personal loans for bad credit
How To

How to Get a Personal Loan with Bad Credit

A bad credit personal loan is a fixed-rate loan given to borrowers who have a low credit score. These personal loans are not secured by collateral but instead, the lender relies on the borrower’s credit score and debt-to-income ratio.

A bad credit score (a FICO score of 300-629) won’t automatically disqualify you from applying for personal loans but it does lower your chances of approval.

If you do qualify for a personal loan with a low credit score, you may end up paying higher interest rates and fees.

A personal loan for bad credit is typically repaid in monthly installments and the repayment period is usually between one and five years. You can use the funds for just about anything you want including consolidating debt.

Here’s how to get a loan with bad credit:

How to Apply for a Personal Loan with Bad Credit

Step 1

Check Your Credit Report

Before applying for a personal loan, check your credit report and address any inconsistencies or errors that may have a negative impact on your score. Higher credit scores not only gives you better interest rates but can also boost your chances of qualifying for a loan. 

Step 2

Compare Lenders

Compare leading lenders that offer bad credit personal loans. Look at their loan repayment terms, interest rates, and specific requirements. You can compare lenders online to find a range of bad credit loan offers that may be suitable for you.

Step 3


A pre-qualification tells you what loan you can qualify for, what the rates are, and what the repayment terms are. This is very useful if you are trying to determine what you may qualify for, without affecting your credit score. Most online lenders offer pre-qualification. 

Step 4

Apply Online

Complete your application online and submit the required supporting documentation. This usually takes only a few minutes as online lenders allow for a very convenient application process. Once approved, the funds will be paid to your bank account as soon as the same business day, depending on the lender. 

Comparing Bad Credit Personal Loans

With many online lenders offering bad credit personal loans, finding the right loan offer is relatively easy. There are two ways to measure the cost of loans:

Monthly Payments

Compare the loan’s monthly repayment against your budget to determine if you can comfortably afford the loan. You can use a personal loan calculator to see how much you can expect to pay.

Annual Percentage Rate

A loan’s annual percentage rate (APR) is similar to the interest rate but it includes all the fees that the lender charges. Financial experts agree that affordable loans are those with an APR of 36% or lower.

Note: Some bad credit lenders will add an origination fee that is typically between 1%-10% of the loan amount. They will deduct this from the loan before depositing the money into your account, resulting in less available money than you anticiapted. 

Other Loan Options

Consumers with good credit scores (700 and above) typically receive the lowest interest rates and the best loan terms.

According to FICO, people over the age of 60 typically have a credit score of 743 while those between the ages of 18 and 29 typically have a score of 652.

This can make quite a difference in loan terms. Look at the differences in payments for a $200,000 home loan during 2020:

ScoreInterest RateMonthly PaymentTotal Interest Paid

However, there are still options available for consumers with low credit scores. Apart from personal loans for bad credit, other loan options include:

  • Credit unions
  • Family and friends
  • Home equity loan with bad credit
  • Peer-to-peer lending

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    Lorien is the Country Manager for Financer US and has a strong background in finance and digital marketing. She is a fintech enthusiast and a lover of all things digital.

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    Last Updated: May 1, 2022

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