Yes, you can get a personal loan with bad credit — expect a higher interest rate than someone with good credit, but real options exist. Start with a credit union (become a member first; more flexible than banks). Consider a secured loan — backed by a savings account, CD, or vehicle — which lowers the lender's risk and often gets you a better rate. A co-signer with strong credit can help you qualify. Most lenders prefer a score of 660+, but bad-credit loans commonly serve the 580-660 range. Below 580, lean on credit unions, secured loans, or a co-signer. Avoid payday loans and any lender guaranteeing approval or demanding an upfront fee.
What Credit Score Do You Actually Need?
Typical personal loan score tiers
There's no single universal cutoff — requirements vary by lender. But beyond the raw score, lenders also weigh your income, existing debt load (debt-to-income ratio), and employment stability. A lower score paired with strong, stable income and manageable debt can sometimes still get approved where the score alone might suggest otherwise.
Your Real Options, in Order
Credit unions
Not-for-profit, member-owned institutions that tend to have more flexible lending criteria than traditional banks — they may weigh your overall relationship and circumstances rather than relying purely on your score. You typically need to become a member first (based on where you live, work, or an association you can join), often requiring a small savings deposit. This is usually the single best starting point for bad-credit borrowers.
Secured personal loans
Backed by collateral — a savings account, CD ("share-secured" or "CD-secured" loan), or vehicle you own. Because the lender has a fallback if you default, these are easier to qualify for and often carry better rates than unsecured loans. A share-secured loan through a credit union, where you borrow against your own savings balance, is one of the most accessible ways to both access funds and build credit history. The tradeoff: the lender can seize your collateral if you don't repay.
A loan with a co-signer
A creditworthy co-signer can help you qualify for better terms than you'd get alone, since the lender can also pursue them if you default. This works best with someone you trust and have a clear repayment plan with — a missed payment affects both your credit histories.
Online lenders specializing in fair/bad credit
Some legitimate online lenders specifically serve borrowers with lower scores. Rates run higher than prime lenders, so compare the total cost (not just the advertised rate) across at least two or three, and confirm the lender is properly licensed in your state before applying.
Lenders and Offers to Avoid
Predatory lenders specifically target people who feel they have few options. Avoid: payday loans and cash-advance stores (effective APRs sometimes in the triple digits, structured to trap you in renewed short-term debt); any lender that guarantees approval regardless of credit history; anyone asking for an upfront fee before disbursing the loan; and high-pressure tactics demanding an immediate decision. These are the classic signs of a loan scam.
Before you sign anything
- Verify the lender is licensed in your state (most state government sites let you check)
- Read the full terms — origination fees, prepayment penalties, all included
- Compare total cost across at least 2-3 legitimate options, not just the rate
- Use lenders offering prequalification with a soft credit check first
- Never pay an upfront fee to "release" a loan
Before you apply anywhere: pull your credit report and check for errors — an inaccurate collection or late payment could be dragging your score down unnecessarily. See our guide to disputing credit report errors. If you have a little time before you need the loan, even modest score improvements can move you into a better rate tier.
The bottom line: Bad credit limits your options and raises your cost, but it doesn't lock you out of a personal loan entirely. Start with a credit union, seriously consider a secured loan if you have anything to put up as collateral, and bring in a co-signer if one is available and willing. Compare total cost, not just headline rates, across a few legitimate lenders — and steer well clear of anyone promising guaranteed approval or asking for money upfront. The right loan, even at a higher rate, can be a genuine tool; the wrong one can trap you in something far worse than the problem you were trying to solve.
Frequently Asked Questions
Can I get a personal loan with bad credit?
Yes, though your options typically come with higher rates and stricter terms than good credit would get. Credit unions are often the best starting point — not-for-profit, member-owned, with more flexible lending criteria than banks, sometimes weighing your overall relationship rather than just your score. You generally need to become a member first (based on where you live, work, or an association), often with a small savings deposit. Beyond credit unions: secured personal loans (backed by collateral like savings or a vehicle), loans with a creditworthy co-signer, and online lenders specializing in fair/bad credit are other legitimate paths. Compare total cost, not just the rate, across a few options, since fees and terms vary significantly between lenders.
What credit score do you need for a personal loan?
No single universal minimum — it varies by lender. Most banks and online lenders prefer 660+, with best rates typically at 720+. "Bad credit" personal loans exist for scores below that, commonly serving the 580-660 range, usually at meaningfully higher rates to offset the lender's risk. Below roughly 580, options narrow considerably — you may need a credit union, secured loan, or co-signer with stronger credit to qualify at all. Lenders also weigh income, debt-to-income ratio, and employment stability, so strong income and manageable debt can sometimes offset a lower score. Checking your score before applying, and using lenders offering prequalification with only a soft credit check, lets you gauge your odds without a hard inquiry affecting your score.
What is a secured personal loan and how does it help with bad credit?
A loan backed by collateral — an asset the lender can take if you fail to repay — which lowers the lender's risk and can make approval easier and rates lower for bad-credit borrowers. Common collateral: a savings account or CD (a "share-secured" or "CD-secured" loan), a vehicle you own, or other valuable property. Because the lender has a fallback, secured loans are often easier to qualify for with a lower score than unsecured loans, and may come with better rates. The tradeoff: if you can't make payments, the lender can seize the specific collateral, so only secure a loan against something you're confident you can protect. A share-secured loan from a credit union — borrowing against your own savings — is one of the most accessible, lowest-risk ways to build credit history while getting access to funds.
What personal loan lenders should I avoid with bad credit?
Predatory lenders specifically target borrowers who feel they have few other options, so extra caution matters. Avoid payday loans and cash-advance stores promising quick approval — effective APRs are sometimes in the triple digits and structured to trap borrowers in renewed short-term debt. Be wary of any lender guaranteeing approval regardless of credit history, asking for an upfront fee before disbursing the loan, pressuring an immediate decision, or contacting you unsolicited with a too-good-to-be-true offer — all common loan-scam warning signs. Before working with any lender, verify they're licensed in your state (check your state government's site), read all terms carefully including prepayment penalties or origination fees, and compare total cost across at least two or three legitimate options rather than accepting the first offer out of urgency.
Sources & References
- PenFed Credit Union — How to Get a Personal Loan With Bad Credit: credit unions as best starting point, co-signer strategy, fee comparison advice
- Experian — Can I Get a Loan From a Credit Union With Bad Credit: secured vs unsecured credit union loans, payday alternative loans (PALs)
- BadCredit.org — Credit Union Loans for Bad Credit: share-secured/CD-secured loan mechanics, ChexSystems screening, membership requirements
- WalletHub — Can I Get a Loan From a Credit Union With Bad Credit: credit union tax advantages, secured vs unsecured loan comparison
- Credit Union of Southern California — Can I Get a Personal Loan With Bad Credit: flexible lending requirements, expected rate and fee tradeoffs
- Consumer Financial Protection Bureau — Consumer Financial Protection Bureau: report predatory lending practices and verify lender complaints