If you have bad credit, getting a loan can feel impossible. You might be worried about high interest rates or getting rejected altogether. But here’s the truth — even with a low credit score, you can still qualify for certain types of loans if you know where to look and how to prepare.
This guide will walk you through exactly how to get a loan with bad credit, what lenders look for, and how to improve your chances of approval.
Understanding Bad Credit
Before applying, it helps to understand what “bad credit” actually means.
Most lenders use the FICO credit score, which ranges from 300 to 850.
- Excellent: 750+
- Good: 700–749
- Fair: 650–699
- Poor: Below 650
If your score falls below 650, lenders may see you as risky — but that doesn’t mean you’re out of options.
Types of Loans You Can Get with Bad Credit
Not all loans require perfect credit. Here are a few options worth considering:
1. Personal Loans from Online Lenders
Some online lenders specialize in bad credit loans. They look beyond your credit score and consider income, employment, and bank history.
Examples: Upstart, OneMain Financial, Avant
Tip: Compare multiple lenders before applying. Some charge higher fees or interest rates.
2. Secured Loans
A secured loan requires collateral — like your car, savings, or property. Because there’s less risk for the lender, it’s easier to qualify.
Common types:
- Car title loans
- Secured personal loans
- Home equity loans
Warning: If you don’t repay, the lender can take your collateral — so only borrow what you can afford.
3. Credit Union Loans
If you’re a member of a credit union, they may offer personal loans with lower interest rates and flexible approval criteria.
Credit unions often focus on your relationship and repayment ability instead of just your score.
4. Payday Alternative Loans (PALs)
Some federal credit unions offer small, short-term loans as an alternative to payday lenders.
Loan range: $200–$1,000
Repayment term: 1–6 months
These loans are safer and more affordable than traditional payday loans.
5. Co-Signed Loans
If you have a trusted friend or family member with good credit, they can co-sign your loan.
This gives lenders extra security — but remember, if you miss payments, it can hurt both your credit scores.
How to Increase Your Chances of Approval
Getting approved for a loan with bad credit isn’t just about luck. You can take specific steps to make lenders more confident in your application.
1. Check Your Credit Report
Visit AnnualCreditReport.com to get a free copy of your report. Review it for any mistakes or old accounts that can be removed to instantly boost your score.
2. Show Proof of Income
Lenders want to know you can repay. Provide proof of stable income — such as pay stubs, bank statements, or tax returns.
If you’re self-employed, show a few months of consistent deposits.
3. Borrow Only What You Need
Smaller loan amounts are easier to approve. Borrowing within your means also reduces the risk of future debt.
4. Offer Collateral or a Co-Signer
Secured loans and co-signed applications are both excellent ways to get approved faster — even with low credit.
5. Improve Your Credit Before Applying Again
If you’re denied, take a few months to rebuild your credit.
- Pay bills on time
- Pay down credit card balances
- Keep old accounts open
Even a small increase in your credit score can mean lower interest rates next time.
Avoid Predatory Lenders
Be cautious of lenders that:
- Don’t check credit at all
- Guarantee approval instantly
- Ask for upfront fees
These are often scams or payday loan traps that can leave you worse off financially. Always read the fine print before signing.
Final Thoughts
Having bad credit doesn’t mean you’re stuck. You just need to approach borrowing wisely — explore multiple lenders, consider secured options, and always focus on improving your credit for the future.
Even small, consistent steps can lead to better financial opportunities down the road.
