Having bad credit can make borrowing money more difficult, but it does not necessarily mean you cannot get a personal loan. Several online lenders and credit unions work with borrowers who have low or limited credit scores.
The key is to compare annual percentage rates (APRs), loan fees, repayment terms, loan amounts, and eligibility requirements before accepting an offer.
In 2026, some lenders serving borrowers with bad credit advertise APRs that can reach around 36%, while borrowers with stronger credit may qualify for substantially lower rates. This makes comparison shopping especially important.
Quick Takeaway
If you have bad credit, don't focus only on approval. Compare the APR, fees, monthly payment and total repayment cost before choosing a personal loan.
What Is a Bad Credit Personal Loan?
A bad credit personal loan is a type of installment loan designed for people who may have a low credit score, limited credit history, previous missed payments, or other negative information on their credit report.
Personal loans are typically unsecured, meaning you do not necessarily have to provide your home or car as collateral. However, some lenders offer secured personal loans, which require an asset as security.
Depending on the lender, you may be able to use a personal loan for:
- Debt consolidation
- Credit card refinancing
- Emergency expenses
- Home improvements
- Car repairs
- Medical expenses
- Moving expenses
- Major purchases
- Other qualifying personal expenses
Best Personal Loans for Bad Credit
There is no single lender that is best for every borrower. The right choice depends on your credit profile, income, borrowing needs and ability to repay.
Upstart — Best Overall for Bad Credit
Upstart is one option worth considering if you have a low credit score or limited traditional credit history.
One potential advantage is that its underwriting process can consider more than just your credit score.
Best for: Borrowers with low credit scores or limited credit history.
Potential downside: Borrowers with poor credit may receive an APR toward the higher end of the advertised range.
Universal Credit — Best for Credit-Building Features
Universal Credit can be an option for borrowers with fair or bad credit.
The lender may be particularly useful for borrowers considering debt consolidation.
Best for: Borrowers looking for credit-building and debt-consolidation features.
Potential downside: Origination fees can reduce the amount of money you actually receive.
Best Egg — Best for Secured Personal Loans
Best Egg may be worth considering if you are interested in a secured personal loan.
With a secured loan, you pledge an asset as collateral. If you fail to repay the loan according to the agreement, you could risk losing the asset.
Best for: Borrowers who have qualifying collateral and want to explore secured financing.
Potential downside: Your collateral may be at risk if you default.
Prosper — Best for Flexible Credit Requirements
Prosper is another marketplace lender that works with borrowers across a range of credit profiles.
Prosper also allows joint applications, which may be useful for borrowers who have another financially qualified applicant.
Best for: Borrowers looking for flexible eligibility and joint-loan options.
Potential downside: Origination fees can increase the overall cost of borrowing.
How to Choose the Best Bad Credit Personal Loan
Don't choose a lender simply because it advertises "fast approval" or "bad credit loans." Compare the actual cost of borrowing.
1. Compare APRs
The annual percentage rate is one of the most useful numbers when comparing personal loans because it reflects the interest rate and certain loan fees.
A loan with a lower APR will generally cost less than a comparable loan with a higher APR.
2. Look at Origination Fees
Some lenders charge an origination fee when processing a personal loan.
The fee can be a percentage of the amount borrowed and may be deducted from your loan proceeds before the money reaches your bank account.
If you are approved for a $5,000 loan and the lender charges a 5% origination fee, you could receive approximately $4,750 before other applicable charges.
3. Check the Repayment Term
Personal loans may have repayment terms ranging from a few years to several years.
A longer term can reduce your monthly payment, but it can also increase the total amount of interest you pay.
4. Check the Minimum Credit Score
Every lender has its own eligibility requirements. Some lenders may accept borrowers with credit scores in the mid-500s, while others require scores of 600 or higher.
5. Consider Your Debt-to-Income Ratio
Your debt-to-income ratio, commonly called DTI, compares your monthly debt payments with your gross monthly income.
Lenders use DTI to determine whether you can reasonably afford another monthly payment.
Can You Get a Personal Loan With a 500 Credit Score?
It may be possible, but your options can be limited.
Some lenders specialize in borrowers with lower credit scores, while others may require a score of 600 or higher.
Important
If your credit score is around 500, lenders may compensate for the additional risk by offering higher interest rates, smaller loan amounts, shorter repayment periods or additional fees.
