A hardship loan with bad credit is a short-term loan designed to help you cover an unexpected expense when your credit score isn’t strong enough for traditional financing. If you’re dealing with a financial emergency, like a surprise car repair, medical bill, or overdue utility payment, having bad credit can make the situation feel even more stressful. That’s when hardship loans can help. They’re meant to bridge the gap when money is tight and options are limited.
These loans can be helpful, but it’s important to understand how they work, especially if you’re already navigating life with bad credit. Interest rates may be higher, terms can vary widely, and not every lender is looking out for your best interests. The good news? With the right information, you can compare your choices, spot the red flags, and decide whether a hardship loan is actually the right move for you.
How To Get a Hardship Loan With Bad Credit?
You can get a loan for financial hardship with bad credit by applying with a bank, credit union, or online lender. If you’re wondering how hardship loans work, know that the approval process is generally quick and easy. Here are some hardship loan basics to keep in mind:
- Research Lenders — Do research on various lenders to find the best one for your financial needs. Remember that every lender has different qualification requirements and loan terms.
- Submit an Application — Apply directly with the lender by submitting basic personal information about yourself, your income, and your loan needs. If you earn money through multiple sources, ensure that you add all income sources.
- Get Funds — The lender will verify your information and make an approval decision. If approved, you can typically get your money within one business day.
If you’re looking for payday alternative loans, consider a CreditNinja personal loan. We don’t require a minimum credit score and our rates are competitive. If you are eligible, you could get same-day funding in your bank account!*
How Does a Hardship Personal Loan Change With Bad Credit?
Hardship loans for bad credit borrowers generally have flexible qualification requirements. Most lenders only require a reliable source of income and an active checking account for approval. However, a hardship loan bad credit option is risky for the lender, so borrowers should expect to get high APRs.
There are secured vs unsecured hardship loans. If you have bad credit, you can look into secured hardship loans, which require collateral, to get a lower interest rate. However, secured hardship personal loans are financially risky because you can lose your asset if you default.
What Are Different Types of Hardship Loans?
These are a few popular types of hardship loan options available:
Credit Union Loans
Credit union loans are offered by credit unions. Credit unions may offer lower interest rates than other financial institutions, but you typically need to be a member to apply.
Online Installment Loans
Online installment loans are payday alternative loans that can provide up to several thousand dollars in emergency cash. However, the interest rate you get will depend on your credit score.
Payday Loans
Payday loans are short-term loans that are typically repaid in one single payment by your next payday. While convenient, these loans can be challenging to repay due to high interest rates and fees.
Employer Loans
Employer loans are provided by your employer and deducted from future paychecks. Loan terms may be better than other financial institutions, but borrowing from your employer can result in potential workplace friction.
Credit Card Cash Advances
Credit card cash advances are loans taken from your existing credit limit. These loans can provide up to a few thousand dollars in emergency cash. However, cash advances have significantly higher APRs and fees.
What Are the Risks and Costs of Getting Hardship Loans?
Hardship loans can be incredibly useful during a financial crisis. However, there are disadvantages to consider before applying. Here are some hardship loan risks to consider:
| Risk | Impact |
| High Interest Rates | Hardship loans often come with significantly higher APRs, making them an expensive hardship loan option compared to traditional personal loans. |
| Additional Fees | Borrowers may face origination fees, late fees, or prepayment penalties, increasing the overall cost of borrowing. |
| Short Repayment Terms | Many hardship loans have short repayment periods, which can result in high monthly payments and make budgeting difficult. |
| Risk of a Debt Cycle | If a borrower can’t keep up with payments, they may take out more loans to cover expenses, creating a cycle of debt. |
| Impact on Credit | Missing payments can worsen a borrower’s credit score. This is especially concerning for borrowers already dealing with bad credit. |
| Aggressive Collections | Some lenders may use aggressive collection practices if payments are missed, adding stress and financial pressure. |
| Limited Consumer Protections | Depending on the lender, hardship loans may lack transparent terms or strong consumer protections, leading to unfair lending conditions. |
| Not a Long-Term Solution | These loans may offer short-term relief but can worsen financial instability if used repeatedly. |
How To Apply Safely
In order to safely apply for a hardship loan, it’s critical to thoroughly vet lenders before filling out a loan application. You can verify legitimacy by checking their registration with state and national regulators, reading online reviews, and verifying the security of their website. For example, legitimate websites use “HTTPS” before the URL, which helps ensure your information is encrypted.
Once you find a legitimate lender that matches your financial needs, you can start a loan application by completing these steps:
- Apply with the Lender — You will need to provide basic personal information, such as your name, birth date, monthly income, and Social Security number. Some online lenders usually require you to complete a bank verification process, which means you need to link a bank account.
- Get Approval — The lender will verify your information to make an approval decision. Most hardship lenders consider various factors, such as your creditworthiness, payment history, debt-to-income ratio, and more. This step may only take a few minutes.
- Sign the Agreement — If you are approved, the lender will send you a loan agreement with your proposed loan terms. Remember to read the agreement carefully and ask questions if anything is unclear. Once you fully understand your financial obligation, go ahead and sign the agreement.
- Get Your Money — After signing, you can typically get your loan money directly deposited into your bank account in as little as one business day!
How Do Hardship Loans Affect Your Credit?
Hardship loans can negatively impact your credit score if you make late payments. Therefore, it’s critical to pay on-time every month. One way to do this is by signing up for automatic payments through your online loan account. By continuously paying on time, it’s possible to improve your credit within a few short months!
The three major credit bureaus, TransUnion, Equifax, and Experian, all offer free credit scores and/or credit reports if you sign up for a free membership. You can use these websites to periodically check your credit fluctuation. Most major credit card issuers also provide free access to credit scores as well, such as Discover, American Express, and Wells Fargo.
FAQ
Does CreditNinja offer hardship loans?
CreditNinja does not offer hardship loans, but we do offer unsecured personal loans. Our loans range from $300 to $5,000 and we do not require a minimum credit score for approval.
What is a hardship loan with bad credit?
A hardship loan is a loan meant for bad-credit borrowers who struggle to get funding from traditional financial institutions.
What can hardship loans be used for?
Hardship loans are versatile and can be used for all kinds of financial hardship situations. People typically use them for house or car repairs, medical bills, debt consolidation, and more.
Do hardship loans hurt your credit?
Applying for a hardship loan may hurt your credit because of hard credit inquiries performed during the approval process. However, inquiring about preapproval may not affect your credit because you may only need to agree to a soft inquiry.
What are the risks of hardship loans for bad credit?
If you get a hardship installment loan, it’s critical that you make timely payments. Late payments could appear on your credit report and further damage your bad credit. But on-time payments could boost your credit over time and help you build a good score.
Are there alternatives to hardship loans for people with bad credit?
If you have bad credit, there are various alternatives to hardship loans. You could apply for an unsecured or secured personal loan, home equity loan, credit card cash advance, or credit union loan.
How fast can I get a hardship loan with bad credit?
Hardship loans typically provide funding in as little as one business day. Most lenders will directly deposit funds into your bank account using the Automated Clearing House (ACH) network.
