What Is an Emergency Loan?
An emergency loan is a term that describes several different ways you may be able to access cash for sudden, unexpected expenses. A common type of emergency loan (and often one of the most affordable options) is a personal loan, but an emergency loan may come in the form of a credit card cash advance, payday loan, payday alternative loan, or even a loan from a friend or family member.
Can I Get an Emergency Loan With Bad Credit?
Borrowing options do tend to be more limited when you have bad credit. Still, that doesn’t mean you’re automatically out of luck. You may be able to qualify for an emergency loan even if you have bad credit.
It is important to have realistic expectations when trying to borrow money with credit challenges, especially where cost and borrowing limitations are concerned. Due to the fact that there’s more risk involved for the lender, emergency loans for bad credit can be expensive.
Higher APRs and fees are common with bad-credit emergency loans. And as a bad-credit borrower, you may not be able to borrow as much money as someone with a good credit history. On the bright side, there are smart strategies you can use to improve your credit rating over time.
Where Can You Get an Emergency Loan With Bad Credit?
There are multiple types of lenders that offer emergency loans for bad credit. Some of the most common options include:
- Online Lenders
- Credit Unions
- Traditional Banks
- Credit Card Companies (Cash Advance)
- Relatives and Friends
- Payday Lenders
Remember, just because a borrowing option is available doesn’t mean that it’s a good choice. Credit card cash advances, for example, are notoriously expensive and might damage your credit score by driving up your credit utilization rate.
You should also avoid payday loans and title loans whenever possible. The Consumer Financial Protection Bureau (CFPB) warns that the average two-week payday loan features a steep APR that’s equivalent to nearly 400%.
Will an Emergency Loan Impact My Credit Score?
Some types of emergency loans can affect your credit score, while others will not. Whether one does depends primarily on if it shows up on your credit reports with Equifax, TransUnion, or Experian.
If a lender doesn’t report your account to the credit bureaus, the loan won’t influence your credit score (unless you default and a collection agency adds the bad debt to your credit reports at a later date). However, if a lender does share your account details with the credit bureaus, that’s a different story.
Banks, credit unions, and online lenders commonly report account details to the credit bureaus. Payday lenders and title lenders generally do not.
When a lender reports an emergency loan to the credit bureaus, the way you manage the account dictates whether it will help or hurt your credit score. If you make all of your payments on time, the account may benefit your credit score in the long run. However, should you make late payments or become past due on your debt, that same emergency loan could hurt your credit score instead.
How Should You Choose an Emergency Loan?
When a lender receives a loan application, it generally starts the consideration process with some research. By checking your credit report and score, the lender can weigh the risk of taking you on as a customer.
Likewise, you should do your own homework anytime you’re thinking about taking on a new debt. You should always review the pros and cons of any financing option before you borrow money—even in an emergency.
Before you choose a bad-credit emergency loan, here are some important questions to ask:
- Can I afford a new monthly payment?
- Does this lender offer loans to borrowers with bad credit?
- What does the lender charge for emergency loans (APR range)?
- Are there additional fees I should be aware of?
- How long will I have to repay the loan?
- Is there a prequalification option to check my potential rate and loan offer in advance?
- How soon will I receive the funds if I qualify?
Repeat the questions above as you research multiple emergency loan options. Even when you’re in a rush, it’s best to compare several lenders to make sure you’re getting the best deal for your situation.
How Fast Can I Get an Emergency Loan?
When you need an emergency loan, you usually must access cash in a hurry. Thankfully, there are numerous lenders that offer fast funding to qualified borrowers. Some personal loan lenders may even deposit the funds into your bank account the same day you’re approved for financing.
On the other hand, loan funding can sometimes take several days or even up to a few weeks. Certain lenders may take longer to process your loan application or release your funds than others. There’s also a chance that your personal bank or credit union may hold the funds a lender deposits into your account for a few days before you can access the money.
How Can You Prepare for an Emergency Expense?
A Federal Reserve study revealed that 40% of adults didn’t have the cash to cover a $400 emergency expense, so if you currently don’t have money set aside to handle unexpected expenses, you’re far from alone. Creating an emergency fund now is the best way to prepare for surprise expenses in the future. The following five tips can help you get started.
