How to Apply for Loans With Bad Credit History

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It takes time to build a good credit report, so qualifying for a loan can be difficult if your credit record is in bad shape. In general, banks and government agencies reject loan applications from borrowers with bad credit, but there are other kinds of lenders that accept loans from these borrowers. In the Philippines, some moneylenders do not conduct credit checks or evaluations, others do but the borrower’s credit history or score is not the most important factor in loan approval or rejection. Thus, even if you have problems with your credit standing, you can still borrow money for any financial emergency. Here is a list of kinds of lenders that provide loans to Filipinos despite having a bad credit history.

Private Lenders

These private lenders which are also known as online lending companies offer a wide range of loans. It includes payday loans, salary loans, cash loans, instant loans, online loans, and emergency loans. All these loans require few qualifications and can approve and disburse immediately. These loan providers only require valid identification and a completed application form. The internet speeds up and simplifies the application process far more than traditional loans.

All you have to do is go to the lender’s website, fill out the form, upload the required documents and wait for the verification of the data. You can obtain the authorization in five to ten minutes and the money is available for withdrawal the same or the next business day.

Just take note though that your bad credit loan may be approved quickly but you will be charged a higher interest because of your high credit risk. Private lender loans have monthly interest rates ranging from 4 percent to 7.5 percent, making them more expensive than bank loans, which have monthly rates of around one percent.

5-6 Lenders

This 5-6 lending plan demands a very high interest of twenty percent that only those who have no recourse for borrowing opt for this scheme. Unfortunately, many Filipinos especially in the micro and small business sectors continue to borrow from them.


For those with a poor credit history, putting up an asset as collateral, such as jewelry or electronics, is another way to secure a loan in the Philippines. Pawn loans are secured loans obtained from pawnshops. These pawnshops will give you a loan without looking at your credit report but if you fail to repay your loan on time despite some who give payment period extensions, then the pawnshop will sell your pawned item to recoup its loss. 

Risks of Applying for A Loan With Bad Credit

Borrowing from lenders who offer bad credit loans is not only costly but also risky. You are expected to pay a high-interest rate plus the principal in a short period of time, typically one to 18 months. The repayments will consume a large portion of your monthly budget.

Your situation can quickly deteriorate into a debt trap if not properly managed. It’s even worse if you have a secured loan because you might lose your collateral if you don’t pay it back. Then it wreaks havoc on your credit history even more. As a result, the vicious circle continues. That is why it is important that you should consider the risks involved and your ability to handle your budget before applying for a bad credit loan. But if your only option is obtaining a loan on bad credit then here are some important tips to help you minimize the risks.

Spend some time reading reviews of companies that offer bad credit loans. To ensure that you are not dealing with scammers, go to the Securities and Exchange Commission (SEC) website. Check if the lender is SEC-registered.

Personal loan calculators are available on the websites of online lending companies. You can determine how much you can afford to borrow and check on the interest rate. Never lie on your application and always tell if you have a bad credit history.  Any inconsistency in your information will be easily detected by the lender, which will harm your chances of loan approval.

Submit all requirements and the application form. Loan applications that are incomplete are rejected. As a result, make certain that everything you submit to the lender is complete. Applying for multiple loans should be avoided as it can impact your credit report and score because of multiple credit inquiries.

If your bad credit loan is approved, take this opportunity to improve your credit score. Make sure to pay your monthly amortizations on time and if you are on the brink of defaulting on your loan,  talk to the lender about term extensions. Once you have successfully paid off your bad credit loan, you will have an easier chance to be approved for personal loans in the future.

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