Quick Answer Box
Yes, you can get a personal loan with bad credit. Lenders like Upstart, Avant, and LendingClub accept credit scores as low as 300-580, though you’ll face higher interest rates averaging 30% APR and may qualify for smaller loan amounts. Your approval chances improve with verifiable income, adding a cosigner, or choosing secured loan options.
Getting denied for a loan because of past financial mistakes feels defeating. But here’s something most people don’t realize: LendingTree users with credit scores below 580 received up to $43,553 for personal loans in the first half of 2025. Bad credit doesn’t automatically disqualify you from borrowing money—it just changes the game you’re playing.
Most lenders define bad credit as a FICO score below 580, but the lending landscape has evolved. Technology-driven lenders now evaluate factors beyond your three-digit score, and some traditional institutions have loosened their grip on rigid credit requirements. This guide walks you through exactly how to navigate personal loans when your credit history isn’t perfect, what to expect from the process, and how to avoid expensive mistakes.
What Makes Getting a Personal Loan with Bad Credit Different?
Traditional banks built their lending models around credit scores because they needed quick ways to assess risk. When your score drops below 580, you’re statistically more likely to miss payments, and lenders respond by either rejecting applications outright or charging premiums to offset that risk.
The difference shows up immediately in the numbers. Borrowers with bad credit typically face APRs at or above 30%, compared to the 15-20% range for those with good credit. That percentage gap translates to real money—on a $10,000 loan over three years, you might pay an extra $2,000-$3,000 in interest compared to someone with excellent credit.
But higher rates aren’t the only shift you’ll encounter. Bad credit loans often come with shorter repayment terms and lower maximum loan amounts than standard personal loans. Where someone with a 720 credit score might qualify for $50,000 over seven years, you might be limited to $15,000 with a three-year repayment window. The tighter terms mean higher monthly payments, which creates a catch-22: lenders worry about your ability to repay, so they structure loans that are actually harder to afford.
Who Actually Approves Personal Loans for Bad Credit?
Finding the right lender matters more than you’d think. Some institutions specialize in working with borrowers who have damaged credit, while others will waste your time with applications they’ll inevitably reject.
Upstart uses an AI algorithm that evaluates factors outside credit history, including education and employment, with a credit score requirement as low as 300. This approach opens doors for people who’ve rebuilt their financial lives but still carry old credit scars. The algorithm asks unusual questions—like your savings account balance and car mileage—that traditional lenders ignore.
Upgrade specializes in debt consolidation and accepts credit scores as low as 580, with the unique feature that they’ll pay your creditors directly on your behalf. This matters if you’re drowning in high-interest credit card debt, because it removes the temptation to use loan proceeds for other purposes.
Avant offers fast funding for fair and bad credit borrowers, often approving loans and depositing funds within one business day, though their rates and origination fees tend to run high. Speed comes at a price, but when you’re facing a genuine emergency, that tradeoff might be worth making.
Credit unions present another option worth exploring. As credit union members, you become eligible for loans with more favorable terms because credit unions typically have lower interest rates and may work with members who have less-than-perfect credit. The catch? You usually need to establish membership first, which involves opening an account and sometimes meeting geographic or employment requirements.
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What You’ll Need to Actually Get Approved?
Bad credit lenders don’t just hand out money based on a smile and a promise. They dig deeper into your financial life to compensate for that low credit score.
Basic eligibility requirements include being a U.S. citizen or permanent resident, being at least 18 years old, having verifiable income from employment or benefits, maintaining a favorable debt-to-income ratio, and having an active bank account for disbursement and repayments. These aren’t suggestions—they’re gatekeepers that determine whether your application moves forward.
The income verification piece gets serious when your credit is damaged. Lenders want proof you can actually afford the monthly payment, so expect to provide recent pay stubs, bank statements showing deposit patterns, and possibly tax returns from the last two years. Self-employed borrowers face extra scrutiny because their income fluctuates, making it harder to prove consistent earning power.
Your debt-to-income ratio matters more than many borrowers realize. This calculation divides your monthly debt payments by your gross monthly income. Most lenders want to see this number below 43%, though some will stretch to 50% for borrowers with compensating factors like stable employment or substantial savings. If you’re already spending 45% of your income on debt, adding another loan payment becomes mathematically questionable.
The Real Cost of Borrowing with Bad Credit
Let’s talk numbers without sugarcoating them. A typical example shows a $10,000 personal loan with an 18.73% interest rate and 8.99% origination fee resulting in a 23.26% APR, where you’d receive $9,101 and make 60 monthly payments of $257.92. Notice you don’t get the full $10,000—that origination fee gets deducted upfront, yet you’re paying interest on the full amount.
Origination fees deserve special attention because they’re easy to overlook. These fees typically range as high as 15% for bad credit loans and are deducted from your loan proceeds before you see a penny. If you need exactly $5,000 for a specific purpose, you might need to borrow $5,800 to actually receive $5,000 after fees.
Average rates for bad-credit borrowers have stayed below 31% for over a year and below 30.5% for most of 2025, which means lenders should avoid offers charging rates above 36%. That 36% threshold separates legitimate lenders from predatory ones. Anything higher veers into payday loan territory, where the debt cycle becomes nearly impossible to escape.
