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If You Have Bad Credit, There Aren't "Grants" That Can Help You

Written by
Alex Huntsberger
Alex Huntsberger is a personal finance writer who covered online lending, credit scores, and employment for OppU. His work has been cited by, Business Insider, and The Motley Fool.
Read time: 6 min
Updated on July 27, 2023
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While the government does have grant programs aimed at helping people in need, they aren't the kind of thing that you can just apply for directly.

Loans are a necessary part of modern-day life. Without them, most people wouldn’t be able to afford any large purchases like houses, cars, or even furniture and other major appliances. Being able to put down a little money now and pay something off over time in exchange for some interest allows folks to live better than they otherwise could.

But when you have bad credit, getting a personal loan can be tough. Real tough.

If you’ve seen ads promising a government grant for someone with bad credit, you might think this is the answer to your problems. But it’s not. While there are grants designed to help people with low incomes, they aren’t something where you can simply go online, fill out a form, and expect a deposit in your bank account. More likely than not, the ad you’re seeing is a scam. (For our deep dive on bad credit loans themselves, check out the OppU Guide to Bad Credit Loans.)

How is a grant different from a loan?

The main difference between loans and grants is simple: Loans have to be repaid, while grants do not. When you take out a loan, you are borrowing money. The institution that lent it to you is expecting you to pay them back, plus interest. When you take out a grant, the institution is giving you money for a specific purpose. No repayment required.

Both loans and grants can be made to individuals or organizations. Loans typically come from banks or lenders, while grants can come from a variety of sources, like schools, non-profits, individuals, and trusts. The federal government also doles out tons of both, as do state governments.

Because grants don’t have to be repaid, you’ll see people refer to them as “free money.” And you know what? That’s true! When you take out a loan, you’re not getting free money. You’re paying interest so that the lender can reduce their risk and turn a profit. With a grant, you’re not paying any extra costs. However, the term “free money” gets used a bit too … freely.

Most federal grants go to businesses and states, not people.

This is the biggest reason why you can’t just go get a grant to help stabilize your finances. The Federal government does provide financial aid resources to help people in need, but they do so by dispersing money to nonprofit organizations and state or local governments. Even federal benefits like Supplemental Nutrition Assistance Program or SNAP (also known as “food stamps”) are administered through individual states.

One of the major exceptions to this rule is if you’re in an area that’s been hit by a natural disaster. In cases like that, you should be able to apply directly to the federal government for assistance. You can learn more by visiting

When it comes to lending, the government usually insures or helps private lenders arrange loans rather than lending money to individuals itself. The government’s involvement helps people qualify for loans who would not otherwise be able to. For instance, you might be able to qualify for an FHA mortgage loan, which is insured by the government and come with lower capital requirements.

If eligible, you should apply for government benefits.

If you’re going to get a grant from the government, it is likely going to be in the form of public assistance, and it’s probably going to be administered by your state or local government. Government programs you might qualify for include SNAP, Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI), and Low Income Home Energy Assistance Program (LIHEAP). Additional programs are available for US Veterans.

Eligibility will vary depending on age, location, and income. Meanwhile, just because you are eligible for a government program does not mean that you will be accepted, so don’t limit your search to these larger federal programs. You should also check out local government programs in your city, state, or county, as well as grants that are offered by local non-profits and aid organizations.

Programs like these are not what most people are thinking of when they think “I need a grant” but they are the closest thing that you’ll find. And if someone comes along offering you something better, it’s most likely a scam.

Beware of “government grant” or “free money” offers.

Con artists love dangling promises of free money to entice potential victims. If you get an email in your inbox promising an easy “government grant” or someone calls you with a fantastic sounding pitch for “free money,” they are likely a scammer.

The jerks who run these scams are likely looking to do one of two things. They either want you to pay some kind of upfront fee, after which they disappear, or they want to get your personal/financial info—stuff like your bank account and social security numbers—at which point they’ll steal your identity.

If you receive an email promising free money or a government grant, delete it. Don’t even open it, and certainly don’t click on any links it contains. Doing so will open you up to a phishing scheme, where scammers steal your online ids and logins.

And if you receive a phone call from someone making similar promises, just hang up on them. Whatever you do, refrain from giving them any personal information over the phone. Even if they pinky swear that they’re from a legitimate government branch, ask them for all their relevant business and contact info. That’ll make them get off the line right quick.

If you have bad credit and need money, there are other options.

When you have a credit score below 630 and you have an unexpected expense, like a car repair or a medical bill, you’re going to be in a tough spot. Building up an emergency fund is the best way to handle situations like these, but that’s more a long-term play. If you need money, and need it now, your options will be limited—especially since a “government grant” won’t be on the table.

Borrowing money from your family can be a good way to go—even if it might mean swallowing your pride—but lots of people don’t have that option. You can also try pawning some of your valuable, but the trouble with pawn shop is that you’ll probably only receive a fraction of what your item is worth. In many cases, the sentimental value will be much higher than what you can get for it.

Putting the bill on your credit card isn’t great, but it’s probably much better than settling for a high-cost no credit check loan.No matter what kind of loan you end up taking out, make sure you do your research. Borrowing money means being on the hook for repayment, and there could be dire consequences for your credit score if you default on your loan agreement. Sure, a grant would be far preferable to loan but, for all their faults, bad credit loans have a big leg-up on bad credit grants: They actually exist.

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