Where To Get a Loan With Bad Credit: Your Top 5 Options

If you have bad credit, you still have several borrowing options. Depending on your needs, you may qualify for an online personal loan, credit-builder loan, payday alternative loan (PAL) or secured loan. The right choice depends on how much you need to borrow, your credit profile and whether you can add a co-signer or provide collateral.

Find out which bad credit loan option may be the best fit for your situation.

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Key Takeaways

• Knowing where to get a loan with bad credit starts with your options. People with a FICO score below 580 can still consider PALs, online personal loans, secured loans, credit-builder loans or a co-signer.

• PALs cap interest at 28% for credit union members. They run from $200 to $2,000 with an application fee of no more than $20.

• Online lenders can fund fast but may charge high annual percentage rates (APRs). Keep your rate under 36%, since anything higher can signal a predatory loan.

• Secured and co-signed loans can improve your odds of approval. Collateral or a creditworthy co-signer lowers lender risk, though a default puts both parties at stake.

• Check your free weekly credit reports before you apply anywhere. You can pull all three bureau reports at no cost at AnnualCreditReport.com to catch errors.

Summary generated by AI, verified by MoneyLion editors

What Counts as Bad Credit?

Bad credit is generally defined as a FICO score that's below 580. This score would indicate a history of missed or late payments, high debt utilization, collections and bankruptcy.

• FICO scores typically fall between 300 and 850.

• Scores below 580 are considered bad credit.

• Scores between 580 and 669 are considered fair credit and you still have limited options in terms of loan opportunities.

• Bad credit isn’t permanent. You can improve your credit by making timely payments, decreasing your credit utilization and correcting errors on your credit reports.

• A single missed payment can drop your credit score by up to 50 points or more.

What Are the Best Loans for Bad Credit?

Not every bad credit loan works the same way. Compare your options below to see which loan type best matches your borrowing needs and financial situation.

How To Choose the Right Option for You

Choosing the right loan starts with understanding your priorities. Here's a quick guide to help you decide.

Choose a PAL If

• You’re already a member of a credit union.

• You want to cap your interest rate.

• You can wait one or two business days before getting funds.

Choose an Online Bad Credit Personal If

• You have a credit score below 580.

• You need funds quickly.

• You don’t belong to a credit union.

Choose a Secured Loan If

• You have collateral to offer.

• You’ve been denied other unsecured loans.

• You want to improve your chances of approval.

Choose a Credit-Builder Loan If

• You need to rebuild your credit history.

• You don’t need funds immediately.

• You can afford monthly payments.

Choose a Co-Signed Personal Loan If

• You have a co-signer willing to take on liability.

• You want to qualify for a lower rate.

• You understand that a missed payment impacts both you and your co-signer.

How To Apply When Your Credit Is Low

Applying for a bad credit loan doesn't have to be complicated. Here are the steps to take:

1. Pull your credit report: Check whether or not there are any errors on your report. Before applying, try to correct these mistakes.

2. Check your credit score: You can pull your credit reports for free once a week from all three credit bureaus at AnnualCreditReport.com.

3. Determine how much you need: Crunch the numbers to find out how much you actually need.

4. Set an APR limit: Try to avoid loans where the APR is more than 36%. This may signal predatory loans.

5. Identify lenders: Look to the lenders that you can work with given your credit score.

6. Prequalify with at least three lenders: You can prequalify at various lenders to compare APRs and terms.

7. Look at your total cost: Review your repayment costs for each lender.

8. Watch for fees: Check for origination fees, late fees, application fees and any prepayment penalties.

9. Choose the shortest term you can afford: Assess your budget and pick the shortest term that works with your entire financial picture.

10. Organize documentation: Have your documentation handy when you apply.

11. Apply for the loan: Choose your lender and apply for the loan.

12. Accept the offer after approval: Review the terms and then accept the offer.

What To Do After You Get the Loan

Once you get approval for your loan, there are still ways to protect and improve your credit. Here are some steps you can take:

• Set up autopay: Turn it on before your first installment is due so you never miss a payment.

• Make every payment on time: Consistent, on-time payments during the life of the loan help build your credit.

• Limit hard inquiries: Try not to borrow additional funds while this loan is pending. You don’t want to increase the number of hard inquiries because it can adversely impact your credit.

• Pull your credit report: You always want to be on the lookout for errors. Make sure you review your credit report every 12 months.

Bottom Line

• Bad credit doesn’t eliminate your borrowing options. You can use an online lender, a PAL, a credit-builder loan or a co-signed loan.

• Look beyond your credit score to find the right type of loan for you.

• Use your current loan as a way to build credit for future borrowing options.

• Have a firm APR ceiling cap when you do decide on a loan.

Bad Credit Loan FAQs

Still wondering how to borrow when your score is low? Here are quick answers to the questions people ask most about getting a loan with bad credit.

Where can I get a loan with bad credit right now?

You may be able to get a loan with bad credit from lenders like Oportun, OneMain Financial and Upstart. Many of these lenders offer same-day or next-day funding.

What credit score do I need to get a personal loan?

Lenders like to see credit scores above 580 for personal loans. To get the best rate for a personal loan, you should aim for a good credit score.

Can I get a loan with bad credit and no co-signer?

Yes, it is possible to get a loan with bad and no co-signer. Instead of offering a co-signer you could secure your loan with collateral to improve your chances of getting the loan.

Is a credit union or online lender better for bad credit?

A credit union generally has lower rates for its members. Typically, the rates are capped at 28% for PALs.

Will applying for a bad credit loan hurt my credit score?

If you prequalify for a loan, it won’t hurt your credit. However, when you apply for your loan, your credit score will dip. Consistent payments can help your credit score in the long term.

Key Terms

• Bad credit: Generally a FICO score below 580, often reflecting missed payments, high credit utilization, collections or bankruptcy. It limits your loan options but isn't permanent.

• PAL: A small-dollar loan from a federal credit union, capped at 28% interest with an application fee of no more than $20. Amounts range from $200 to $2,000 depending on the PAL type.

• Credit-builder loan: A loan whose proceeds are held in a locked account until you finish repaying, so the main benefit is building payment history rather than getting cash upfront.

• Secured loan: A loan backed by collateral, such as a car or savings, which can make approval easier but puts that asset at risk if you default.

• Co-signer: Someone who shares legal responsibility for your loan. Their credit can improve your approval odds, but missed payments hurt both of you.

• APR: The yearly cost of borrowing, including interest and certain fees. Most experts say an affordable loan's APR should not exceed 36%.

• Hard inquiry: A lender's review of your credit when you formally apply, which can lower your score by a few points. Prequalifying usually uses a soft inquiry that doesn't affect your score.

Summary generated by AI, verified by MoneyLion editors

Sources

• Consumer Financial Protection Bureau. 2024. "What are some ways to start or rebuild a good credit history?"

• MyCreditUnion.gov. "Payday Alternative Loans."

• Consumer Financial Protection Bureau. 2025. "What is a FICO score?"

• Federal Trade Commission. "Free Credit Reports."

• Consumer Financial Protection Bureau. "Differentiating between secured and unsecured loans."

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