How to Improve Your Approval Chances Right Now?
Waiting six months to repair your credit isn’t realistic when you need money for a broken transmission or unexpected medical bill. These strategies work with the credit you have today.
Adding a cosigner transforms your application from high-risk to manageable. Prosper permits co-applicants, and applying with a creditworthy friend or family member can increase approval likelihood, earn you a lower rate, or qualify you for a larger loan—though the cosigner becomes equally responsible if you default. This isn’t a decision to make lightly. Missing payments doesn’t just hurt you; it damages someone else’s credit and potentially destroys a relationship.
Secured loans flip the risk calculation by requiring collateral. When you pledge a paid-off vehicle or savings account as collateral, you could end up with a lower interest rate because the loan’s collateral helps offset the lender’s risk—though defaulting means the lender can seize that collateral. The math works in your favor here: a secured loan might charge 18% instead of 32%, saving thousands over the loan’s life.
Asking for less money than you actually need sounds counterintuitive, but it works. Lenders feel more comfortable approving smaller amounts because the total risk decreases. Instead of requesting $15,000, consider whether $10,000 would solve your immediate problem. You can always apply for additional funding later once you’ve demonstrated responsible payment behavior.
Alternatives When Traditional Lenders Say No
Personal loans aren’t your only option, though the alternatives come with their own complications. Credit unions sometimes offer payday alternative loans—small-dollar loans designed as safer alternatives to predatory payday lending. These typically max out around $2,000 with repayment terms of one to six months, but the rates stay reasonable.
If you own your home, a home equity line of credit might offer lower rates than an unsecured personal loan, even with bad credit. The property acts as collateral, reducing lender risk. But tapping home equity means putting your house at risk if financial circumstances deteriorate—a tradeoff that demands serious consideration.
Cash advance apps like Earnin or Dave provide small, short-term loans of $100-$500, though the fees for instant transfers add up quickly. These work for genuine emergencies when you’re two days from payday, but relying on them regularly suggests a deeper budgeting problem that needs attention.
Buy-now-pay-later services handle specific purchase situations without traditional loan applications. Need a new laptop for work? Affirm or Klarna might split the cost into four interest-free payments. The lack of credit check appeals to people with damaged scores, though missing payments damages credit just like traditional debt.
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Red Flags That Scream Predatory Lending
Not every lender offering bad credit loans operates ethically. Some exploit desperate borrowers with terms that guarantee financial failure.
Before sharing personal information, always verify a lender’s licensing and registration with your state’s attorney general, especially for unsolicited offers through mail, email, or social media. Legitimate lenders don’t cold-call or send spam emails promising guaranteed approval without applications.
“No credit check” marketing deserves skepticism. While some lenders offer loans without credit checks, these may involve predatory lenders charging exorbitant fees, or result in smaller loans with short repayment terms even from legitimate sources. Lenders need some way to assess your ability to repay—if they’re not checking credit, they’re probably charging fees that assume you’ll default.
Upfront fees before loan approval signal problems. Legitimate lenders might charge origination fees deducted from loan proceeds, but they don’t demand payment before telling you whether you’re approved. Anyone asking for money upfront is probably running a scam.
Frequently Asked Questions
Can I get a $10,000 loan with a 500 credit score?
Getting a $10,000 loan with a 500 credit score may be challenging but not impossible, depending on factors like the specific lender, whether you can prove sufficient income for repayment, and whether you can provide collateral or add a cosigner. Most borrowers at this credit level qualify for smaller amounts in the $2,000-$5,000 range. Your best strategy involves applying with lenders specializing in subprime lending, providing extensive income documentation, or adding a creditworthy cosigner to strengthen the application.
How fast can I get approved for a bad credit personal loan?
Some lenders like Avant can approve and fund loans the day after you apply, with 99% of personal loan funds sent the next business day after completing required paperwork before 5 p.m. Monday through Friday. The timeline varies by lender and how quickly you provide requested documentation. Online lenders typically move faster than traditional banks. Prequalification takes minutes, formal applications might get decisions within hours, and funding can hit your account in one to three business days after approval.
Will applying for a personal loan hurt my credit score more?
Prequalifying only involves a soft credit pull that doesn’t affect your score, but formally applying generates a hard credit inquiry that could temporarily lower your score by a few points. The impact is minimal and short-lived—typically recovering within a few months as long as you’re making on-time payments. Multiple hard inquiries within a 14-45 day window usually count as a single inquiry when you’re rate shopping, so comparing multiple lenders won’t multiply the damage.
Final Thoughts
Bad credit makes borrowing harder and more expensive, but it doesn’t make it impossible. The key lies in understanding what you’re actually signing up for—higher rates, tighter terms, and more scrutiny on your finances. Focus on lenders that specialize in working with damaged credit, prepare thorough documentation proving you can repay, and avoid the temptation of loans with rates exceeding 36%. Every on-time payment you make rebuilds your credit gradually, opening doors to better terms on future borrowing. The goal isn’t just getting approved today—it’s positioning yourself to never need a bad credit loan again.
