A bad-credit personal loan is a personal installment loan that may be available to borrowers with lower credit scores or limited credit histories.
Lenders may consider more than your credit score when reviewing a personal loan application. Depending on the lender and loan product, factors can include income, employment, existing debt, credit history, loan amount, repayment term, and other information in your application.
This guide explains how personal loans for bad credit work in the United States, what lenders may consider, how to compare loan offers, what a soft or hard credit inquiry means, and which alternatives may be worth considering before taking on expensive debt.
Important: Loansoo.com is an independent financial information website. We are not a lender, do not guarantee loan approval, and do not make personalized lending decisions for readers.
Key Takeaways
- A low credit score can make borrowing more difficult and may result in higher borrowing costs.
- There is no single credit score that guarantees approval or rejection for every personal loan.
- Lenders may consider income, debt, credit history, and other application information in addition to credit score.
- Prequalification may sometimes use a soft credit inquiry, but you should confirm the lender’s process before applying.
- Compare APR, fees, repayment term, monthly payment, and total repayment—not just the advertised interest rate.
- Be especially cautious of anyone promising guaranteed approval in exchange for an upfront payment.
- A personal loan is not automatically the best solution for an emergency or existing debt.
- State laws and lender availability can affect the loans and rates available to you.
What Is a Bad-Credit Personal Loan?
A personal loan for bad credit generally refers to a personal installment loan marketed or made available to borrowers who may have a lower credit score or a less established credit history.
Personal loans are typically repaid through scheduled payments over a defined period. Depending on the lender, they may be secured or unsecured.
Your credit score is one factor that can affect whether you qualify and what terms you are offered. Credit scoring systems commonly use scores ranging from 300 to 850, although lenders can use different scoring models and may evaluate additional information.
A low score does not tell the entire story of your financial situation.
For example, two people with similar credit scores could receive different loan offers because they have different incomes, debt levels, credit histories, or other financial information.
What Credit Score Is Considered Bad Credit?
The term “bad credit” does not have one universal definition that every lender uses.
FICO scores generally range from 300 to 850. A score below 580 is commonly categorized as “Poor” in the FICO scoring framework, while 580 to 669 is generally considered “Fair.”
| FICO Score Range | Common FICO Category |
|---|---|
| 800–850 | Exceptional |
| 740–799 | Very Good |
| 670–739 | Good |
| 580–669 | Fair |
| 300–579 | Poor |
However, do not assume that a particular score automatically qualifies you for a particular loan.
Each lender can have its own underwriting criteria.
Can You Get a Personal Loan With Bad Credit?
Potentially, yes.
Some lenders offer personal loans to consumers with lower credit scores, while others may have minimum credit-score requirements or may place more emphasis on other factors.
Lenders may consider information such as:
- Credit history
- Income
- Employment
- Existing debt
- Debt-to-income ratio
- Loan amount
- Requested repayment term
- Payment history
- Banking or financial information
- Whether collateral or a co-borrower is involved
Federal law generally allows creditors to consider legitimate financial factors such as income, debt, and credit history when making credit decisions, while the Equal Credit Opportunity Act prohibits discrimination based on protected characteristics.
The important point is that there is no universal “500 credit score loan” or “600 credit score loan” rule that applies to every lender.
Personal Loan Options for Bad Credit
If your credit profile is weak, several types of borrowing may be available depending on your circumstances.
1. Unsecured Personal Loans
An unsecured personal loan does not require you to pledge a specific asset as collateral.
The lender generally evaluates your creditworthiness, income, debt, and other information to determine whether to approve the application and what terms to offer.
Potential advantages
- No specific asset is pledged as collateral
- Fixed-payment structures may make budgeting easier
- Some lenders allow online applications
Potential disadvantages
- Approval may be more difficult with poor credit
- Interest costs can be higher
- Fees may apply
- A missed payment can further damage your credit history
2. Secured Personal Loans
A secured loan is backed by collateral.
