Can You Get a Personal Loan With Bad Credit?

A personal loan is a type of unsecured loan that allows you to borrow money without needing collateral. You can use a personal loan to consolidate debt, cover emergency expenses or fund major purchases. To qualify, lenders generally evaluate your creditworthiness, which includes your credit score.

If you have bad credit, you may still be able to get a personal loan, but it can be more difficult. Due to perceived higher risk, lenders may impose higher interest rates or more stringent repayment terms, which can increase the overall cost of borrowing. Shopping around and comparing offers from different lenders can help you find the best option that suits your financial situation and credit profile.

Key Takeaways

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A poor credit score typically falls below 580 for a FICO credit score and between 300 and 600 for a VantageScore.

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Some lenders are more willing to work with borrowers with bad credit, including online lenders, credit unions and local lenders like community banks.

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To improve your chances of getting a personal loan with bad credit, check your credit score regularly, shop around for lenders and get prequalified.

What’s Considered a Bad Credit Score?

Credit scores range from 300 to 850, with higher scores representing better creditworthiness. A bad credit score generally is below 580 for FICO scores and between 300 and 600 for VantageScore. Lenders see a bad credit score as a sign that you're a higher-risk borrower.

While the definition of what constitutes bad credit differs slightly between FICO and VantageScore, the factors used to measure credit scores are similar. These include payment history, credit utilization, length of credit history, new credit inquiries and the mix of credit types a person has open.

Note that late or missed payments, carrying high balances on credit cards and submitting multiple new credit applications can all negatively impact your score. These factors signal potential financial instability to lenders, which can affect your ability to secure credit.

Credit Score
FICO
VantageScore

Very Poor

Under 300

300–499

Poor

300–579

500–600

Fair

580–669

601–660

Good

670–739

661–780

Very Good

740–799

What Interest Rates Can You Get With Bad Credit?

As of October 2024, the average interest rate for a 24-month personal loan is 12.33%, according to Federal Reserve data. However, the interest rate you receive will depend on various factors, such as your credit score and the lender you choose.

With bad credit, you'll likely receive interest rates on the higher end of the scale. In some cases, interest rates for borrowers with bad credit can range from 20% to 36%. Shopping around and comparing offers can help you find the best available rate for your situation.

Pros and Cons of Getting a Personal Loan With Bad Credit

While getting a personal loan with bad credit may provide access to much-needed funds, it also comes with challenges like higher interest rates. Understanding both the pros and cons can help you make a more informed decision before applying.

Pros of Getting a Personal Loan With Bad Credit

  • Access to funds: Even with bad credit, personal loans can provide quick access to money for emergencies or major purchases. This can be especially helpful if other types of credit, like credit cards, are unavailable.

  • Debt consolidation: A personal loan can allow you to consolidate high-interest debt into one manageable monthly payment. Even if the loan has a higher rate, it could still be lower than the rates on multiple credit cards.

  • Fixed monthly payments: Personal loans usually come with fixed interest rates and monthly payments. This makes it easier to plan your budget since the payment amount won’t change over time, unlike credit cards or other loans with variable rates.

  • Credit-building potential: Successfully repaying a personal loan can help improve your credit score over time. This positive payment history may increase your creditworthiness and lead to better financial opportunities in the future.

Cons of Getting a Personal Loan With Bad Credit

  • Higher interest rates: Lenders typically offer higher interest rates to borrowers with bad credit. This means you’ll pay more in interest over the life of the loan compared to someone with a higher credit score.

  • Limited loan options: With bad credit, your options for lenders may be more limited. Some lenders may deny your application, and those who approve might offer less favorable terms, such as shorter repayment periods or smaller maximum loan amounts.

  • Potential fees: Many personal loans come with fees, such as origination fees, prepayment penalties or late fees. For borrowers with bad credit, these fees can be higher, increasing the overall cost of the loan.

  • Risk of more debt: If you take out a personal loan without addressing the factors that led to bad credit, you risk falling further into debt. Missing payments or defaulting on the loan can further worsen your financial situation and harm your credit score.

Where to Get a Personal Loan With Bad Credit

If you have bad credit, there are several places to get a personal loan, each with its own benefits and drawbacks. Online lenders are convenient and provide quick approval, but they usually charge higher interest rates and fees. On the other hand, credit unions often offer lower rates and more flexible terms, but you need to be a member, and the approval process may be slower. While traditional banks might offer competitive rates, they typically have stricter credit requirements, making it harder to qualify with bad credit.

Below, we've highlighted the offerings and terms provided by different online lenders for a quick comparison.

