Struggling with a low credit score but still need access to funds? You’re not alone. Many Americans find themselves needing a personal loan for unexpected expenses, medical bills, or consolidating debt—even when their credit isn’t perfect. The good news? It’s still possible to get a personal loan with bad credit. You just need to know a few secrets on where to look and how to prepare.
What Is Considered Bad Credit?
Before we dive into solutions, it helps to understand what “bad credit” actually means. Most lenders use the FICO score, which ranges from 300 to 850.
General Breakdown
- 300–579: Poor
- 580–669: Fair
- 670–739: Good
- 740–799: Very Good
- 800–850: Excellent
If your score is under 670, many traditional lenders may consider you a higher-risk borrower. But don’t worry—there are still options available.
Steps To Get A Personal Loan With Bad Credit
1. Check Your Credit Report
Start by reviewing your credit report for any errors that might be dragging down your score. You can get a free report annually from all three major bureaus (Experian, Equifax, and TransUnion) at AnnualCreditReport.com.
If you spot any mistakes, dispute them. Correcting even small errors can boost your score and improve your chances of loan approval.
2. Shop Around for Lenders
Not all lenders treat bad credit the same.
Options to Consider
- Online lenders: Many specialize in bad credit loans and offer fast approval processes.
- Credit unions: These nonprofit institutions often provide more favorable rates and are more flexible with credit scores, especially if you have an account with them.
- Community banks: Smaller banks may be more willing to work with borrowers who have a less-than-perfect credit history.
- Peer-to-peer lending platforms: These connect individual borrowers with investors and may offer more lenient credit requirements.
3. Consider a Co-Signer
If you have a trusted friend or family member with good credit, ask them to co-sign the loan. This can significantly increase your chances of approval and potentially lower your interest rate. Just remember—a co-signer is equally responsible for repaying the loan.
4. Look Into Secured Loans
Secured personal loans require you to offer collateral (like a vehicle, savings account, or other asset) in exchange for the loan. This reduces the lender’s risk and increases your approval odds. However, if you fail to repay, you risk losing the asset you used as collateral.
5. Compare Interest Rates and Terms
When you have bad credit, interest rates can vary widely. Some lenders may charge APR rates of 25% or higher, while others offer more reasonable terms. Don’t accept the first offer you receive—compare multiple quotes to find the most affordable loan.
Other Considerations
- Loan origination fees
- Prepayment penalties
- Monthly repayment amounts
- Total loan term (in months or years)
6. Avoid Payday Loans
While payday loans may seem tempting for quick cash, they’re often predatory. With sky-high interest rates and short repayment terms, they can trap borrowers in a cycle of debt. Look for reputable personal loan lenders instead.
7. Boost Your Loan Application
Even with bad credit, you can strengthen your application.
- Showing proof of steady income
- Reducing your debt-to-income ratio
- Providing documentation (pay stubs, tax returns, bank statements)
- Highlighting on-time payment history for other bills (like rent or utilities)
Top Lenders That Offer Personal Loans to Borrowers with Bad Credit
While options vary by state, there are a few popular personal loan providers that often work with borrowers who have low credit scores.
Upstart
- Minimum credit score: 300
- Known for using AI to assess loan applications beyond just credit scores
OneMain Financial
- Offers both secured and unsecured personal loans
- Has physical branches for in-person service
Avant
- Caters to borrowers with credit scores as low as 580
- Offers flexible loan terms and quick funding
LendingPoint
- Focuses on fair-to-good credit
- Approves borrowers with credit scores as low as 600
Final Tips for Success
- Borrow only what you need. Don’t take out more than you can reasonably repay.
- Stay on top of payments. On-time payments can improve your credit score over time.
- Set up auto-pay. This ensures you never miss a due date.
- Build your credit. Even after you get the loan, work on improving your score for better financial options in the future.
You’re Not Stuck—There Are Solutions
Having bad credit doesn’t mean you’re out of options when it comes to personal loans. With the right strategy—checking your credit, comparing lenders, considering a co-signer, and understanding your loan terms—you can get the funding you need and start rebuilding your financial health.