- Track your spending – Challenge yourself to record every dollar you spend for a month, including small cash purchases.
- Create a realistic budget based on your monthly bills and spending habits – You can use convenient budgeting software or even a simple pen and paper to get the job done.
- Find ways to cut your current expenses – As you free up extra cash in your budget, you can use it to pay down debt (creating even more opportunities for savings) and to save.
- Open a separate, dedicated savings account to tuck away money for emergencies – High-yield savings accounts can help your money grow faster.
- Make a habit of saving some money every pay period – Remember, it’s fine if you need to start small.
Are There Alternatives to Emergency Loans?
Emergency loans can offer you much-needed relief in certain situations, yet taking on more debt might not be the best solution if you’re already struggling financially. Before you fill out a new loan application, examine your budget and make sure you can afford the monthly payments. If you think an additional debt is going to overextend you financially, an alternative approach might be a better choice.
Emergency Loan Alternatives
- Try to negotiate adjusted hardship payment plans with your creditors.
- Temporarily consider making minimum payments on your credit cards to free up extra cash. (This should only be a short-term approach and not an ongoing habit.)
- Ask your employer for a paycheck advance.
- For small emergencies, consider a paycheck advance from Earnin or similar services.
Note that some employers offer 401(k) hardship withdrawals to help employees meet immediate and heavy financial needs, but you should always proceed carefully and consider the consequences before tapping into your retirement savings.
The Bottom Line
Facing an emergency expense without the funds to cover it can be a stressful experience. If you have bad credit, which makes borrowing money more difficult and more expensive, you may feel even more hopeless. The best thing you can do in this situation is to take a deep breath and consider the options that are available to you.
If you decide to borrow money, compare multiple emergency loan offers to make sure you find the best solution for your situation. Then, once you recover, make a plan to put yourself in a better position in the future. You can work to build an emergency fund (slowly, if necessary) and improve your credit. Both of these moves can help you the next time unexpected expenses strike.
Investopedia’s mission is to provide our readers with unbiased, comprehensive financial product reviews they can trust. We’ve researched dozens of personal loan options and compared interest rates, fees, qualification requirements, and other features so we can share some of the best offers currently available with you. Our goal is to provide you with the knowledge you need to make well-informed decisions when you’re ready to borrow.
What To Do When You’re Rejected For A Mobile Phone Contract
By Harriet Meyer
Many mobile phone contracts don’t require you to pay a penny upfront – even for the latest smartphone. Instead, you commit to regular payments over, say, 18 or 24 months.
But, just like other credit applications, such as for a mortgage or loan, you could be rejected for a mobile phone contract if you have a bad credit rating.
Here, we consider why you might find yourself in this frustrating position and – most importantly – what you can do about it.
Why was my contract application rejected?
It’s usually the first question on everyone’s lips when they have been turned down for credit. And the answer is that, essentially, the provider has checked your credit report and determined that you’re a high-risk customer who may fail to pay off your debt.
Providers use the information on your credit file to assess your history of managing money. So, if you’re rejected, this could be for one of the following reasons, or a combination of these:
- A history of late or missed bill payments, causing providers to see you as financially stretched, or someone who struggles to manage money
- Holding an account in joint names with someone who has a poor credit history
- You’re not registered on the electoral roll, so a provider may not be able to verify your identity and address
- County Court Judgements (CCJs) against your name, or Individual Voluntary Agreements (IVAs) on your credit record, indicating that you could face financial trouble
- Lack of credit history – you need some history of making regular payments to build up your credit history, and show that you can manage regular debt payments.
How can I check my credit score?
If you genuinely have no idea why you have been rejected, it’s worth checking your credit report. This way, you can find out what the provider was looking at when it decided not to offer you a contract.
You can do this at one of the three main credit reference agencies – Experian, Equifax, and TransUnion (formerly Callcredit). Experian offers a free service that enables you to sign up and check your credit score for a general overview. ClearScore is another free service that uses Equifax data.
