Can You Get a Personal Loan With Bad Credit?

A credit card is a revolving line of credit that allows you to borrow funds up to a specified limit for purchases, cash advances or balance transfers. Accessing a credit card can sometimes be challenging for borrowers with bad credit, but it's not impossible.

Specialized credit cards, often called secured credit cards, are designed for individuals with lower credit scores. These cards typically require a security deposit, which serves as collateral against the credit limit and minimizes risk for the issuer. Thus, approval is more likely even with a poor credit history.

A cash advance is a short-term loan that borrowers can obtain against their next paycheck or from their credit card. This type of loan is accessible even to those with bad credit, as it typically does not require a credit check. Instead, lenders focus on proof of income or the availability of funds on a credit card.

However, cash advances often carry very high interest rates and fees, which can rapidly increase the amount owed beyond the initial sum borrowed. Additionally, because of their accessibility and high costs, borrowers can easily fall into a cycle of debt, taking new advances to repay previous ones. MoneyGeek recommends avoiding these types of loans.

Online lenders are an accessible option for borrowers seeking personal loans with bad credit. These platforms often offer a streamlined application process that can be completed quickly from the comfort of one’s home, with decisions and funding available in a few days.

Many online lenders are willing to work with borrowers with lower credit scores, focusing on other aspects of their financial profile, such as income and employment. This approach can lead to higher interest rates compared to traditional loans, but it provides an opportunity for those who traditional banks might decline.

Online lenders may have more flexible income and employment requirements compared to traditional banks. However, interest rates for borrowers with poor credit from online lenders can be high, potentially exceeding 30% APR in some cases.

Credit unions can be a go-to option for personal loans for individuals with bad credit. As member-focused institutions, they often have more flexible lending criteria compared to traditional banks and might offer lower interest rates.

To join a credit union, you typically need to meet specific membership requirements based on factors such as where you live or work, pay a nominal membership fee and open a deposit account. Some credit unions have loosened membership requirements in recent years, allowing you to join based on broad criteria like residing in a particular county or state. C