Bills Logo

Bad Credit - Loans, Help, and Bad Credit Home Loans Advice

Bad Credit - Loans, Help, and Bad Credit Home Loans Advice
Daniel Cohen
UpdatedDec 8, 2016
  • clock icon
    9 min read
Key Takeaways:
  • Bad credit can be financially debilitating - so fix bad credit.
  • Start by pulling credit and knowing why you have bad credit.
  • Restore your credit quickly and get access to loans even with bad credit.

Bad Credit Loans, Debt Help, and Advice to Improve Credit

Bad credit can impact you in many ways.

A low FICO score leads to getting turned down for loans. If you do qualify, you'll get a high interest rate or get hit with extra fees. This applies to unsecured loans and also car or mortgage loans. 

If you have bad credit, there are things that you can do today to make things better. Make a goal to get debt free and establish a good track record of payment history.

No matter how bad your credit is today, it's never too late to start rebuilding your bad credit and turn your credit problems around.

Use to learn how to improve your bad credit, including learning how credit is established and how to get a loan or a mortgage with bad credit, and to find the resources to solve your credit problems.

We'll get you started on how to solve your bad credit and how to get the best possible loans with bad credit.

It's important to get your credit report and start assessing exactly what  your credit problems are. Then you can start restoring your credit, pay-down your debts, and optimize the cost of your loans and liabilities over time.

That's the road to get back to financial health. 

How a Credit Score is Calculated

If you have bad credit, it is important to start out with a fundamental understanding of how a credit score or a FICO score is calculated, so you can take the proper steps to protect and improve your score. Your credit rating is calculated based on five variables, including:

1. Payment history: 35%

Payment history, which counts for approximately 35% of your score, is the most heavily weighted factor used in calculating your credit score. Consistently paying your bills on time has a positive influence on your score, while late or missed payments will hurt you in this area. If you have delinquent payments, the older the delinquency the less the negative impact on your score will be. Collection accounts and bankruptcy filings are also taken into consideration when analyzing your payment history.

2. Credit utilization: 30%

Total debt and total available credit, which counts for about 30%. This section looks at how much debt you have compared to the total available credit on your accounts. If all of your accounts are maxed out, you will be considered a poor credit risk, because it appears that you are struggling to pay off the debt you have already incurred. If your account balances are relatively low compared to your available credit, this part of the risk analysis should help your overall credit score. The score calculation also looks at these two factors independently. Having too much available credit, whether you have used it or not, could hurt your credit score, as statistical studies have shown that people with excessive amounts of available credit are a higher credit risk. Unfortunately, the bureaus do not define exactly what they consider excessive, so best tip is to use credit conservatively and to keep your debt to credit limit ratio low.

3. Time accounts have been active: 15%

Length of positive credit history, which counts for about 15%. The longer you maintain accounts in good standing, the better your score will be. This shows that you are able to make a long-term commitment to a creditor and are consistently responsible about making your payments. If you have accounts with long history (5 or more years) and no missed payments, you should keep these open and current.

4. Variety of accounts: 10%

Mix of types of credit, which counts for approximately 10%. Having several different types of credit, such a credit cards, consumer loans, and secured debt, will have a positive influence on your credit score. Having too much of one type of credit can have a negative impact. Types of credit are called “tradelines” in the banking business.

5. Number of accounts opened recently: 10%

The number of new credit applications you have completed recently, which accounts for about 10% of your score. Applying for too much new credit in a short time period makes indicates that you could be credit risk, as you may be desperately trying to keep your head above water. The models make an exception for people who are shopping around for a loan, so if you are simply applying to see who can give you the best rate on a new loan, you need not worry too much about damaging your credit score.

Six Steps to Improve Credit Scores & Credit Ratings

Here is a brief outline of six basic steps to building and maintaining a high credit score.

1. Keep accounts active

To start building good credit with your credit card, you will need to obtain the card, use it, and make the first payment before you see any rise in your credit score. If you have no credit history, you may have to sign up for a “secured card” as a first step. A secured credit card is one that requires you to deposit money (typically a minimum of around $300) into an account controlled by the credit card company or bank to even obtain the card. This deposit “secures” any debt you place on the card. It is a way for a creditor to lessen risk when dealing with someone who has poor credit or no credit.

