Getting a personal loan with a bad credit score might feel impossible, but it’s not. Millions of Americans have credit scores below 600, and lenders know this. Whether you need money for medical emergencies, car repairs, debt consolidation, or unexpected expenses, there are still options—even if your credit history isn’t perfect.
In this guide, you’ll learn:
- What qualifies as a bad credit score
- Where to find personal loans for bad credit
- The best lenders in the USA
- Pros, cons, and how to improve your chances of approval
What is a Bad Credit Score?
Your credit score is a 3-digit number that reflects your creditworthiness. It’s calculated based on your payment history, credit utilization, age of accounts, types of credit, and recent inquiries.
FICO Score Range:
- Excellent: 800 – 850
- Very Good: 740 – 799
- Good: 670 – 739
- Fair: 580 – 669
- Poor (Bad Credit): 300 – 579
If your score falls below 580, most traditional banks will either deny your loan application or charge extremely high interest rates. But there are specialized lenders who cater to this group.
Can You Get a Personal Loan with Bad Credit?
Yes, you can. But you’ll need to be more careful and strategic.
Many online lenders, credit unions, and peer-to-peer platforms offer personal loans for borrowers with poor credit. However, they often come with:
- Higher interest rates (APR)
- Smaller loan amounts
- Additional fees
- Co-signer requirements (sometimes)
Top Lenders Offering Personal Loans for Bad Credit (2024)
Here’s a comparison of some of the best bad credit lenders in the USA:
| Lender | Minimum Credit Score | Loan Amount | APR Range | Highlights |
|---|---|---|---|---|
| Upgrade | 560+ | $1,000 – $50,000 | 8.49% – 35.99% | Fast online process, fixed APR |
| LendingPoint | 580+ | $2,000 – $36,500 | 7.99% – 35.99% | Same-day funding possible |
| Avant | 580+ | $2,000 – $35,000 | 9.95% – 35.99% | Flexible loan terms |
| Upstart | 300+ | $1,000 – $50,000 | 6.5% – 35.99% | AI-driven approval process |
| OneMain Financial | None | $1,500 – $20,000 | 18% – 35.99% | Branch support, no min score |
📝 Note: APR = Annual Percentage Rate. Always read the full loan agreement carefully before signing.
How to Apply for a Personal Loan with Bad Credit
- Check Your Credit Score:
Use free platforms like Credit Karma or Experian to see where you stand. - Review Your Credit Report for Errors:
A wrong entry could be lowering your score unfairly. Dispute any errors before applying. - Determine How Much You Need:
Borrow only what you absolutely need. This keeps your repayments manageable. - Compare Lenders:
Look at APRs, repayment terms, fees, and eligibility criteria. Some lenders offer prequalification with a soft credit check. - Gather Required Documents:
- Government-issued ID
- Proof of income (pay stubs or tax returns)
- Active bank account information
- Social Security Number
- Apply Online or In-Person:
Many lenders allow you to apply directly through their websites. Some, like OneMain, offer in-branch assistance. - Receive Funds:
If approved, funds may arrive in your account within 24 to 72 hours.
Pros and Cons of Bad Credit Personal Loans
Pros:
- Access to emergency funds
- May help improve credit if payments are made on time
- No need for collateral (in most cases)
Cons:
- High interest rates
- Strict repayment terms
- Additional origination or late payment fees
- Risk of falling into a debt trap
How to Increase Your Chances of Getting Approved
- Add a Co-Signer: A trusted family member or friend with good credit can improve your chances significantly.
- Offer Collateral: Some lenders offer secured personal loans (e.g., using your car as collateral).
- Show Proof of Stable Income: The stronger your income, the better your chances—regardless of credit score.
- Prequalify Before Applying: This allows you to check if you’re eligible without affecting your credit score.
Alternative Loan Options for Bad Credit Borrowers
- Secured Personal Loans: Backed by an asset like a car or savings account.
- Credit Union Loans: Often more flexible and willing to work with members who have bad credit.
- Peer-to-Peer Lending Platforms: Such as LendingClub or Prosper.
- Payday Alternative Loans (PALs): Offered by some credit unions, much safer than payday loans.
- Borrowing from Friends/Family: Interest-free, but should be formalized with a repayment plan.
Things to Watch Out For (Red Flags 🚩)
- Upfront Fees: Legitimate lenders will never ask for money before giving you a loan.
- Too-Good-to-Be-True Promises: No one can “guarantee” approval, especially for bad credit.
- Payday Loans: Extremely high interest (often 300–400% APR). Avoid unless it’s the absolute last resort.
- Unsecured websites or shady apps: Always verify the lender’s legitimacy before entering personal info.
Tips to Improve Your Credit Score Before Applying
Improving your score—even slightly—can unlock better loan terms.
- Pay all bills on time (payment history = 35% of your score)
- Keep credit card balances below 30% of your limit
- Avoid applying for multiple new accounts at once
- Dispute errors in your credit report
- Use tools like Experian Boost to add positive history
Real Example: Sarah’s Story
Sarah had a credit score of 540 after losing her job in 2022. She needed $5,000 to pay medical bills but got rejected by her bank.
She:
- Checked her score on Credit Karma
- Applied at LendingPoint with a co-signer
- Got approved within 24 hours at 27% APR
- Paid off the loan in 8 months
- Her credit score jumped to 615
Moral: With the right strategy, bad credit doesn’t have to mean no options.
Frequently Asked Questions (FAQs)
Q1. Can I get a loan with a 500 credit score?
Yes, lenders like Upstart and OneMain Financial may approve applicants with scores as low as 500 or even no credit score, but terms may be less favorable.
Q2. Do bad credit loans hurt your credit more?
No, as long as you make timely payments, they can actually help rebuild your credit over time.
Q3. How much can I borrow with bad credit?
Typically between $1,000 and $20,000 depending on your income and lender policies.
Q4. Will applying affect my credit score?
Yes, but only after a hard inquiry. Many lenders offer soft check prequalification options.
Q5. Are online bad credit loans safe?
Only if you use verified lenders. Always look for HTTPS sites and research reviews before applying.
Conclusion
Having bad credit isn’t the end of the road when it comes to getting a personal loan. There are trustworthy lenders in the USA that provide personal loans specifically designed for individuals with poor credit histories. With the right approach—checking your score, comparing offers, and applying strategically—you can access funds and even begin rebuilding your credit.
Ready to take action? Start by checking your credit score and prequalifying with one or two lenders today.