Lender Name
APR Range
Loan Amount Range
Repayment Terms
Time to Receive Funds

8.99–35.99%

$5,000–50,000

24–60 months

Same day

9.95–35.99%

$2,000–35,000

24–60 months

Next day

11.72–17.99%

$5,000–40,000

24–60 months

Three to six business days

8.99–35.99%

$2,000–50,000

24–60 months

Next day

If you’re looking for a blend of affordability and customer service, MoneyGeek rounded up the best loans for bad credit.

How to Get a Personal Loan With Bad Credit

Getting a personal loan with bad credit can be challenging, but it’s possible if you take the right steps. By understanding your credit situation and exploring your options, you can improve your chances of finding a loan that meets your needs.

1
Check your credit score

Before applying for a loan, check your credit score. Knowing your score helps you understand where you stand and what kind of interest rates or loan terms you might qualify for. Review your credit report for any errors or inaccuracies that could be affecting your score and take steps to correct them.

2
Shop around for lenders

Look for lenders that offer personal loans to individuals with bad credit. Many online lenders, credit unions and even small banks specialize in working with borrowers in this category. Research their terms, interest rates and fees to find lenders that offer fair conditions.

3
Get prequalified

Once you’ve identified potential lenders, get prequalified to see what loan amounts, interest rates and terms you could receive without affecting your credit score. Prequalification gives you an idea of what’s available to you based on a soft credit check, allowing you to compare options before committing.

4
Compare loan offers

After getting prequalified, compare the loan offers side by side. Look closely at the interest rates, repayment terms and any additional fees like origination fees. Pay attention to the total cost of the loan over its lifetime and choose the one that offers the best overall terms for your financial situation.

5
Submit the loan application

Once you’ve chosen the best loan offer, submit your loan application. Be prepared to provide personal information, proof of income and any other documents the lender requires. The lender will perform a hard credit check, which can slightly impact your credit score. If approved, review the loan agreement carefully before accepting.

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MONEYGEEK EXPERT TIP

The size of a loan can affect your approval chances and interest rates. Smaller loans are generally easier to obtain, especially if you have bad credit, since they're seen as lower risk. Larger loans generally have stricter approval criteria and are harder to get if you have bad credit, or they may require additional documentation. The advantage of larger loans is that they usually offer lower interest rates. — Alvin Yam, CFP

How to Identify Bad Credit Loan Scams

Scammers often target borrowers with bad credit by offering seemingly easy loan approvals, but there are clear signs that can help you avoid falling into their traps. Here are key indicators to watch for:

  • Upfront fees: Legitimate lenders do not ask for fees before approving or processing your loan. If a lender demands payment before you've signed any agreement, it's likely a scam.

  • No physical address: A trustworthy lender will have a verifiable physical address. If the lender cannot provide one or only offers vague contact information, this is a red flag.

  • Not registered in your state: Lenders must be registered to operate legally in the states they serve. If a lender isn't registered in your state, it's likely an illegitimate business.

  • No secure website: Legitimate lenders use secure websites to protect your personal information. If the lender's website lacks a secure connection (no "https" or padlock symbol), don't provide sensitive data.

  • "No credit check" advertisements: While some lenders work with bad credit, every legitimate lender will perform some form of credit check. A lender promising a loan without any credit evaluation should raise suspicion.

FAQ About Getting a Personal Loan With Bad Credit

We answered some frequently asked questions to help you better understand how to get a personal loan with bad credit.

How does a bad credit score affect loan terms?
Can improving your credit score help reduce loan costs?
What should you consider before taking out a personal loan with bad credit?
How do you get approved for a personal loan with bad credit?
Are there alternatives to personal loans for someone with bad credit?
How long does it take to get approved for a personal loan with bad credit?

About Zachary Romeo, CBCA


Zachary Romeo, CBCA headshot

Zachary Romeo is a certified Commercial Banking and Credit Analyst (CBCA), and the Head of Loans and Banking at MoneyGeek. Previously, he led production teams for some of the largest online informational resources in higher education, with over 13 years of experience in editorial production.

Romeo has a bachelor's degree in biological engineering from Cornell University. He geeks out on minimizing personal debt and helping others do the same through people-first content.


sources
Shield Insurance

The content on this page is accurate as of the posting/last updated date; however, some of the rates mentioned may have changed. We recommend visiting the lender's website for the most up-to-date information available.

Editorial Disclosure: Opinions, reviews, analyses and recommendations are the author’s alone and have not been reviewed, endorsed or approved by any bank, lender or other entity. Learn more about our editorial policies and expert editorial team.