A secured card is just as good as any other credit card when it comes to building credit. Like with any credit card, the payment history on your secured card is reported to the credit bureaus. By making on-time payments (on-time payments are the No. 1 factor in determining a credit score) and carrying a low debt load (your debt balance-to-credit limit ratio is also a big credit score component), you build the history and profile that produces good credit.

Another way to build credit from scratch can include getting a low-limit retail store card or a gas card. Just be sure to pay the monthly balance in full so as to avoid the high monthly interest charges that many of these types of cards carry.

You can also build your credit score, by having someone co-sign on a debt with you. Because the co-signer takes full responsibility to repay the debt, if you do not, co-signing is risky and is something that the co-signer should be wary of doing. Every person who considers co-signing on a loan should make sure to understand the risks of co-signing. Still, the risks for the co-signer does not reduce the positive effects for your credit score of having a co-signed account report in good standing to the credit bureaus.

2. Review your credit report regularly

Review your credit report once a year. The higher your credit score, the better. A score below 680 usually results in a borrower being charged a higher interest rate or denied credit. If the report includes items that are inaccurate, request the report be corrected. You can receive a free copy of your credit report at, where you are entitled to one free report from each of the three bureaus every year. I recommend that you stagger your requests, accessing one report every four months in an alternating fashion. has some terrific information about how to dispute items on your credit report.

3. Borrow and repay money

Another good way to build credit history is to pay off a small loan. Borrow from your bank or credit union to purchase a used car or a larger purchase, such as an appliance. Pay the loan on time and in full. Pay any student loans on time every month. (Remember: On-time payments are the No. 1 factor in determining a credit score.)

4. Keep a stable employment history

A stable job history is another factor that lenders will consider when giving a loan. Creditors look at job history to understand a consumer’s stability and income.

5. Protect yourself from identity theft

Identity theft is at an all-time high, and it can destroy credit ratings. Remember that identity theft occurs both “offline,” and through the Internet. Protect yourself from unscrupulous individuals who could go through your trash, steal account numbers online or get personal information through complex “phishing” scams. Record all important financial information and account numbers in a secure place. Shred all documents that contain personal information. Never give out personal information in e-mails or in a phone call you did not initiate.

6. Establish and stick to a budget

A good way to maintain a healthy financial lifestyle is to create — and stick to — a household budget. Many people fall into credit score disarray by spending beyond their means, building up debts, and maxing out credit cards. In budgeting, list ongoing monthly expenses (fixed expenses like rent or mortgage payments). Add variable expenses that are “must-buys” (food, gas, medicine). Leave two categories for savings and spending cash (for unexpected expenses and entertainment). Add monthly net income (the amount left after taxes and other paycheck deductions such as health insurance and 401(k) contributions). A free budget guide is available at

Bad Credit Mortgage and Loan Options

Now that you understand what goes into a credit score and have been armed with tips on how to fix bad credit, the next step is to get some quick advice on how to actually qualify for loans even if you have bad credit. This advice will help you whether you apply for an auto loan, an unsecured loan, or a mortgage.

FHA Loans are Ideal For People With Bad Credit

Anyone with less than good credit look at FHA or government loan programs. FHA loans are available to people with bad credit, where bad credit can disqualify a person from most loan programs. Please read the FHA mortgages resource to learn more.

Co-Signers on a Loan

If your spouse has good credit, that may help mitigate your own bad credit. Ask yourself, does your spouse have a FICO score? If they have one, is their credit score excellent, poor, or somewhere in between?

It may be possible for the two of you to qualify together for a loan as co-borrowers, but what kind of loan will depend on the income each of you earn, the credit scores both of you have, and the equity available in your home. In general, the workaround for bad credit loan needs is to have the person with the better score apply for the loan by themselves and keep the borrower with the lower score on title only.

To learn more about credit reports, credit scoring, and what it means to you, I encourage you to explore the wealth of material offered at the credit resource page.


AAmira, Jun, 2020

Oh wow, nice article.

