Are Loans for Bad Credit Legal in the US


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Having bad credit can be a frustrating disadvantage. Getting lenders to trust your ability to pay them back over time can be particularly challenging. However, is it legal and possible to get loans for bad credit in the US?

The simple answer is yes. Having bad credit history does not mean you are disqualified from borrowing a loan. However, obtaining a loan from traditional lenders such as banks or credit unions is hard.

That’s where WeLoans come in. WeLoans connects you with professional lenders specializing in lending to people with bad credit. Read on to learn how to get your online loans for bad credit on the page of WeLoans.

What Types of Bad Credit Loans Can I Get? 

Eric Bank at WeLoans, an expert financial writer, recommends that borrowers compare rates and fees from different types of loans before deciding. Let’s learn more about the types of these bad credit loans from WeLoans.

Secured Loan

A secured loan requires collateral such as a car or property to unlock a higher loan limit. This type of loan typically has lower interest rates and is more attainable since the collateral provides a sense of security.

Payday Loan

A payday loan could be viable when you have bad credit and require little money to cover expenses before your next paycheck. These lenders usually don’t consider your credit score, focusing on your income and ability to repay the loan. 

However, payday loans often have high-interest rates and fees, so it’s important to carefully review the loan terms and consider other alternatives before proceeding with this option. 

Installment Loan

Installment loans have gained widespread popularity due to their flexibility and ease of repayment. They allow you to repay the loan amount plus interest over a set period, usually in equal monthly installments. 

This approach makes managing your finances easier since you can budget monthly payments. You can visit WeLoans to get more details about installment loans.

No Credit Check Loan

These affordable and fast loans allow you to stay afloat despite your financial difficulties. Your credit score is not factored in the approval process. Instead, the lenders will require information like your employment status and income details during the screening process. 

However, a no-credit-check loan often comes with high-interest rates and fees, making them a costly option in the long run.

How to Identify Scams for Bad Credit Loans?

Some loans for people with bad credit may not be trustworthy, and you must be careful to avoid getting scammed. There is a possibility of a scam if the lender…

  • Asks you to pay fees upfront.

A legitimate lender will only ask for payment after they approve your loan. They may charge an application or credit report fee but will deduct these fees from your borrowed loan.

  • Has no physical address.

A trustworthy lender will have their address listed on their website, and you can check it using a mapping app like Google Maps. Always verify the lender’s address before applying for a loan.

  • Is not registered with FTC.

A lender must be registered with the appropriate state regulatory agency, Federal Trade Commission (FTC). Be cautious and do your research on both online and in-person lenders. 

  • Makes the initiative to contact you.

Scammers often contact potential victims out of the blue, so be careful about giving them your personal information. A legitimate lender won’t cold call you asking for your personal information. If you didn’t initiate contact with the lender, avoiding engaging with them is best.

  • Has an insecure website.

It’s essential to ensure the lender’s website is secure before sharing sensitive information. Scammers may try to steal your personal and financial information through fraudulent websites. 

To avoid such scams, check the website URL for a padlock icon and the letter “s” after “http” in the web address. It shows that the website is safe and secure. 

  • Does not check your payment history.

A legitimate lender will want to see your payment history, credit score, DTI ratio, and other financial information before approving you for a loan. 

Always provide truthful and accurate financial information to lenders to ensure a smooth and legitimate loan application process.

How to be Eligible for Bad Credit Loans Online?

There are specific criteria that you need to meet:

  • You must be at least 18 years old. 
  • You must be a US citizen or a permanent resident.
  • With a minimum income requirement. The minimum income requirement depends on the loan amount you’re seeking, your credit score, and your employment status.
  • You must provide personal details to verify your identity and deposit the loan funds into your account, like your Social Security Number, bank account, email address, etc.


Bad credit loans can benefit people with poor credit scores who need emergency funds. Although loans for bad credit are legal in the US, regulations and restrictions vary by state. It’s crucial to check the associated risks, such as higher interest rates and fees, and confirm the terms and conditions before signing any loan agreement. 

Using a reputable broker like WeLoans can aid in finding the best loan offer for your needs. However, conducting your own research on potential lenders is still essential to ensure their legitimacy.