You may improve your approval chances by applying for a smaller amount, adding a qualified co-borrower where permitted, demonstrating stable income or considering a secured loan.
How to Get a Personal Loan With Bad Credit
Check Your Credit Report
Review your credit reports and look for incorrect information that could negatively affect your credit profile.
Calculate Your Budget
Determine how much you can realistically afford to pay each month. Don't borrow the maximum amount simply because you qualify for it.
Compare Multiple Lenders
Compare APR, loan amount, monthly payment, loan term, origination fees and other costs.
Prequalify When Available
Many lenders allow potential borrowers to prequalify before submitting a full application.
Submit a Full Application
Once you find an offer that fits your budget, submit a formal application and carefully review the loan agreement.
How to Improve Your Chances of Approval
- Improve Your Credit Score: Pay bills on time and reduce credit card balances.
- Apply for a Smaller Amount: Borrow only what you actually need.
- Add a Co-Borrower: Some lenders allow joint applications.
- Consider a Secured Loan: A qualifying asset may provide additional security to the lender.
Bad Credit Loans vs. Payday Loans
If you have bad credit, you may see advertisements for payday loans or other short-term loans promising immediate cash.
Be Extremely Careful
Payday loans can carry extremely high costs and very short repayment periods. Always compare the total cost before choosing a short-term loan.
A traditional personal loan with a fixed payment schedule may be considerably more manageable if you qualify for reasonable terms.
Watch Out for Bad Credit Loan Scams
People with poor credit are often targeted by loan scams because they may be more desperate for financing.
- Guaranteed approval regardless of your credit
- Requests for money before loan approval
- Unusual payment methods
- Extremely low rates without checking your finances
- Pressure to make an immediate decision
- Requests for unnecessary sensitive information
Alternatives to Personal Loans for Bad Credit
Credit Union Loans
Credit unions may offer personal loans and other financial products to their members. If you already belong to a credit union, compare its offer before choosing an online lender.
Secured Loans
If you have qualifying savings or another acceptable asset, a secured loan may provide another borrowing option.
Credit Card Balance Transfer
If your primary goal is paying off credit card debt, a balance-transfer card could potentially reduce interest costs if you qualify.
Debt Management Plan
If you're struggling with several debts, a nonprofit credit counseling organization may help you create a debt management plan instead of taking on another high-interest loan.
Borrowing From Family
If appropriate and comfortable, borrowing from a trusted family member may avoid lender fees and interest. Establish clear repayment terms to avoid misunderstandings.
Frequently Asked Questions
What is the easiest personal loan to get with bad credit?
There is no guaranteed easiest loan because approval depends on your credit history, income, existing debts and the lender's requirements. Online lenders that specialize in lower-credit borrowers may provide more options than traditional banks.
Can I get a personal loan with a 550 credit score?
Possibly. Some lenders consider applicants with credit scores in the mid-500s, although approval is not guaranteed and the loan may come with a higher APR or lower borrowing limit.
What credit score is considered bad?
Credit-score classifications vary by scoring model and lender. In many lending contexts, scores below 630 are considered fair-to-poor territory, although lenders use their own underwriting standards.
Can I get a $5,000 personal loan with bad credit?
You may be able to, but the lender will consider your credit history, income, existing debt and other factors. Some lenders offer loans starting around $1,000, while others have higher minimums.
Does applying for a personal loan hurt your credit?
A prequalification check typically uses a soft credit inquiry and generally does not affect your score. A formal loan application normally results in a hard inquiry, which can temporarily affect your credit score.
What is a good APR for a bad credit personal loan?
There is no single APR that is good for every borrower. Compare multiple offers and consider the total cost. If the payment is difficult to afford, consider alternatives before accepting the loan.
Final Thoughts
Finding the best personal loan for bad credit requires more than finding a lender willing to approve your application.
Focus on the total cost of the loan, especially the APR, origination fees, monthly payment and repayment term. Prequalify with multiple lenders when possible so you can compare potential offers without unnecessarily submitting multiple full applications.
Most importantly, only borrow an amount you can comfortably repay. A personal loan can help consolidate expensive debt or cover an unexpected expense, but a high-cost loan can make financial problems worse if the monthly payment does not fit your budget.
