Payday Loans for Bad Credit: Safer Options and What to Know First
If your credit isn’t great, payday lenders will probably lend to you. They’re marketed to bad-credit borrowers because they barely do credit checks. But at triple-digit APRs and with a debt-trap design, payday loans are the most expensive, riskiest way to borrow.
The good news is that bad credit doesn’t limit you to payday loans, and there are safer, cheaper options to borrow when you’re in a bind, many of which let you check your rate without hurting your credit. For example, bad credit personal loans, payday alternative loans and even buy now, pay later plans are all better options than payday loans.
In our guide, we’ll go over the many risks of payday loans and show you the safer alternatives, no matter your credit score.
Can You Get a Payday Loan With Bad Credit?
Yes. Payday lenders typically don’t run hard credit checks. Instead, they qualify you based on income and an active bank account, which is why they’re accessible to lenders with bad or no credit. But this accessibility comes at a steep price — triple-digit APRs and a repayment structure that traps many borrowers — so a payday loan should be a true last resort.
Why Payday Loans Are Risky for Bad-Credit Borrowers
Payday loans may be tempting if you’re in a bind. But they’re more trouble than they’re worth. With very high APRs and fees, required automatic withdrawals and short repayment windows that strain budgets and drive repeat borrowing, which can easily trap you in a debt cycle. Plus, they won’t help you build credit. Luckily, there are safer options.
Better Options Than Payday Loans for Bad Credit
Having bad credit doesn’t mean payday loans are your only option when you need to borrow money. Here’s a look at safer alternatives.
Bad-Credit Personal Loans (Soft-Pull Prequalification)
Some online lenders and marketplaces specialize in borrowers with poor credit, like Pennie. Another perk: Online lenders and marketplaces let you prequalify with a soft credit check to see estimated rates without any hit to your score. (A hard check happens only if you accept an offer.)
Meanwhile, rates are far below payday loan APRs, terms are longer, plus, these lenders report payments to the three credit bureaus, meaning they can help you build credit.
Credit Union Payday Alternative Loans (PALs)
Federal credit unions offer PALs, which are short-term, small dollar loans that don’t hinge on a strong credit score. These also offer a rate cap of 28%, which is far below payday lenders and offer installment repayment.
These are one of the cheapest options for someone worried about a credit hit, but they’re available only to credit union members. Sign up at your local credit union to take advantage of this option.
Cash Advance Apps
Cash advance apps like EarnIn advance a portion of earned wages with no credit check at all and no interest. Because they use your bank and income data, cash advance apps are genuinely no-credit-check options that are far cheaper than a payday loan.
However, advances are small. EarnIn users, for instance, can access up to $150 per day and up to $1,000 per pay period.
Buy Now, Pay Later and Payment Plans
For a specific purchase, buy-now-pay-later can split the cost into interest-free installments without a hard check. BNPLs allow you to spread a cost across multiple payments, many times at a 0% APR, without borrowing traditionally. However, there are risks associated with BNPL apps. See our guide for more.
If you’re falling behind on bills, ask the biller directly about a payment plan or hardship arrangement.
Other Options
Other payday loan alternatives include a nonprofit credit counselor which can offer free budget help and negotiation, an employer paycheck advance or borrowing from family or friends with clear terms. Even these usually beat a payday loan for a bad-credit borrower.
How to Spot a Predatory Payday Lender
Payday lenders can be predatory. When you’re reviewing payday loan terms, it’s important to slow down and read the disclosures. Keep an eye out for these red flags:
Lenders that won’t disclose APR or fees: This information should be provided to you.
Upfront fees: Some payday lenders charge fees ranging from $10 to $30 per $100 borrowed.
High-pressure tactics: Legitimate lenders won’t badger you to take out a loan.
Unlicensed operators: Make sure the lender is licensed in your state. (For payday lenders, search through your state’s financial regulatory agency.)
“Guaranteed” approval: No legitimate lenders offer guaranteed approval.
How to Get a Loan With Bad Credit
Here’s how to get a loan with bad credit:
- Check your credit report and score so you know where you stand.
- Prequalify with soft-pull lenders/marketplaces to compare real rates without a hard inquiry.
- Compare the APR and total cost, not just the monthly payment.
- Borrow only what you need, and avoid any offer promising guaranteed approval.
- Make on-time payments to rebuild credit.
How to Improve Your Borrowing Options Over Time
A loan denial isn’t the end of your borrowing road, it’s just a speed bump. There are ways to improve your borrowing odds over time. They include:
- Making on-time payments
- Lowering credit utilization
- Using credit-builder tools that can raise your score over time and unlock cheaper borrowing, so today’s bad-credit options become better ones.
Frequently Asked Questions
Yes. Payday lenders usually don’t run a hard credit check — they qualify you based on your income and an active bank account — which is exactly why they market to people with bad credit. But that easy access comes at a very high price: triple-digit APRs and a repayment structure that traps many borrowers in a cycle of fees. So while you can get a payday loan with bad credit, it should be a last resort. Bad credit doesn’t limit you to payday loans — safer, cheaper options are available.
Several. A bad-credit personal loan from an online lender is usually far cheaper than a payday loan, comes with fixed installments, and reports your payments to the credit bureaus so it can help rebuild your credit — and you can prequalify with a soft credit check to see rates without a hard inquiry. Credit union payday alternative loans (PALs) are another low-cost option for members, and for small gaps, a cash advance app charges no interest. Compare the APR and total cost before choosing.
Usually not with a hard credit check. Payday lenders typically rely on your income and bank account rather than your credit score, which is why they’re easy to qualify for with bad credit. The trade-off is that they also generally don’t report your on-time payments to the credit bureaus, so a payday loan won’t help you rebuild credit. By contrast, a personal-loan lender will run a hard check when you formally apply — but many let you prequalify first with a soft pull that doesn’t affect your score.
No — and it’s a red flag. No legitimate lender can guarantee approval before reviewing your application, so any offer promising ‘guaranteed approval’ (especially alongside ‘no credit check’ and ‘same-day’ promises) should make you cautious. Legitimate lenders are also required by law to disclose the APR and total cost before you sign. If a lender won’t show you those terms, pressures you, or asks for an upfront fee, walk away and consider a safer option instead.
Absolutely. Online lenders that work with bad credit, credit union payday alternative loans (PALs), cash advance apps, and buy-now-pay-later plans are all more affordable than payday loans and accessible with a low credit score. Many let you check your rate with a soft credit pull that won’t hurt your score. Start by comparing a few prequalified offers, and choose based on the APR and total cost rather than just how fast you can get the money.
Katie Sartoris is a Certified Educator in Personal Finance and an award-winning journalist with a decade of reporting and editing experience in the industry. She joined the Penny Hoarder from Gannett, where she was a local news editor in Central Florida. Katie lives in Leesburg with her husband and cats, and is working on restoring and updating her original mid-century home.
