Having bad credit in Canada doesn't automatically close the door on borrowing, but it does significantly narrow your options and raise your costs. Understanding which lenders serve bad-credit borrowers, what rates to expect, and how to protect yourself from predatory offers is essential before you apply.
Your credit score is a numerical summary of your borrowing history. It reflects how reliably you've paid bills, how much of your available credit you use, how long you've had credit accounts, and whether you've had any collections, bankruptcies, or judgments against you.
Lenders use this score to estimate the risk of lending to you. A lower score signals a higher risk of default, so lenders either decline the application or charge a much higher interest rate to compensate for that risk. This is rational from the lender's perspective, even if it feels punishing from the borrower's side.
One of Canada's largest subprime lenders. Accepts borrowers with credit scores as low as 300. Rates range from 29.99% to 46.99% APR. Loan amounts from $500 to $75,000. Both secured and unsecured options. Reports to credit bureaus, which can help rebuild your score over time. Has branches across Canada plus a full online application.
Fairstone accepts fair and poor credit borrowers. Rates start around 19.99% and can reach 39.99% APR. They offer both secured loans (using your vehicle or home equity as collateral for better rates) and unsecured loans. Loan amounts from $500 to $50,000. Over 240 branches across Canada.
Spring Financial offers personal loans specifically designed for Canadians rebuilding credit. Their Bloom program is a credit-builder product that establishes a positive payment history. They report to both Equifax and TransUnion. Rates are high but they're transparent about costs and focused on helping borrowers improve their credit profile.
Specializes in loans for people with poor credit or those receiving government income (EI, disability, CPP, etc.). Loan amounts from $1,500 to $20,000. Rates are on the high end. A legitimate option for borrowers who receive non-employment income that traditional lenders won't consider.
A lending marketplace that works with multiple bad-credit lenders. Submit one application and get matched with available lenders. Useful for seeing multiple options without multiple hard credit checks on your file.
If you have an asset — a paid-off car, savings account, or other property — a secured personal loan can dramatically improve your chances of approval and reduce your interest rate. The lender takes less risk because they can claim the asset if you default.
For bad-credit borrowers with assets, a secured loan is often the smarter financial choice — just make sure you can reliably make the payments before pledging something important.
Be realistic about the experience:
When you have bad credit, you're a target for predatory lenders. These are companies that profit from desperate borrowers by charging illegal or near-illegal rates, adding hidden fees, or structuring loans in confusing ways.
Signs of a predatory lender:
Canada's criminal interest rate ceiling is 60% APR (Criminal Code s.347). Any loan above this rate is illegal. However, payday loans under $1,500 repayable within 62 days have special provincial exemptions that allow costs equivalent to hundreds of percent annually. Avoid these whenever possible.
Before taking a loan at 40%+ APR, consider whether any of these alternatives might work:
If you take out a high-rate loan, use it strategically:
Consistent on-time payments are the single most powerful way to rebuild a damaged credit score. One or two years of disciplined repayment can meaningfully improve your score and open access to much better loan products.
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