Depending on the product, collateral could include an eligible vehicle, savings account, or another asset.
Potential advantages
- Collateral may improve eligibility in some situations
- Some secured products may offer different pricing than unsecured loans
Potential risks
If you fail to repay a secured loan according to its terms, the lender may have rights to the collateral.
Before using an asset as security, make sure you understand exactly what could happen if you miss payments.
3. Loans With a Co-Borrower or Co-Signer
Some lenders may allow another person to apply with you or guarantee the debt.
A stronger credit profile from the additional applicant may affect the lender’s assessment, but policies vary.
A co-signer or co-borrower should understand that taking responsibility for someone else’s debt can create significant financial risk.
If the borrower fails to make payments, the other person may be responsible according to the agreement, and the missed payments can affect credit histories.
What Should You Compare Before Taking a Bad Credit Personal Loan?
Do not compare personal loans based only on the monthly payment.
A lower monthly payment can sometimes result from a longer repayment period, which may increase the total amount of interest paid.
Instead, compare the complete cost of borrowing.
1. APR
The Annual Percentage Rate (APR) is an important comparison measure because it can incorporate the interest rate and certain costs associated with the credit transaction.
For consumer credit covered by federal disclosure rules, APR and other credit terms are subject to disclosure requirements.
When comparing offers, look at the APR rather than focusing only on a headline interest rate.
2. Loan Amount
Borrow only what you actually need.
Taking a larger loan because you qualify for it can increase your total interest cost and monthly obligations.
3. Repayment Term
A longer term may reduce the required monthly payment, but it can also mean paying interest for a longer period.
Compare:
Monthly payment + total repayment + total interest
rather than monthly payment alone.
4. Origination Fees
Some personal loans may have origination or other fees.
A fee can affect how much money you actually receive and the overall cost of borrowing.
Read the lender’s fee disclosures before accepting an offer.
5. Late Fees and Other Charges
Check the loan agreement for:
- Late-payment fees
- Returned-payment fees
- Prepayment conditions
- Origination fees
- Other applicable charges
6. Funding Conditions
Advertised funding times are not necessarily the same as the time every borrower will receive money.
Funding can depend on approval, identity verification, documentation, bank processing, and other conditions.
How Does the Personal Loan Application Process Work?
The exact process differs between lenders, but a typical application may look like this.
Step 1: Review Your Credit
Check your credit reports for inaccurate information.
In the United States, AnnualCreditReport.com is the federally authorized source for free annual credit reports.
Step 2: Review Your Budget
Before applying, calculate how much you can realistically afford each month.
Do not judge affordability only by whether a lender approves the loan.
Step 3: Check Potential Offers
Some lenders allow consumers to check potential offers through a prequalification process.
Ask whether the initial check uses a soft or hard credit inquiry.
Step 4: Compare Offers
Compare:
- APR
- Loan amount
- Monthly payment
- Loan term
- Fees
- Total repayment
- Other conditions
Step 5: Submit a Full Application
If you decide to proceed, the lender may request additional information and perform a hard credit inquiry.
Step 6: Review the Final Terms
Do not accept an offer until you understand the amount borrowed, APR, fees, payment schedule, and total repayment obligations.
Soft Credit Check vs. Hard Credit Check
Understanding credit inquiries can help you shop more carefully.
Soft Credit Inquiry
A soft inquiry generally does not affect your credit score in the same way a hard inquiry can.
Some lenders use soft inquiries when allowing consumers to check potential offers or prequalify.
However, always confirm the lender’s process because prequalification does not necessarily mean that the final application will avoid a hard inquiry.
Hard Credit Inquiry
A hard inquiry may occur when you formally apply for credit.
Because multiple credit applications can affect your credit profile, avoid submitting unnecessary full applications.
The best approach is to understand the lender’s inquiry policy before proceeding.
What Is a Debt-to-Income Ratio?
Your debt-to-income ratio (DTI) compares your monthly debt obligations with your gross monthly income.
