Finding a personal loan when you have bad credit can feel overwhelming, but it’s not impossible. Whether you need cash for an emergency, debt consolidation, or a large purchase, many lenders are willing to work with borrowers who have low credit scores. The key is knowing your options, understanding the risks, and comparing the best deals tailored to your situation.
This complete guide will walk you through how personal loans for bad credit work, how to qualify, what to avoid, and the top lenders to consider in 2025.
What Is a Personal Loan for Bad Credit?
A personal loan for bad credit is a type of unsecured loan offered to individuals with low credit scores (typically below 580 on the FICO scale). These loans can be used for a variety of purposes—such as medical bills, car repairs, or debt consolidation—and don’t require collateral.
Due to the increased risk for lenders, these loans often come with higher interest rates, fees, and shorter repayment terms. However, they can still be a useful tool to get needed funds and even rebuild your credit when managed responsibly.
How to Qualify for a Personal Loan with Bad Credit
Even with a poor credit score, you can improve your chances of getting approved by taking the following steps:
1. Check Your Credit Score
Start by checking your credit report from the major bureaus (Equifax, Experian, and TransUnion). You’re entitled to a free annual credit report at AnnualCreditReport.com. Understanding where you stand helps you target the right lenders.
2. Compare Lenders
Not all lenders have the same approval criteria. Some specialize in subprime loans or offer prequalification tools that won’t affect your credit score. Focus on lenders that advertise flexible credit requirements.
3. Offer Proof of Income
Lenders want to see that you can repay the loan, even with bad credit. Providing recent pay stubs, tax returns, or bank statements can boost your approval chances.
4. Add a Co-Signer (If Possible)
A creditworthy co-signer can increase your odds of approval and potentially lower your interest rate.
5. Consider Secured Loans
If you’re open to pledging an asset (like a car or savings account), a secured personal loan might be easier to get and come with better terms.
Best Personal Loan Options for Bad Credit in 2025
Here are some lenders known for offering personal loans to people with poor credit:
1. Upstart
- Min. Credit Score: 300
- Loan Amounts: $1,000 – $50,000
- APR Range: 6.5% – 35.99%
- Uses AI to assess applications based on income, employment, and education.
2. OneMain Financial
- Min. Credit Score: No minimum, flexible underwriting
- Loan Amounts: $1,500 – $20,000
- APR Range: 18.00% – 35.99%
- Offers in-person service at local branches.
3. Avant
- Min. Credit Score: 550
- Loan Amounts: $2,000 – $35,000
- APR Range: 9.95% – 35.99%
- Quick approval process; funds may be available by next business day.
4. LendingPoint
- Min. Credit Score: 600
- Loan Amounts: $2,000 – $36,500
- APR Range: 7.99% – 35.99%
- Approves loans based on broader financial picture, not just credit score.
Pros and Cons of Personal Loans for Bad Credit
✅ Pros:
- Fast access to funds
- Can be used for many purposes
- May help rebuild credit with on-time payments
- Wide range of lenders available
❌ Cons:
- High interest rates and fees
- Shorter repayment terms
- Risk of falling into a debt cycle
- May require collateral or co-signer
Tips for Finding the Best Deal
- Prequalify First: Use prequalification tools to compare offers without hurting your credit score.
- Read the Fine Print: Watch for origination fees, late fees, or early repayment penalties.
- Choose the Shortest Term You Can Afford: A shorter loan term usually means less interest paid overall.
- Make Timely Payments: Paying on time helps improve your credit score and avoids late fees.
Alternatives to Personal Loans for Bad Credit
If you don’t qualify or want to explore other options, consider:
- Credit Union Loans: More lenient requirements and lower interest rates.
- Family or Friends: A personal loan from someone you trust may have little or no interest.
- Buy Now, Pay Later Services: Useful for purchases at participating merchants.
- Debt Management Plans: Work with a credit counselor to consolidate debt and reduce interest rates.
FAQs About Personal Loans for Bad Credit
Q1: Can I get a personal loan with a credit score below 600?
Yes. Many lenders offer loans to people with scores as low as 300–600. Just expect higher interest rates and stricter terms.
Q2: Will applying hurt my credit score?
A soft credit check (used during prequalification) won’t impact your score. However, a hard credit check (required for final approval) may lower your score slightly.
Q3: How much can I borrow with bad credit?
Loan amounts typically range from $1,000 to $35,000, depending on the lender and your financial situation.
Q4: What is the interest rate for a bad credit loan?
Rates can vary from 7% to 36% or more, depending on your credit profile, income, and loan terms.
Q5: Are there guaranteed personal loans for bad credit?
No reputable lender offers 100% guaranteed approval. Be cautious of scams that make such promises and ask for upfront fees.
Final Thoughts
While having bad credit can make borrowing more expensive, it doesn’t mean you’re out of options. In 2025, many reputable lenders offer personal loans for bad credit with transparent terms and manageable repayment plans. The key is to do your research, compare offers, and borrow only what you can reasonably repay.
Use a loan as a stepping stone—not a crutch—and make on-time payments to gradually rebuild your credit and open up better financial opportunities in the future.
