Best Personal Loans for Bad Credit (2026)

Can You Get a Personal Loan with Bad Credit?

Yes — but the terms will be worse than what someone with good credit receives, and some lenders will decline you entirely. A credit score below 580 significantly limits your options and raises your interest rate. The average APR for a personal loan to someone with poor credit is 25–35%+ — compared to 10–15% for borrowers with good credit.

That math means borrowing $5,000 at 30% APR for 3 years costs you $2,800 in interest. The same loan at 12% APR costs $987. Knowing this going in helps you make a better decision about whether to borrow at all, and which lender to choose.

Lenders That Work with Bad Credit Borrowers

Online lenders (Upstart, LendingPoint, Avant, OppLoans) are generally more willing to lend to borrowers with low credit scores than traditional banks. They often use alternative underwriting factors — employment history, education, cash flow — in addition to credit score. The tradeoff: higher APRs and fees.

Credit unions are worth trying before online lenders. They're member-owned nonprofits and often have more flexible underwriting for existing members. Some credit unions offer "payday alternative loans" (PALs) — small, short-term loans designed specifically for members who would otherwise resort to payday lenders, capped at 28% APR.

Secured personal loans allow you to borrow against collateral — a savings account, CD, or vehicle — reducing the lender's risk and often resulting in a lower rate. The risk: if you default, you lose the collateral.

What to Watch Out For

Origination fees. Some bad-credit lenders charge 5–10% origination fees deducted from your loan proceeds. A $5,000 loan with a 10% origination fee means you receive $4,500 but owe $5,000. Factor this into the true cost.

Prepayment penalties. Some lenders charge a fee if you pay off the loan early. This negates any savings from paying ahead — look for "no prepayment penalty" before signing.

Predatory lenders. Payday loans (200–400% APR), rent-to-own schemes, and some online installment lenders targeting poor-credit borrowers are designed to keep you in debt. If the APR is above 36%, you are likely in predatory territory.

Improving Your Chances of Approval

• Add a cosigner with good credit — they share responsibility for repayment but can significantly lower your rate
• Apply to lenders that do soft pulls first — prequalification without a hard inquiry lets you check rates without hurting your score
• Show stable employment — consistent employment history matters to many lenders even when credit score is low
• Borrow less — a smaller loan is less risky for the lender and easier to approve

Compare the best personal loans for bad credit →