The basic calculation is:
DTI = Total Monthly Debt Payments ÷ Gross Monthly Income × 100
Example
Suppose your gross monthly income is:
$5,000
And your monthly debt payments are:
$1,500
Your DTI would be:
$1,500 ÷ $5,000 × 100 = 30%
Different lenders may use different DTI requirements and may calculate the ratio differently.
There is no single DTI percentage that guarantees approval for every personal loan.
What Documents May a Lender Request?
Depending on the lender and your application, you may be asked for information such as:
- Government-issued identification
- Social Security number or other identifying information
- Employment information
- Income information
- Recent pay stubs
- Tax documents
- Bank account information
- Address information
- Information about existing debts
Requirements vary, so check the lender’s official application instructions.
How Much Does a Bad Credit Personal Loan Cost?
The cost depends on the lender, your credit profile, loan amount, term, fees, and other factors.
Consider a hypothetical example:
You borrow:
$5,000
Suppose the loan has:
18% APR
for:
36 months
Your monthly payment and total repayment would depend on the lender’s exact calculation and fee structure.
This is why Loansoo’s Personal Loan Calculator can be useful for estimating different scenarios before you apply.
Calculator tip: Try several loan amounts and repayment terms instead of looking at only one scenario.
Why a Longer Loan Term Is Not Always Cheaper
Imagine two hypothetical loans for the same amount.
A shorter term may require a higher monthly payment but could result in less total interest.
A longer term may produce a lower monthly payment but keep you in debt for longer.
For example:
Option A
- Higher monthly payment
- Shorter repayment period
- Potentially lower total interest
Option B
- Lower monthly payment
- Longer repayment period
- Potentially higher total interest
The actual result depends on the APR, fees, and loan terms.
This is why borrowers should compare the total cost of the loan, not just the monthly payment.
Are “No Credit Check” Personal Loans Real?
Be very careful with advertisements promising a loan with “no credit check,” “guaranteed approval,” or “bad credit guaranteed.”
A lender may use different methods to evaluate an applicant, but no legitimate offer should be assumed to guarantee approval regardless of financial circumstances.
The FTC specifically warns consumers about advance-fee loan scams in which someone promises credit and then demands an upfront payment before providing the loan.
Before sending money or personal information, research the company and verify that it is legitimate.
How to Check Your Credit Score in the U.S.
- Get your free credit reports from AnnualCreditReport.com.
- Review your Equifax, Experian and TransUnion reports for errors.
- Check whether your credit-card issuer provides a free credit score.
- Find out whether the score is a FICO Score, VantageScore, or another scoring model.
- Remember that the score you see may differ from the score a lender uses.
- Dispute inaccurate information with the appropriate credit reporting company and the company that supplied the information.
Personal Loan Scam Warning Signs
People searching for emergency money can be especially vulnerable to scams.
Watch for these warning signs.
Guaranteed Approval
Be cautious if someone says:
“Everyone is approved.”
Legitimate lenders generally evaluate an applicant before making a firm credit decision.
Upfront Payment for Guaranteed Credit
The FTC warns about scams where consumers are told to pay a fee before receiving promised credit.
A legitimate lender can charge certain fees in appropriate circumstances, so the important warning sign is a demand for payment in exchange for a guarantee of credit.
Pressure to Act Immediately
Be cautious if someone tells you that you must send money immediately or lose your “approved” loan.
Take time to verify the company.
Gift Cards or Cryptocurrency
Requests to send loan-related payments through unusual methods such as gift cards or cryptocurrency should raise serious concerns.
No Clear Loan Agreement
Before accepting a loan, you should be able to review the terms, costs, and repayment obligations.
Fake Government or Bank Claims
Scammers may pretend to represent banks, government agencies, or well-known financial companies.
Verify the company through an independently obtained official website or contact method.
How to Check Whether a Lender Is Legitimate
Before applying:
- Find the lender’s official website independently.
- Verify its legal business identity.
- Check whether it is authorized to operate where required.
- Review the lender’s privacy policy and terms.
