Portions of this article were drafted using an in-house natural language generation platform. The article was reviewed, fact-checked and edited by our editorial staff.

Key takeaways

  • Taking out multiple bad credit loan can lead to cash flow problems and rising interest rates.
  • Poor credit scores can lead to higher interest rates and higher origination fees.
  • Applying for multiple loans can temporarily lower your credit score through multiple hard credit checks.
  • Alternatives to multiple bad credit loans include secured credit cards, government or economic hardship grants and loans from close friends or family members.

Taking out multiple bad credit loans may sound like a good solution to a financial issue, but it could actually make the situation worse. While you technically can take out multiple bad credit loans, it’s not the best financial move for everyone, especially if you’re having a hard time organizing your existing debts.

Taking out another loan to pay off existing debt may only delay the problem and increase costs, so it is important to consider all the potential consequences. Before you apply, consider potential alternatives and how another loan will affect your financial health.

Should I take out multiple bad credit loans?

Whether you should take out multiple bad credit loans depends on your ability to repay the loans and why you’re considering borrowing more. If you are considering taking out multiple loans, the first thing to do is evaluate your financial situation. Understand how much debt you already have, how much income you have each month and what your debt-to-income ratio is.

If your current debt load is too high and you are having trouble making payments, adding more debt may not be the best solution. Spreading yourself too thin financially can lead to problems down the road, including missed payments that can lead to further credit damage.

That being said, it may be more beneficial to concentrate on improving your credit before seeking to borrow more money. Since taking out too many bad credit loans can have  severe financial consequences, like high amounts of interest accrual, it may be best to find an alternative financing option.

If you need the funds on the fly and don’t have the time to improve your credit, then another loan may be the best option for you. However, keep in mind that this is only the case if you’re positive that you can make the monthly payments, both in the short and long-term.

When to consider a consolidation loan

For individuals who are having trouble making loan payments, a consolidation loan may be a more attractive option. A consolidation loan can help make loan payments more manageable by combining your debt into a single, potentially lower, payment. However, there are several considerations to make before applying for another loan, including:

  • The amount of debt you’re already juggling
  • Your monthly budget and if it allows for another monthly payment
  • Your current credit score and repayment history
  • What interest rates and fees you prequalify for
  • How much the total interest accrual would add to the total cost life of the loan

If you are considering getting a consolidation loan or another bad credit loan, be sure to check your credit score and debt load. Having a debt-to-income ratio above 36 percent can make it difficult to be approved for a loan.

Also, keep in mind that i those with low credit are more likely to be offered higher origination fees and higher interest rates than those with good to excellent credit, who are more likely to be offered the lender’s most competitive rates and lowest fees.

How many personal loans can I have?

While there’s no limit to how many personal loans you can have, there are still factors to consider before signing on the dotted line. Applying for multiple loans can temporarily lower your credit score through multiple hard credit checks and if you apply for several loans in a short amount of time, it can have a bigger impact.

If you don’t get approved for loans initially and you may need to enlist the help of a co-signer; however, this can cause relational difficulty if you can’t make the monthly payments on time, as it will impact your co-signer’s credit score and they’ll be required to make the payment.

It’s also recommended to only borrow exactly as much as you need; the more you borrow, the more likely it is to get trapped in a debt cycle which can quickly lead to financial hardship down the road. That being said, before you consider applying for multiple loans, carefully consider whether it’s the best solution for your situation.

Types of bad credit loans

Most bad credit loans are offered by online lenders, and the interest rates can be much higher than with traditional personal loans. However, there are a few other options for those who have a less-than-stellar score.

  • Home equity lines of credit (HELOCs) and home equity loans. These act as second mortgages, allowing borrowers to access cash based on the equity they have in their homes.
  • Cash advances from credit cards. Cash advances from credit cards may come with additional fees.
  • Payday loans. It’s recommended to avoid payday loans as they can be challenging to repay and are often predatory. These loans should only be used as a last resort due to their high costs and high interest rates which often exceed 300 percent.
  • Car title loans. Car title loans allow individuals to borrow a percentage of their car’s value, but they must fully own their vehicle and surrender the car title until the loan is repaid.

It’s best to avoid taking out multiple loans if at all possible but if you absolutely must take out a loan, payday, title, and pawnshop loans are typically the most accessible loans for individuals with bad credit.

How can I increase my chances of getting another loan?

If you have a poor credit score and need a loan, you should research lenders to find the most affordable option and ask how you can increase your chances of qualifying. While every lender is different, there are a few things that you can do to increase your chances of getting approved across the board.

  • Pay off existing debts. Taking on a loan can increase your debt-to-income ratio and put a strain on your budget. Before considering another loan, see if you have it in the budget to pay down any existing debts or consider taking out a debt consolidation loan to further simplify your existing loan payments.
  • Prequalify. If you want to avoid a negative impact on your credit, look for lenders that offer prequalification. This allows you to assess your eligibility and receive rate quotes without affecting your credit score.
  • Identify the reasons for denial. If your loan application is rejected, the lender will provide an adverse action letter explaining the reasons for denial. This information can help you take steps to improve your chances in the future, but keep in mind that regardless of the outcome, your credit score will still take a small hit.
  • Work on building or repairing your credit. Repairing your credit before applying for a loan can help you avoid being denied due to a low credit score and can increase your chances of scoring a more competitive rate.
  • Consider a secured personal loan. If you are having difficulty obtaining an unsecured loan you should consider applying for a secured personal loan, which is generally easier to get approved for because the balance is backed by collateral.

Alternatives to multiple bad credit loans

It is important to remain cautious when taking out multiple bad credit loans, as this can have negative consequences to your credit and financial health in the long run. However, if you absolutely need access to more funds but don’t qualify for — or want to — take out another loan, then you have a few options.

For one, you can always consider a secured credit card or one geared toward those with low credit. While these cards will likely come with high interest rates, they’re a way to get the funds you need, when you need them.

You can also apply for government or economic hardship grants from local or national nonprofit organizations. If possible, you can also consider asking a close friend or family member if they’d be willing to lend you the funds — just make sure you have a clear repayment plan in writing and stick to it to avoid damaging your relationship.

While the alternatives aren’t extremely plentiful, it’s best to investigate every single option to avoid possibly putting yourself in a financial hole by borrowing a large amount of high-interest debt.

Bottom line

Technically speaking, you can take out as many loans as you’d like; however, that isn’t always the best option for both your financial situation and your long-term credit health. Between keeping up with multiple payments to the impact on your debt-to-income ratio, taking on more debt with already shaky credit can increase your risk of further damaging your score.

If absolutely necessary, you can take out multiple bad credit loans with different lenders, but make sure to avoid predatory lending, like payday loans, which charge astronomically high interest rates. These types of loans are more likely to approve borrowers on the lower end of the credit spectrum, so make sure you read the terms and conditions carefully before applying for a bad credit loan to make sure you know what you’re signing up for.