so you are likely dealing with a scam.
You are pressured to apply immediately. Legitimate lenders must follow the laws that govern lending in Canada, and no legal lender is allowed to use forceful or threatening language or pressure you to surrender your personal or banking information. Walk away if you feel pressured to sign on.
The funding methods are suspicious. Most lenders offer a few ways to receive your money, with e-transfer and direct deposit being the most common. If a lender asks for your online banking login so they can “deposit” money, or wants to give you your loan via gift cards, it may be a scam.
For more on how these schemes work, see how to protect yourself from loan insurance scams.
Bottom Line
Guaranteed approval loans may sound tempting, especially if you are struggling to get approved for a loan, but they are far from legitimate. That is not to say you cannot find loans for poor credit. As mentioned, there are many lenders in Canada who cater to those with poor credit, allowing you to get your hands on much-needed funds without having to meet the strict credit requirements that are typical of traditional lenders.
Guaranteed Approval Loans For Poor Credit In Canada FAQs
Yes, bad credit will affect your ability to get approved for a loan, especially with traditional lenders. However, if you apply with a private, alternative, or bad credit-specific lender, your chances will be higher.
There is a difference between the promise of a personal loan guarantee and instant loan approval. Lenders who promise 100% approval are likely pulling a scam. However, if you apply with the right lender, same-day approval is possible.
As mentioned, there is no such thing as guaranteed loan approval. However, there are legitimate lenders out there who do provide personal loans without checking your credit as part of their application process, so it is possible to get a loan with no credit score. You can also apply for a guarantor loan, wherein the credit of your co-signer or guarantor will be checked in your place.
Personal loans are typically available for loan amounts between $500 and $35,000. However, bad credit borrowers generally have a harder time getting approved for higher loan amounts, though the exact amount you may qualify for depends on your finances and the lender you apply with.
While bank accounts are a typical requirement for loans, some lenders provide funding to those without an account. These are known as no bank account loans. You will still need to prove that you earn enough to cover loan payments and demonstrate reliable income and employment.
®Fairstone Financial Inc. is a wholly owned subsidiary of Fairstone Bank of Canada.
*Interest rates are subject to change. Actual Annual Percentage Rate (APR) varies based on the province of residence and individual factors like credit details and loan amount. The interest rate on an unsecured personal loan is 31.99% in BC.
†On approved credit. Terms and conditions apply. Interest rates vary by province/territory and from customer to customer based on factors like credit score and borrowing history. See Fairstone’s website for details.
Fairstone Financial Inc. holds high-cost credit licenses in AB, MB (License #85047, expiring 20-02-2026) and QC; it has applied for a high-cost credit grantor license in NL. For license information by province, visit Fairstone.ca/HCCG
In Ontario, Fairstone Financial Inc. is licensed as mortgage brokerage 10821.
In Nova Scotia, Fairstone Financial Inc. is licensed as mortgage lender #2021-3000028.
