Bad Credit Loans in Canada

A bad credit loan is a loan offered to borrowers with a low credit score, past defaults or a thin credit file. In Canada, these loans exist, but they usually cost more because the lender is taking on more risk.

By Promissory.ca Editorial Team Reviewed against official Canadian sources Last updated: 2026-09-16

What bad credit loans are

Lenders price risk. When your credit history shows missed payments, defaults or high utilization, lenders charge a higher interest rate or require a co-signer or collateral. Some lenders specialise in bad credit lending; others will decline and you may need to rebuild your credit first.

Eligibility

You meet the age of majority in your province
You have verifiable income, even if your credit history is damaged
You can provide ID, proof of income and banking information
You may need a co-signer, guarantor or collateral for better terms

How it works

Check your credit reports from Equifax and TransUnion for errors before applying
Pre-qualify with a soft check where available so your score is not affected
Compare the APR and total cost, not just the monthly payment
Consider a secured loan or a credit-builder product to rebuild history
Make every payment on time — payment history is the largest scoring factor

What to watch for

A higher risk profile means a higher rate; compare the total cost of credit
A co-signer can lower your rate but takes on the risk of repayment
Guaranteed-approval claims are a red flag — no legitimate lender guarantees approval
Never pay an upfront fee to a lender before funds are advanced

Frequently asked questions

Can I get a loan in Canada with bad credit?

Some lenders in Canada work with borrowers who have damaged credit, but rates are usually higher. Availability and terms depend on your income and the lender's criteria.

Will applying for a bad credit loan hurt my score further?

A hard credit inquiry can lower your score slightly. Pre-qualification with a soft check does not. Limit the number of formal applications you submit.

How can I improve my credit score while repaying a loan?

Make every payment on time, keep your credit utilization below about 30% of your limits, avoid new applications, and check your reports for errors.

Is a secured loan easier to get with bad credit?

Secured loans are often easier to qualify for because the lender holds collateral, but you risk losing that asset if you default.

Related tools and guides

Calculators

Guides

Find bad credit loans by province

Important legal information

Promissory.ca is not a lender, bank, mortgage broker or credit counsellor. We do not make lending decisions and we do not charge you a fee to use this service.

Submitting an application does not guarantee approval. All applications, rates and terms are set and approved solely by the individual lender or licensed professional.

Rates, fees and loan amounts vary by lender, province, loan type and your credit profile. Advertised rates are the lender's lowest offered rate and may not be available to you.

Lenders may perform a credit check with one or more credit bureaus, including Equifax and TransUnion. A hard credit inquiry may affect your credit score.

There is no obligation to accept any offer presented to you. Review every agreement carefully before signing.

Borrow only what you can reasonably afford to repay. Late or missed payments may result in additional fees, collection activity and negative credit reporting.

We handle personal information in accordance with the Personal Information Protection and Electronic Documents Act (PIPEDA). See our Privacy Policy for how we collect, use and protect your information.

If you are struggling with debt, consider contacting a non-profit credit counselling service or a Licensed Insolvency Trustee before borrowing more.

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Options from our Canadian lending partners. Promissory.ca is not a lender and does not make lending decisions.

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Affiliate disclosure: Promissory.ca is a free comparison and referral service. We may receive compensation from lending partners when you click a partner link or submit an application. This compensation does not affect the information or comparisons we publish.

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