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Loan Options for Those with Poor Credit

A poor credit history can include missed payments, charge backs, bankruptcies, and unpaid loans. Repairing a bad credit history often takes time, diligence, discipline and adequate income. Obtaining credit and loans with blemished credit can be difficult to impossible. When financial emergencies arise, those who need to borrow funds can be at a loss. Short of asking others for assistance, individuals in a financial bind with bad credit history can find out details about payday loans. These are short-term loans that are made based on the fact the borrower will receive the funds in the form of a paycheck within the coming weeks.


When someone with a poor credit history is in need of extra money to cover expenses, there are limited options. Those options include unconventional loans, savings, or seeking assistance from others with available funds. Payday loans fall under the umbrella of unconventional financing, since these loans do not require the same standards as conventional financing. Unconventional loans also have different interest rates and different payback terms. For instance, an unconventional loan can have a higher interest rate or start out with a lower interest rate, with substantial rate increases over the life of the loan.

Payday Loans

Payday loans are given based on the borrower’s expected income. The amount the borrower is given is typically less than a conventional loan. A payday loan can be less than a thousand dollars, with the expectation the amount will be paid back within two weeks. The interest rate on the borrowed money can be high – much higher than even a regular credit card. Those with poor credit histories are willing to pay the higher rates due to the convenience of being able to be approved with less scrutiny. Furthermore, the need for money to cover expenses outweighs the higher charges.

The decision to take out a payday loan should be made with caution. Extreme emergencies and cases where there is not another viable alternative are sound reasons to make this type of choice. The borrower should be confident future income will be able to cover the cost of the loan. Taking out multiple payday loans over time can create further complications for the borrower and the borrower’s long-term credit history.