When you’re looking for a loan with bad credit, you may find it difficult to get approved; not because of your credit scores, but because you don’t have a bank account. Excessive non-sufficient funds, too many overdrafts, and even unpaid bank fees can put you on the denial list when you go to a new bank and apply for an account.
Even if you’ve learned to live without a debit card and checkbook, you can hit yet another wall when you go to apply for a loan. Most lenders today require a bank account before agreeing to offer you a loan. Luckily, it’s entirely possible to get approved for a checking account when you look for a non-ChexSystems bank or a second chance checking account.
But before you start browsing for those banks, find out why you need a checking account (below) and which bad credit lenders are our favorites. They may require a checking account, but they also offer a number of benefits once you do get approved. Review this list carefully to find out the key requirements for the best bad credit personal loans so you can start filling in the gaps and get ready to apply.
Getting a Bad Credit Installment Loan
When you have poor credit, you can still qualify for installment loans, which can be an effective way of financing a major purchase or covering a sudden financial emergency.
What are installment loans?
Basically, they’re loans that spread out the payments over a longer period of time compared to something like a payday loan or cash advance loan. Loan terms can range anywhere from a few months to several years. You can also potentially qualify for a larger loan amount than short-term loans, as long as your income qualifies.
Generally, you will need a bank account as part of the approval process, so try to get that taken care as quickly as possible so you can apply. Also, note the difference between a direct lender and a lending network.
When you pick a direct lender, you apply solely with that company and receive a single offer. A lending network, on the other hand, requires just a single application which is then sent to multiple lenders. You could potentially receive several loan offers by filling out one simple application online.
Here are our top personal installment lenders and networks to get your search process started.
$500 - $5,000
3 to 60 months
as low as 5.99%
Features and Benefits
- No obligation or fee to check loan approval
- High approval rate despite credit history
- Funds available as soon as next business day
- Assisting people with bad credit since 1998
$1,000 - $10,000
6 to 60 months
Features and Benefits
- ClearCost guarantee. Know exactly what you owe.
- Personalized Loan Options
- Use My CreditBuilder to build credit from your loan
- Check eligibility without a credit check
When searching for long term loans, look at both the monthly payment and the total cost of the loan. A long repayment period can keep your payments more manageable each month, but could also end up costing you more in the long term. Each lender will also vary on what kind of fees they charge. You may be charged an origination fee, prepayment fees, or late payment fees.
Also, remember that if an origination fee is charged, you don’t need that cash upfront. However, the money will be deducted from your loan funds before they’re deposited into your bank account. Make sure you include that amount in your estimates for finances since you’ll be receiving a little less than you originally expected.
All of these factors should be considered as part of your decision-making process. While it may be tempting to accept the first loan offer you receive, that’s probably not the smartest choice for your long-term finances. Give yourself some time to rate shop and compare to make sure you’re really comfortable with the commitment you’re about to make.
Getting a Bad Credit Short-Term Cash Advance
A short-term loan is a type of installment loan because it’s paid back over a fixed time period. However, rather than having years to pay off your loan balance, you usually only have 12 months or even less. In fact, many lenders offer short-term loans over a period of just three months.
Clearly, with such a short payoff period, you probably won’t be able to borrow a huge amount. The minimum is usually around $500 and many lenders keep the maximum as low as $2,500. You’ll most likely need a bank account for this type of loan as well. The exception is going to a shark-like lender that offers payday loans as we discussed earlier.
You’ll be better served to take the time and find either a non-ChexSystems bank or second chance checking account that you can use to qualify with a reputable lender.
Here are some options for lenders or lender networks offering short-term loans. There’s still the option for longer terms lasting several years. But if you’re looking for a small loan amount that can be repaid quickly, you’ll still find that with either of these choices.
$100 to $999
7 days to 12 months
Features and Benefits
- Trusted since 1997
- Response by email or phone within minutes of submitting request
- Money deposited as soon as next business day
- High approval rate even with bad credit
When you pick a loan with a shorter loan term, it’s more important than ever to make sure you have a solid repayment plan because the wiggle room is so small. You’re much more likely to incur hefty fines and penalties when you can’t make your final loan payment after a few short months. Make sure your income is steady and you have room in your budget to cover other financial emergencies that may crop up during your short-term loan.
Do you need a checking account to get a personal loan?
In short, you most likely do need one in order to get a personal loan, regardless of your credit history. The reasons for this are simple. Most lenders directly deposit the funds. Gone are the days of receiving a check or even an envelope of cash, especially if you want the convenience of applying to an online lender.
One exception to this rule is if you visit a brick and mortar lender that offers payday loans or title loans. They may be willing to offer you a check or cash card rather than depositing the funds into your bank account. Sometimes you can even get these types of loans with no credit check. But there are definitely pitfalls when it comes to working with these types of lenders.
You’re likely to get hit with some pretty horrific fees and interest rates. Plus, payday loans require a quick repayment and are often blamed for getting borrowers into a cycle of ongoing debt.
That leads us to the second reason some lenders require a bank account. The lender may also require that payments be automatically withdrawn each month on your due date.
This gives them a little more security and partially accounts for why they’re willing to lend to those with poor credit in the first place. Essentially, autopay from a valid checking account lessens the lender’s risk involved with the loan.
General Eligibility Requirements for a Bad Credit Loan
In addition to having your own checking account, most bad credit lenders have a few other concrete eligibility requirements. Here’s what else you can expect to need in order to improve your chances of being approved.
Age. All lenders in the U.S. require you to be at least 18 years old in order to qualify for your own loan.
Citizenship. You’ll need to be either a U.S. citizen or resident.
Income. Monthly income requirements vary by each lender, but at a minimum, expect to need at least $1,000 a month after taxes. This can be either from employment or benefits.
Contact Information. You’re going to need to supply at a minimum one working phone number and email address so your lender has multiple ways to contact you.
Wondering how to qualify for a loan if you don’t have a checking account?
Not only are there plenty of local banks and credit unions you can find to work with, there’s also an increasing number of online accounts that offer flexible criteria. There are typically two types of checking accounts to look out for.
The first is anything offered by a non-ChexSystems bank. If you have a negative banking history that’s causing your applications to get turned down, you probably have a record in ChexSystems. The key is to find a bank that doesn’t run this check and get approved for an account.
The second option is to look for a second chance checking account. Even if they do look at your ChexSystems record, you could still meet requirements to get an account. Usually, you have to pay a small monthly fee (though not always) and you might have some restricted features. Not only can a second chance account get you back into checking, but it can also get you eligible for that bad credit personal loan you need.
Back to Banking
As you can see, getting a bank account is a crucial part of also qualifying for a loan with poor credit. Today’s digital world practically relies on the ability to transfer funds electronically and there’s just no easy way of getting around this inevitability.
But a checking account can help you in more ways than just qualifying for a bad credit loan. You can sign up for direct deposit, whether received through an employer or through government benefits. You can also avoid the hassle of constantly carrying cash in your wallet or purse and having to rely on expensive prepaid debit cards to shop or pay bills online.
Both a bank account and a personal loan can help rebuild your financial history one step at a time. The longer you manage your accounts responsibly, the more likely you are to receive better interest rates and terms further down the road. If you get a second chance checking account, you can usually upgrade to a regular account within six months to a year. And consistent on-time payments on installment loans can help your credit score steadily rise over time.
With just a bit of research and time, you can set yourself up for a much brighter future with far fewer obstacles when it comes to managing your money. Get both the right checking account and the right bad credit loan today to start on the path to a better financial future.