It depends. Some payday lenders do credit checks before approving your loan, while others don’t. If your payday lender isn’t considering your credit score at all, they’ll shift the focus on your income. In a nutshell, they will try to discern if you have the cash flow to keep up with loan repayments if they offer you a payday loan.
But tread carefully with no-credit-check-payday loans: While they’re an easy way to secure cash when you need it, you run the risk of staying in debt with steep interest rates and penalties for not repaying your loan on time.
For the most part, payday lenders have extremely generous lending criteria compared to traditional personal loan providers, and specifically market their loan products to people in a bad credit situation. So even if lenders see your bad credit, it likely won’t disqualify you.
With some of the highest interest rates on the market and the tightest turnaround times for loan repayments, welfare recipients in Canada need to be wary of payday loans. While they’re convenient when you’re in a financial bind, here are some things to keep in mind:
- It’s expensive. Not only is the interest rate extremely high, but if you don’t repay your loan on time, you could be penalized with additional fees. Explore all of your financing options before you decide to apply. If you think you might have problems paying the payday loan back on time, avoid getting it in the first place.
- It’s a short-term solution. A short loan term doesn’t give your finances much time to recover. This is why it’s important to be certain that you can repay the loan by your next payday.
- Avoid falling for a payday loan scam. There are many lenders in the online space who prey on people who need money urgently. Be careful when selecting a lender and always do research to find one who is reputable and trustworthy.
How to apply for payday loans as a welfare recipient
While it varies among lenders, you will usually need to supply the following information to apply for payday loans that accept social assistance in Canada:
- Valid ID with your name and address.
- Valid phone number.
- Pay cycle frequency (e.g. bi-weekly or monthly).
- Net and gross amounts of all your income, including your welfare income.
- Proof of income (you can get this by logging into your CRA MyAccount)
- Bank account information where your funds will be transferred (chequing account, routing and institution numbers).
Installment loans if you have benefits in addition to social assistance
If you receive other government benefits regularly to supplement your social assistance, you could be eligible for an installment loan.
What is an installment loan?
An installment loan is a type of personal loan with a fixed amount loan that you pay back periodically. Student loans, mortgages and car loans are examples of installment loans because you also repay these with regular amounts over a period of time. There is a key difference though: 
Most loans that lenders refer to as installment loans are personal loans that come with smaller loan amounts and shorter loan terms than the average personal loan.
Installment loans are usually unsecured and come with a set repayment schedule you’ll iron out with your lender. This way, you’ll know precisely when payments are due and for how much. Term lengths often last between six months and five years.
Yes, your credit score may take a dip temporarily when you apply for your installment loan. This is because lenders usually run a hard credit check on your application to determine if you’re a safe borrower.