- Look for clear disclosures about APR and fees.
- Search for regulatory complaints or enforcement information.
- Never assume that a company is legitimate just because it appears in an online advertisement.
The FTC recommends checking whether a lender is registered in your state and contacting your state attorney general or financial regulator when appropriate.
Alternatives to a High-Cost Personal Loan
A personal loan is not the only way to handle a financial emergency.
Depending on your situation, alternatives may include:
Credit Union Options
Some federal credit unions offer Payday Alternative Loans subject to NCUA rules.
As of 2026, the NCUA says the temporary 18% interest-rate ceiling for loans made by federal credit unions has been extended through September 10, 2027, while PALs may carry up to 28% under applicable regulatory conditions.
Eligibility and terms depend on the specific credit union and applicable rules.
Employer-Based Assistance
Some employers offer payroll advances, emergency assistance, or other financial wellness programs.
Check whether your employer provides any such benefits before using expensive credit.
Payment Plans
If you need money to pay a medical, utility, or other bill, contact the provider before taking a loan.
You may be able to negotiate a payment arrangement.
Nonprofit Credit Counseling
A reputable nonprofit credit counseling organization may help you review your budget and debt-management options.
Emergency Savings
If you have accessible savings, using a portion of your emergency fund may be less expensive than taking a high-cost loan.
However, avoid using all available savings if doing so would leave you unable to handle essential expenses.
Can a Personal Loan Help Rebuild Credit?
It can, but there is no guarantee.
A personal loan may contribute to your credit history if the lender reports the account and you make payments as agreed.
However, taking on new debt solely to improve your credit score may not be appropriate for everyone.
If you already have difficulty making your current payments, adding another loan could increase financial pressure.
Focus first on whether the loan is affordable and actually solves the financial problem.
What If You Are Denied for a Personal Loan?
A denial does not necessarily mean you should immediately apply to many other lenders.
Instead, consider finding out why you were denied.
Possible reasons can include:
- Insufficient income
- High existing debt
- Credit history
- Recent missed payments
- Too many recent credit applications
- Loan amount requested
- Insufficient credit history
- Lender-specific eligibility requirements
Federal law provides consumers with certain rights when credit applications are denied or less favorable terms are offered.
Review the notice provided by the creditor and address the underlying issue where possible.
Should You Take a Personal Loan to Pay Off Credit Card Debt?
Debt consolidation can sometimes simplify multiple payments, but it is not automatically a money-saving strategy.
Before consolidating credit-card debt with a personal loan, compare:
- Personal-loan APR
- Credit-card APR
- Origination fees
- Monthly payment
- Repayment term
- Total interest
- Total amount repaid
Most importantly, consider what caused the credit-card debt in the first place.
If the underlying spending problem continues, a consolidation loan may simply replace one form of debt with another.
How to Improve Your Chances of Getting Better Loan Terms
There is no guaranteed formula for approval, but you can improve your financial position over time.
Check Your Credit Reports
Look for inaccurate or incomplete information.
Pay Bills on Time
Payment history is an important part of many credit-scoring systems.
Reduce Outstanding Debt
Lower debt can improve your overall financial position and may improve your DTI.
Avoid Unnecessary New Applications
Applying for multiple accounts within a short period can create additional inquiries and may make your credit profile look riskier to some lenders.
Borrow Only What You Need
A smaller loan can reduce your repayment burden.
Consider Waiting if Possible
If the loan is not an emergency, improving your credit and financial position before borrowing may help you qualify for more favorable options later.
Frequently Asked Questions
Can I get a personal loan with a 500 credit score?
Possibly. Some lenders may consider applicants with lower credit scores, but approval depends on the lender’s eligibility requirements and other information in your application.
A 500 credit score does not guarantee approval or a particular APR.
Can I get a personal loan with a 600 credit score?
Possibly. A 600 score falls within the Fair range under the commonly used FICO classification, but lenders use different underwriting criteria.
Your income, debt, credit history, and other factors can also affect the decision.
