Personal Loans for Bad Credit Canada 2025 — Spring Financial, Fairstone & More

Last updated: March 2025 — Having bad credit in Canada doesn't mean you can't borrow — it means you'll pay more for credit and have fewer options. This guide covers the lenders who actually approve bad credit applicants, strategies to maximize your approval odds, and how to use a loan to rebuild your credit score.

What Is Considered "Bad Credit" in Canada?

Credit Score Range	Rating	What It Means
800–900	Excellent	Any lender, best rates available
720–799	Very Good	All major lenders, excellent rates
660–719	Good	Most lenders approve; competitive rates
620–659	Fair	Some banks; credit unions; higher rates
560–619	Poor	Alternative lenders only; high rates
300–559	Bad	Very few options; secured loans or credit builders

Best Lenders for Bad Credit Personal Loans in Canada

Spring Financial — Best for Credit Building

Spring Financial is specifically designed for Canadians rebuilding credit. Their signature product, "The Foundation," is a 12-month installment loan starting at $1,500. Regular payments are reported to both Equifax and TransUnion, creating a positive payment history. After completing The Foundation, borrowers typically qualify for larger loans at better rates.

Rate: 14.99% – 46.96% APR
Amount: $500 – $35,000
Minimum credit score: ~550 (flexible)
Application: 100% online, decision in minutes
Credit reporting: Yes — both bureaus

Fairstone — Best for In-Person Service & Secured Loans

Fairstone has 240+ branches across Canada and offers both secured (using home or vehicle equity) and unsecured personal loans. Their secured loans have lower rates (19.99%–26.99%) and higher amounts (up to $50,000). A great option if you own a vehicle or have home equity but have damaged credit.

Unsecured rates: 19.99% – 39.99% APR
Secured rates: 19.99% – 26.99% APR
Amount: $500 – $50,000
Minimum credit score: ~560
Branches: 240+ across Canada

easyfinancial — Best for Larger Amounts with Poor Credit

easyfinancial (part of goeasy Ltd.) serves Canadians across the credit spectrum, including those with credit scores below 500. They offer both secured and unsecured options up to $100,000. For secured loans, a vehicle title or home equity is used as collateral. easyfinancial reports to credit bureaus, making them useful for rebuilding.

Rate: 9.99% – 46.96% APR
Amount: $500 – $100,000
Minimum credit score: No minimum stated (secured options help)
Locations: 400+ across Canada

Mogo — Best for Mid-Range Poor Credit

Mogo serves Canadians with credit scores starting around 580–600. Their fully digital application takes minutes and only requires a soft credit pull for pre-qualification. Mogo also provides free credit score monitoring, helpful for tracking your rebuilding progress.

Rate: 9.90% – 29.99% APR
Amount: $1,000 – $35,000
Minimum credit score: ~580
Notable: Free credit monitoring included

LoanConnect & Loans Canada (Marketplaces)

These comparison marketplaces accept applications from borrowers across the full credit spectrum and match them to appropriate lenders. A single application may be matched with multiple lender offers, letting you compare rates without multiple hard inquiries. LoanConnect works with scores as low as 300 in some cases through its network of specialized lenders.

Secured Personal Loans for Bad Credit

If you own a vehicle (paid off or nearly paid off), a home, or have savings, a secured personal loan uses that asset as collateral. This dramatically reduces the lender's risk and results in significantly lower rates for bad credit borrowers. Types:

Vehicle-secured loan: Use your car's pink slip as collateral. Available through Fairstone, easyfinancial, and others. Rates typically 9.99%–29.99% vs 39.99%–46.96% for unsecured with same credit
Savings-secured loan: Some credit unions let you use your own savings account as collateral, lending at prime + 1–3% even with poor credit
RRSP-secured loan: Some lenders accept RRSP funds as collateral (though this is rarely recommended due to RRSP withholding tax risks)

Savings-Secured Strategy: If you have $2,000 in savings, take a savings-secured loan from a credit union for $2,000 at prime + 2%. Your savings are held as collateral, so the loan is risk-free for the lender — and your rate is far lower than any unsecured bad-credit loan. Repaying builds your payment history. This is one of the best credit rebuilding tactics available.

Getting Approved: What Matters Beyond Credit Score

Alternative lenders consider more than just your credit score:

Income stability: Steady employment (even minimum wage) matters more than income amount
Employment length: 6+ months at current employer helps; 2+ years is ideal
Bank account history: NSF-free banking for 3+ months signals financial stability
Existing debt load: Even with bad credit, if you're not overwhelmed with payments, approval improves
Reason for poor credit: A single medical emergency that caused a collection is different from chronic payment delinquency

Improving Your Approval Odds

Check your credit report first: Free at Equifax and TransUnion — dispute any errors, which are common
Pay any active collections: Even paying collections in full shows resolution
Add a co-signer: A family member with good credit co-signing dramatically improves approval odds and rate
Offer collateral: Secured loan applications have much higher approval rates
Apply to appropriate lenders: Don't start at major banks if your score is below 620 — go to alternative lenders who work with your credit range
Reduce outstanding balances: Paying down credit cards even slightly before applying reduces your utilization ratio

The Co-Signer Option

Having a co-signer (family member or trusted friend with good credit) can unlock dramatically better rates. The co-signer shares equal responsibility for the debt — if you miss payments, their credit is also affected. This is a significant ask, so only approach people who know your situation and trust your repayment commitment.

Credit Rebuilding After a Bad Credit Loan

A bad-credit installment loan, repaid on time, is one of the most effective credit rebuilding tools. Here's what happens to your score:

Month 1–3: Small score dip from hard inquiry and new account opening
Month 3–6: Score begins recovering as payment history establishes
Month 6–12: Meaningful improvement — often 30–60+ points with consistent payments
Year 2: If no other negative events, score typically crosses into "fair" range (620+)
Year 3: Many borrowers reach "good" range (660+) and qualify for mainstream credit

Avoid Predatory Lenders: Legitimate lenders are licensed provincially. Never pay upfront fees to get a loan. Never wire money to get approved. Never provide banking passwords or remote access to your computer. These are scams targeting people with poor credit who are desperate for funds.

Rebuild Your Credit with KOHO

KOHO Credit is a credit-building product that reports monthly to Equifax — helping you build a positive credit history without the risk of high-rate debt. $10/month, cancel anytime. Combined with KOHO's savings account, it's a complete financial rebuilding package.

Start Building Credit — Code 45ET55JSYA

Frequently Asked Questions

Can I get a personal loan with a credit score of 500?

Yes — through alternative lenders like easyfinancial (which has no stated minimum) and LoanConnect's network. Rates will be high (39.99%–46.96%), but it's possible. A secured loan (vehicle or savings as collateral) is the best path for sub-550 credit scores.

Will applying for a loan hurt my credit score?

A hard credit inquiry causes a small, temporary score reduction (typically 3–8 points). This effect fades within 6–12 months. Multiple inquiries within a short period (shopping for the same type of loan) are treated as a single inquiry by credit bureaus if done within 14–30 days. Use a marketplace to get multiple offers with a single inquiry when possible.

How long does it take to rebuild credit in Canada?

With consistent effort (no missed payments, reducing debt, no new negative events), most people see meaningful improvement (30–60+ points) within 12 months, and can reach the 660 "good" threshold within 2–3 years. Bankruptcies and consumer proposals remain on record for 6–7 years but their impact lessens significantly after 2–3 years of positive activity.