The way credit scores are calculated varies between the different agencies, but they give providers an idea of how reliable you may be when you’re signing up for a contract.
What can I do if I’m rejected?
Remember that any financial contract is a commitment – so if you’re rejected, consider if it’s sensible to be signing up at all, particularly if you’re battling with other bills.
But whatever you do, avoid applying for a string of mobile phone contracts in the hope of being accepted. Each one will involve a credit search and leave a mark on your file, which could impact on your ability to get future credit, such as a mortgage.
The good news is there may be other options available which means you can still get a new phone or upgrade.
Find out more about your credit report with our guide.
Pay a deposit. The network provider may get around you having a poor credit history by asking you to pay an upfront deposit for the contract to offset any risk that you fail to make payments.
The amount of deposit will vary depending on your credit status, the package and the provider. You typically receive the deposit back once you’ve made several months’ worth of payments – typically ranging from three to 12 months.
Choose a SIM-only tariff. If you’re willing to buy a handset upfront, or already have an old phone you can use, you could opt for a pay monthly SIM-only deal. These are cheaper than full-blown contracts as you’re not receiving and paying for a phone as part of the deal.
You will still have a credit check, but you’ve got a greater chance of being accepted as payments are typically lower for these contracts, so there’s less risk for the provider.
Also, paying your monthly SIM-only bill on time will help show that you can sensibly manage a contract, which may boost your credit score over time.
Opt for a pay-as-you-go deal. If you want a phone for occasional use, then a pay-as-you-go deal might suit. Once you’ve bought a phone upfront, you pay for credit as and when needed. You won’t be tied into a contract, and will not be subject to a credit check.
Get a ‘bad credit’ contract. There are specialist companies which supply phone contracts to people with bad credit. You can do an online search to get an idea of what’s available, or speak to an adviser in a mobile phone store.
However, you may not be able to get the phone model you want, and your monthly payments may be substantially higher than for a standard contract. This is not an option to be taken lightly.
Check out family deals. You may want to ask a family member with a good credit rating to sign up to the contract. That’s if you’re opting for a family deal, when several lines may be connected to a single contract – but only one person pays the bill and undergoes a credit check.
Get a guarantor. Alternatively, you could ask someone to essentially guarantee your contract by co-signing it. But, of course, they must be comfortable being liable for any missed payments, thereby offsetting the risk for the network provider in case you default. Provided you make payments on time, this option can also gradually improve your credit rating.
Improve your credit score. To improve your chances of being accepted for a mobile phone contract or any other form of credit in the future, you can take time to improve your credit score by, for example:
- Registering on the electoral roll with your local authority
- Ensuring you don’t fall behind with monthly repayments on any bills (set up direct debits to pay them automatically)
- Sticking within your credit limit on any cards that you use and clearing the balances every month
- Check your credit report (see above) and if you find any errors, ask the agency to amend them with a ‘Notice of Correction’
Upstart vs. Sofi: Which Personal Loan Is Right for You?
Our goal here at Credible Operations, Inc., NMLS Number 1681276, referred to as “Credible” below, is to give you the tools and confidence you need to improve your finances. Although we do promote products from our partner lenders, all opinions are our own.
If you’re looking for a personal loan, you’ll likely come across Upstart and SoFi. Both companies offer flexible loans for a variety of purposes, but there are some differences to keep in mind when deciding between them.
Here’s a comparison of Upstart vs. SoFi to help you choose. Both Upstart and SoFi are Credible partners.
|Fixed rates||8.13% – 35.99% APR4||5.99% – 18.83% APR|
|Loan amount||$1,000 to $50,0005||$5,000 to $100,000|
|Loan terms||3 to 5 years4||2 to 7 years|
|Min. credit score||600
(in most states)
|Does not disclose|
|Time to fund||As soon as 1 – 3 business days6||3 business days|
|Origination fee||0% to 8% of loan amount||None|
|Income||$12,000||Check with lender|
|Residency||Available in all states except IA and WV||Available in all states except MS|
Compare personal loan rates from
Upstart, SoFi, and other
top lenders in 2 minutes
Find My Rates Now
Checking rates won’t affect your credit
Upstart personal loans
Founded by ex-Googlers, Upstart’s artificial intelligence platform fully automates 58% of its personal loans. It has originated $6.9 billion in loans and notably offers loans to those with less-than-perfect credit.