What is the easiest personal loan to get with bad credit?
There is no single loan that is easiest for every borrower.
A lender’s eligibility criteria, your income, credit profile, existing debt, requested amount, and state can all affect your options.
Are personal loans for bad credit expensive?
They can be more expensive than loans offered to borrowers with stronger credit, but actual pricing varies significantly by lender and borrower.
Always compare APR and total repayment.
What does “no credit check” mean?
It can mean that a company does not use a traditional credit-score inquiry as part of its evaluation, but it does not necessarily mean that the company will lend without verifying your identity, income, or ability to repay.
Be especially cautious of guaranteed-approval claims.
Does prequalification hurt my credit?
A lender may use a soft credit inquiry for prequalification, which generally does not have the same effect as a hard inquiry.
However, practices differ, so confirm the lender’s process before proceeding.
How much can I borrow with bad credit?
There is no universal maximum.
The amount available depends on the lender, your income, credit profile, existing debt, state, and other eligibility criteria.
How quickly can I receive a personal loan?
Funding times vary.
Even when a lender advertises fast funding, actual timing can depend on approval, identity verification, documentation, and your bank’s processing.
Can a co-signer help me qualify?
A co-signer may affect a lender’s assessment if the lender allows co-signed applications, but policies vary.
The co-signer should understand the financial responsibility associated with the loan.
Should I take a payday loan instead?
Do not assume a payday loan is cheaper simply because it is easier to qualify for.
Compare the total cost, repayment period, and consequences of missed payments with other available options.
Personal Loan Checklist
Before signing a personal loan agreement, ask yourself:
- Do I actually need to borrow this money?
- Can I comfortably afford the monthly payment?
- What is the APR?
- What fees will I pay?
- How much will I repay in total?
- How long will I be in debt?
- Is the rate fixed or variable?
- What happens if I make a late payment?
- Is there a prepayment condition or fee?
- Does the lender operate legally in my state?
- Have I compared more than one option?
- Am I being pressured to pay money before receiving the loan?
- Have I read the complete agreement?
If you cannot answer these questions, take more time before accepting the loan.
Use a Personal Loan Calculator Before You Apply
Before submitting an application, it can be useful to estimate the monthly payment and total cost of different loan scenarios.
With a personal loan calculator, you can compare:
- Loan amount
- Interest rate
- Repayment term
- Monthly payment
- Total interest
- Total repayment
For example, try calculating the same $5,000 loan over different repayment periods.
You may find that a longer term produces a lower monthly payment but a higher total cost.
A calculator cannot tell you whether a loan is right for your personal situation, but it can help you understand the mathematics before you apply.
Final Thoughts
Having bad credit does not necessarily mean that you have no borrowing options.
But it does mean that you should be particularly careful about the cost and conditions of any loan you consider.
Instead of searching only for the phrase “guaranteed bad credit loan,” focus on understanding the complete offer.
Compare the APR, fees, monthly payment, repayment term, and total cost.
Check the lender’s legitimacy.
Understand whether a credit inquiry will be soft or hard.
And consider alternatives before taking on expensive debt.
Most importantly, never pay someone simply because they promise that an upfront fee will guarantee your loan approval. The FTC specifically warns consumers about advance-fee loan scams.
The goal should not simply be to get approved.
The goal is to find borrowing that you can realistically afford, and that does not make your financial situation worse.
Disclaimer
Loansoo.com provides general educational information about personal finance, loans, and financial calculators. We are not a bank, lender, financial institution, investment adviser, attorney, or credit counselor, and we do not guarantee loan approval, interest rates, or loan terms.
Loan availability, APRs, fees, eligibility requirements, and other conditions vary by lender, borrower, and state and may change over time. Information on this page should not be treated as personalized financial, legal, or tax advice.
Before applying for a financial product, review the lender’s current disclosures and loan agreement carefully. Consider your own financial circumstances and, when appropriate, consult a qualified professional.
Last reviewed: 2026