Best Bad Credit Loans in Canada

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Last updated on October 2, 2020

Compare personal loan rates for borrowers with bad credit in Canada. It’ll be more difficult for borrowers with bad credit to get fair interest rates, terms, and conditions than people with good or excellent credit scores.

Everyone goes through a rough financial patch in life. Perhaps a life circumstance forced you to miss a couple of payments on a credit card, or a sudden job loss forced to you to run up debt that you didn’t anticipate. As a result, your credit score may have slipped well below 600, to a place defined as bad credit. Just because you have bad credit doesn’t mean you can get a loan to help you get out of the hole. In fact, hundreds of people get bad credit loans in Canada every year, and use them as a step up to consolidate debt, improve their financial situation and grow their credit again. If you’re in need of funding, here are the best bad credit loans in Canada you can shop for.

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The Best Bad Credit Loans in Canada

If your credit score is below 600, but are in a pinch and need money, there are several companies that will help you with a loan. Below is our list of the best bad credit loans in Canada.

Refresh Financial

refresh financial

If you are looking for a loan to help build your credit file, Refresh Financial offers loans for that specific purpose. Through their Credit Builder program, you can apply for a credit builder loan up to $25,000 at an interest rate of 19.99%. You can access the money at any time, and the payments are reported to the credit bureaus – helping you build your credit file, and helping you qualify for better loans over time.

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SkyCap Financial

What makes SkyCap Financial special is their dedication to their customers. In addition to providing bad credit loans in Canada, the platform also offers their proprietary budget software, SkyCap University, to help borrowers better understand their relationship with their money. Borrowers can get up to $10,000 with an interest rate as low as 12.9%. Repayment terms are over three years, with affordable payments.


One of the biggest banks offering personal loans, FerratumMoney operates across Canada, and 23 other nations. What makes FerratumMoney one of the best bad credit loans in Canada is their relatively low interest rates and fee-free structure. Borrowers can get loans starting at 18.9% interest in as little as 24 hours after approval. And with their fee-free structure, you can make extra payments or pay off the loan early without any penalties.


MagicalCredit specializes in bad credit loans in Canada, offering loans to people working or receiving government subsidy. Interest rates range from 19.99% to 46.8%, with terms between 12 and 60 months. The application only takes five minutes, and once approved you can get money deposited to your account within 24 hours. Through their surprise-free system, you can make sure you make your payments on time, helping your credit score grow.


Fairstone offers bad credit loans in Canada through their website, or in person at over 240 branches across the nation. For those unsure of how much they qualify for, their website offers a loan quote option, letting you know how much you qualify for without a credit check. Interest rates start at 19.9%, with loan terms ranging from as little as six months, all the way out to 10 years.


Available in only four provinces (Alberta, British Columbia, Ontario and Saskatchewan), LendDirect offers bad credit loans in Canada for a number of reasons. Borrowers can receive an open line of credit of up to $15,000 at interest rates starting at 19.99%. If you want less of a loan and more buying power to help you achieve your financial goals, LendDirect offers an alternative which can help your credit grow.

What is Considered Bad Credit in Canada?

From the moment you open your first bank account, credit bureaus start building a file based on your consumer habits. Both Equifax and TransUnion Canada continually monitor your credit habits, including the number of accounts you open, the balance on each credit card and loan you hold, and what kind of accounts you hold.

Based on these factors, both credit bureaus will put together a credit score: A numerical representation of how you manage your credit. Canadian credit scores range from 300 to 900, with higher being better. If your credit score is over 800, you are considered to have “Super Prime” credit, and may easily qualify for the best credit cards out there.

If you make payments on time every month, keep credit card balances low, and maintain a healthy debt-to-income ratio, then your credit score will continue to increase. But missed payments, high credit card balances, or accounts closed by the bank can cause your credit score to go down.

If you have a credit score under or around 600, you may be considered to have “bad credit.” Getting a bad credit score isn’t caused by missing one or two payments, or allowing one account to go delinquent. Rather, the worst credit scores are caused by a series of actions and events which may or may not be out of your control.

The good news is that bad credit isn’t forever. By understanding your credit score and how your credit is affected by situations in your life, you can work to improve your score and earn better rates on loans and credit scores.

How is my Canadian Credit Score Determined?

According to Equifax Canada, your credit score is determined by five factors on your credit report:

  • Payment history to debtors: credit cards, loans, mortgages, etc.)
  • Used credit vs. Available Credit: high credit card balances
  • Length of your credit history: older is better
  • Public records: Loans in default, liens against your property, or legal decisions against you
  • Number of credit file inquiries: how many hard credit pulls you have had in the last two years.

From there, the information in your credit file is weighted based on importance. The biggest impact on your credit score is your payment history. If you have a good payment history, your credit score will be higher – but if you’ve missed a few payments or had an account fall into default, it will go down.

Your available credit is the second most important factor in your credit score. If your credit cards are maxed out, it will be lower than someone who has more available credit. The length of your credit history and public records are less important, but can still bring your credit score down. A history of delinquent payments or bankruptcy can cause your credit to drop significantly. Finally, your inquiry history is the least important factor in your credit score, but that doesn’t mean you should apply for all kinds of credit. A long list of credit request suggests to lenders that you are playing fast-and-loose with your personal finances, making them weary of extending you credit.

Although both credit bureaus use similar formulas, your credit score may not be the same at both places – which is perfectly normal. Because both companies interpret and collect information differently, it’s not uncommon to have your credit score be higher at one place over another.

How Do I Get My Credit Score?

If your banking institution doesn’t already offer credit monitoring, there are several ways you can get your credit score. From going directly to the credit bureaus, to using a free service, you should be monitoring your credit score regularly.

For a free credit score, we recommend Credit Karma. Credit Karma is a free service backed by personal finance giant Intuit, which provides a free credit score from both Equifax and TransUnion. The only downside is how they create your score. Because Credit Karma uses a different credit score model than Equifax and TransUnion, your actual score may be higher or lower than what it shows online.

If you want to get your true credit score, you can buy credit monitoring services from both Equifax and TransUnion. Although these services range cost around $20 per month, it may be worth it if you need to get your actual credit score before a major purchase.

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