How to Get a Personal Loan With Bad Credit (And What It Will Cost You)

What "Bad Credit" Means to a Lender

When a lender reviews your application, your credit score is a proxy for risk. Scores below 580 are generally considered "poor" and scores of 580–669 are "fair" — both commonly labeled "bad credit" in the lending industry.

With a score in this range:

• Many lenders will decline your application
• Those that approve will charge higher rates (15–36% APR)
• Loan amounts may be limited ($1,000–$5,000)
• Terms may be shorter

That said, bad-credit personal loans exist and serve real needs. The key is borrowing the minimum needed, comparing every offer, and having a concrete plan to repay.

Lenders That Work With Bad Credit

Online Lenders

Online lenders have the most flexible underwriting and often look beyond credit scores to income, employment stability, and bank account history.

• Upstart: Uses AI-based underwriting that weighs education and employment alongside credit score. Good for thin credit files or recent credit problems.
• Avant: Specializes in fair credit borrowers (580+). Transparent rates, fast funding.
• LendingPoint: Works with scores as low as 600.
• OneMain Financial: Physical locations, serves borrowers with poor credit, but rates are high (18–36%).

Credit Unions

Credit unions are member-owned and often more willing to work with members who have imperfect credit. If you are already a member, talk to a loan officer directly — they have more flexibility than automated systems.

Some credit unions offer Payday Alternative Loans (PALs): small amounts ($200–$1,000) at 28% APR max, far cheaper than payday lenders.

Credit Builder Loans

If you do not urgently need cash but need to build credit to qualify for better rates, a credit builder loan works differently: the lender holds the money in a savings account while you make monthly payments. When the loan is paid off, you receive the funds. These are available at many credit unions and online lenders like Self.

Compare credit builder loan options →

What to Watch Out For

Predatory Lenders

Some lenders target bad-credit borrowers with:

• Payday loans: 300–500% APR. Designed to trap borrowers in a cycle of renewals.
• Title loans: Use your car as collateral. You risk losing your vehicle.
• "Guaranteed approval" loans: No legitimate lender approves everyone. This is a red flag for scams or predatory terms.

Rule of thumb: Any loan above 36% APR is generally considered predatory by consumer advocates and many state regulators.

Upfront Fees

Legitimate lenders deduct origination fees from your loan — they do not ask for payment upfront before disbursing funds. A lender asking for a "processing fee" or "insurance payment" before approval is almost certainly a scam.

Comparing Bad Credit Loan Offers

Before accepting any offer, compare:

Use a personal loan calculator to compare total cost across offers.

How to Improve Your Odds

Check Your Credit Report for Errors First

Before applying, check your credit report at AnnualCreditReport.com. Errors on your report could be suppressing your score below where it should be. Disputing and removing an incorrect collection account or late payment could improve your score enough to qualify for better rates.

How to dispute credit report errors →

Apply With a Co-Signer

A creditworthy co-signer can dramatically improve your approval odds and interest rate. The co-signer's credit is equally at risk if you miss payments — only ask someone who fully understands and accepts the risk.

Consider a Secured Personal Loan

Some lenders offer personal loans secured by a savings account or CD as collateral. Because the lender has recourse, the rates are lower and approval is easier. Rates of 8–15% are achievable even with poor credit.

Be Realistic About Loan Size

Smaller loans are easier to get approved for and cheaper to repay. Borrow only what you genuinely need, not the maximum offered.

The Real Cost at Different APRs

$5,000 personal loan, 24-month term:

At 36% APR, you pay nearly $2,000 in interest on a $5,000 loan. This is why keeping loan amounts small and repaying quickly is critical when rates are high.

Frequently Asked Questions

What is the minimum credit score to get a personal loan? Some lenders work with scores as low as 560–580. Below 560, options are very limited and terms will be costly. Credit unions and secured loans offer the most accessible options.

Should I take a high-APR loan to consolidate credit card debt? Only if the loan rate is lower than the credit card rates you are consolidating. If your cards are at 24% and the loan is at 32%, consolidation will cost more, not less.

Will applying for multiple loans hurt my credit? Rate-shopping with multiple lenders within a 14–45 day window typically counts as one inquiry for scoring purposes. Pre-qualification (soft pull) checks do not affect your score at all — always pre-qualify before fully applying.