AAnonymous, Oct, 2019

So apparently I took out a pay day loan in 2013 and I received a call by a collection company stating that they are placing a judgment against me. I know that I have never applied for a payday loan in 2013. I have previously maybe in 2008 or 2009 and I am pretty positive that I paid it back. They also said it was for 1,202.72 I doubt I would have been given such a large loan amount! What can I do legally about this situation?

DDaniel Cohen, Oct, 2019

I can't give you legal advice, but will share some info with you with the understanding that is not from a lawyer and not legal advice.


A collection agent can't place a judgment against you. They could sue you whcih could result in the court ordering a judgment agsainst you. 

You don't say what state you are in, but check the statutue of limiations on debt for your state, for a written agreement. 

Don't engage with the collector on the phone. Give them your current address and if they mail you something respond with a request for validation. If the SOL in your state is longer than time period since they allege defualt, then go to court if sued and use the SOL as a defense

AAnonymous, Sep, 2019

How desperate do you have to hire somene with the name "Demoninvader" to work to repair your credit? They lie through their teeth so they can steal your money.

AAnonymous, Aug, 2019

Stay away from Mas Financial Service! They claim to provide loans worldwide for any purpose and that "the loan amount will be available on the same day."

Rip off!!! I wish that these scammers were shut down, but it the seem to be unable to be eradicated- like cockroaches.

AAnonymous, Jul, 2019

Watch out for a scammer whose name I don't see mentioned on this page: KevinPoulsenCyberConsultant.

SSergio V, Sep, 2017

Hello I had a credit car back in the mid 200's through Capital One, I made my last payment in late 2006-07. To make a story short the collection went into my credit report and fell off in 2013-14 and has not been showing or reported since then. I recently received a renewed judgement letter sent by an attorney through the USPS which I was not aware I had one and is not showing credit report. I know from what I've read there is a 7 year limit and then it would get removed from your credit which I see it was. I guess I am just wondering why did I receive this letter and what can I do, or what can be done? I also don't ever recall getting a summons to appear in court. I don't own a home, my vehicle is worth less then the debt amount it states I owe which the letter states I owe $4,400 and my car is worth like $1500 and its a 2000 model. I do have a job but have many bills which I can nearly get by on a monthly basis. I am currently rebuilding my credit and would not want this to hurt it. Any advice would be helpful, Thank You

DDaniel Cohen, Sep, 2017

First, a judgment can only be renewed if it was in place and renewed before the deadline. It does seem odd that no collections efforts took place if a judgment was obtained against you and you were in Nevada. 25% of your pay could be garnished. If you have earned enough to be subject to garnishment, more than $217/week, then it would be surprising that a judgment creditor would not have come after your pay for years and years. Judgments last 10 years in Nevada and can be renewed, 

 You can't stop the judgment-creditor from garnishing your wages, if they have a legitimate judgment (aside from filing for bankruptcy, which puts a hold on that). In Nevada, any bank account with your name on it could be cleared out by a bank levy.

Although a derogatory account should fall off your report within 7.5 years from the date of first delinquency, judgments can remain longer. Importantly, if a debt doesn't appear on your credit report, or even if it falls off after the 7-7.5 year period, you may still owe it. The length of time the derogatory account shows on your report and your legal responsibility for the debt are separate and distinct issues. Not on the report does not make the debt no longer collectible.

The first order of business is to determine if this is real. The original judgement should have shown on your credit report in the Public Records area. Go to , get a free credit report, and check and see if the judgement is there and if it shows as renewed or whatever. If you don't see anything, take the paperwork and show it to an attorney or contact the Office of Nevada Attorney General's Bureau of Consumer Protection. There is a Consumer Hotline listed at the site.

ZZe, Jun, 2014
My credit has taken a hit and I did my best to my knowledge to improve my score. After the death of parents and family moving in and out, I just found out that I have a charge of with Capitol One for $380.49. I called them, to no avail, being hung up on the first time and the 2nd and 3rd time being told that this will not be removed from my credit because this is not a practice of their even if it is paid off. I know the bad decision was mine for such a small charge while trying to stay afloat with my other bills. Do you have any suggestions as to how I can remedy this without waiting the 7 years? Thanks
BBill, Jun, 2014
The damage to your score from the charge-off is done. You can best help your score by having positive information report on other accounts. The biggest factor in your control are keeping your credit utilization low and, of course, making your payments on time.