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How to Get a Loan With Bad Credit

how to get a loan with bad credit

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updated: July 18, 2024
edited by Wendy Connett

Whether you’re trying to buy a car, consolidate debt, or buy a home, getting a loan with bad credit takes a lot of work.

Many lenders claim to offer loans for people with bad credit, but the actual number of those that do are few and far between. If approved for a loan, you may also be offered a very high annual percentage rate (APR) and terms that don’t make sense.

It’s true that if you take the time, you can improve your credit score. However, sometimes you need a loan sooner than that. If that’s the case, you’ll need to know how to stack the odds in your favor when you need to get a loan with bad credit.




7.8% to 35.99%
Loan amount
$1,000 to $50,000
Min. credit score

How to get a loan with bad credit

Finding a lender that’s willing to offer loan terms to borrowers with bad credit takes a lot of hard work. But don’t give up—you have options. Here’s where to start.

Check your credit

Even if you’re afraid of how low your credit score is, it’s valuable knowing exactly what it is and what your credit report contains. It can help you understand what lenders will see when making a credit decision about you. In your credit report, you may also see mistakes such as these:

  • Loans or accounts that don’t belong to you.
  • Accounts listed as late or delinquent that aren’t.
  • Incorrect balances or credit limits.
  • Incorrect Social Security number, address, or other personal details.

Fixing these mistakes can give your credit score a significant boost. You may want to check out credit monitoring services like those from MyFICO or Experian.

As for negative information in your report that is correct, at least you’ll know it’s there and how you can avoid missteps like that in the future.

Get preapproval

Many online lenders offer a soft credit check when you apply for a personal loan. This will allow you to see if you would be approved, the loan amount and APR, and which options for terms you would have.

Being able to see exactly what you would qualify for without a hard credit inquiry is helpful for borrowers with bad credit.

Compare loan amount, rates, and payment

Once you get pre-approved, it’s time to compare options from different lenders. There will likely be a wide variance of what is offered among lenders, especially for borrowers with lower credit scores. You may not qualify for the amount you need, either.

Even with bad credit, your loan terms should make sense for you. If the interest rate is excessive, you may want to find another lender or wait until your credit score is higher before applying for a loan again.

Make sure loan payments fit in your budget

Evaluate how the loan and the monthly payment fit with your finances. Income and debt levels are especially important to a borrower with a low credit score. If the credit utilization is too high to be approved for a loan, it doesn’t matter what your credit score is because you won’t be able to get a loan.

Choose a lender

For borrowers with lower credit scores, there is a large variance in how much a lender will charge. After comparing rates, terms, fees, and monthly payments, you may also want to see how quickly the loan can be funded and what customer service is like.

Considerations before getting a loan with bad credit

From the lender’s point of view, bad credit scores are merely a reflection of how likely you are to default. If your credit score is low because you’re heading in that direction, another loan you can’t repay is going to hurt rather than help. Take stock of what it takes to make a loan with bad credit happen, as well as what happens when you wait. Ask yourself the following:

  • What are the costs? Are origination fees or the APR outrageously high? How much is the loan cost?
  • Do you have collateral to offer? Cars, homes, or other collateral can be used to secure loans.
  • Will a co-applicant help? Sometimes a joint applicant can help increase your odds of approval.
  • Is another loan the answer? Have you addressed the root problem? Or are you getting more debt on top of debt you can’t afford?
  • Will waiting help? Does it make sense to wait to get a loan until you can improve your credit? You might be able to save some money while you’re working on your credit score.

Where to get a loan with bad credit

When you need a loan, you’ll want to start looking at your options. Many lenders offer loans for people with bad credit, including these:

Loan providerBest forLoan amountAPRLoan termCredit score needed
Short credit histories
$1,000 to $50,000
6.70% to 35.99%
3 or 5 years
300 credit score
Quick funding
$2,000 to $35,000
9.95% to 35.99%
1 to 5 years
580 credit score
Joint personal loans
$1,000 to $40,000
9.57% to 36.00%
3 to 5 years
600 credit score

Some lenders take into account your education and employment status in addition to your income, debt, and credit history.

TIME Stamp: Getting a loan with bad credit takes effort

If you need a loan and your credit isn’t in great shape, you have your research cut out for you. It may not be possible to walk into every bank and come out with a loan. However, you’re not out of options.

See if you can get prequalified for a loan, often through a soft credit check available from many online lenders. Look at the APR, fees, and disclosures carefully. Although the costs are almost certainly going to be higher, make sure you don’t stumble into a loan with predatory terms.

Frequently asked questions (FAQs)

How do you get a loan with the worst credit score?

You may want to try a secured credit card if you have an extremely low credit score. You deposit money with the credit issuer and the maximum amount of credit extended to you is equal to the amount of your deposit.

Can you get a personal loan with a credit score of 500?

A credit score of 500 is very low for a personal loan. If you have enough income to make the payment, try lenders who offer a soft credit check to see if you can qualify for a loan.

What credit score do I need for a $5,000 loan?

Lenders love high credit scores, so the higher the better. For a $5,000 loan, lenders will look at your credit score, payment history, credit history, debts, and income. For the best rates, you’ll need a credit score above 670.

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