Upstart offers personal loans for a variety of uses — including debt consolidation loans, wedding loans, and more. You can borrow as little as $1,000 or as much as $50,000 and can expect fast loan funding.
Learn More: Personal Loan vs. Credit Card
- Lower minimum credit score: Upstart offers personal loans to borrowers with credit scores as low as 600. If you’re looking for bad credit personal loans or fair credit personal loans, Upstart could be a good choice.
- No prepayment penalties: You don’t have to worry about any fees if you pay off your loan early.
- Fast funding: If your application is accepted, you’ll likely get your money within just a few business days. In fact, Upstart says that 99% of applicants get their money after just one business day.
- Low minimum borrowing amount: You can borrow as little as $1,000 with Upstart, which could be helpful if you only need a small loan.
- Lower maximum loan amount: With Upstart, you can only borrow up to $50,000. This could make it harder to fund larger debt consolidations or bigger home improvements.
- High origination fees: With Upstart, you might pay an origination fee of up to 8% of the loan amount.
- No options for visa holders: Upstart doesn’t offer personal loans for visa holders — you must have a Social Security number to borrow with this lender.
Check out our Upstart personal loans review to learn more.
SoFi personal loans
SoFi offers a variety of financial products, including credit card consolidation loans and other types of personal loans. It also provides several perks to its members, such as unemployment protection, career coaching, and networking events.
With SoFi, you can borrow anywhere from $5,000 to $100,000. Plus, SoFi personal loans come with no fees.
Learn More: How Personal Loans Impact Your Credit Score
- Large loan amounts: You can borrow up to $100,000 in unsecured funds with SoFi. This can be useful for home improvement loans, wedding loans, and other large borrowing needs.
- Discounts available: If you sign up for autopay, you can get a discount on your SoFi personal loan. You might also qualify for a discount if you’re using other SoFi products.
- Member benefits and perks: As a SoFi member, you’ll have access to additional resources, including financial planning, career coaching, and networking events. SoFi also provides unemployment protection in case you lose your job.
- Options for visa holders: If you’re a visa holder without a Social Security number, you might still qualify for a SoFi personal loan.
- Higher credit score requirements: You’ll need good to excellent credit to qualify for a personal loan through SoFi. If you have poor or fair credit, you’ll likely need to consider other lenders.
- Higher minimum loan requirement: You’ll need to take out at least a $5,000 personal loan to borrow through SoFi. If you need a smaller loan, SoFi might not be the right choice for you.
- Longer funding time: SoFi personal loans typically take a few business days to fund. If you need a faster loan funding time, you might need to look elsewhere.
See our SoFi personal loans review for more details.
Choosing a lender for a personal loan
A personal loan could help you cover large or unexpected purchases. Before you borrow, it’s a good idea to shop around and consider as many lenders as possible to find a loan that fits your needs. Credible makes this easy — you can compare multiple lenders, like Upstart and SoFi, in two minutes.
Keep Reading: Where to Get a $10,000 Personal Loan
Bad Credit7 months ago
All you Need To Know about Bad Credit Scores in 2020
Bad Credit7 months ago
How to Get an SBA Coronavirus Disaster Loan
Bad Credit7 months ago
Bad Credit Payday Loans Online
Credit Repair Companies9 months ago
How to improve your credit score
Bad Credit8 months ago
Bad Credit? Best Bad Credit Mortgage Refinance Companies • Benzinga
Bad Credit6 months ago
Have Bad Credit? Here’s How You Can Still Get A Loan
Credit Repair Companies10 months ago
11 Ways to Improve Your Credit Score
News8 months ago
Global Credit Repair Services Market Demand and Status, Forecast 2025 | • CreditRepair.com • MyCreditGroup • The Credit People • Veracity Credit Consultants • TransUnion • MSI Credit Solutions • Lexington Law • USA Credit Repair