How to Get a Personal Loan With Bad Credit in 2025

Having bad credit can feel like a closed door when you need to borrow money. But here’s the truth: thousands of people with low credit scores get personal loans approved every single day. The key is knowing where to look and how to present yourself as a borrower.

What is Considered Bad Credit?

Lenders use your credit score to assess risk. Here’s how the FICO score ranges break down:

• 800–850: Exceptional
• 740–799: Very Good
• 670–739: Good
• 580–669: Fair
• 300–579: Poor (Bad Credit)

Where to Get a Personal Loan With Bad Credit

1. Credit Unions

Credit unions are member-owned, not-for-profit institutions. They tend to be more flexible than banks and often offer Payday Alternative Loans (PALs) — small loans designed specifically for people who might otherwise turn to high-interest payday lenders. If you’re a member, this is your first stop.

2. Online Lenders

Online lenders like Upstart, LendingPoint, and Avant specialize in borrowers with fair or poor credit. Many use alternative data beyond your credit score — such as your education, employment history, and income — to make lending decisions. Rates are higher than prime loans but far lower than payday loans.

3. Secured Personal Loans

If you have an asset — a savings account, car, or other property — you can use it as collateral for a secured loan. Because the lender has reduced risk, approval is easier and rates are lower. The downside: if you don’t repay, you lose the asset.

4. Co-signer Loans

Having a friend or family member with good credit co-sign your loan dramatically improves your approval odds and lowers your rate. Just be aware: if you miss payments, it damages their credit too.

What Lenders Actually Look At

Your credit score is just one factor. Smart lenders also evaluate:

• Debt-to-income ratio (DTI): Your monthly debt payments divided by your gross monthly income. Below 36% is ideal.
• Employment stability: How long you’ve been at your job matters.
• Income: Can you actually afford the monthly payments?
• Recent credit behavior: Have you improved recently, even if your history is rough?

How to Improve Your Approval Chances

• Check your credit report for errors and dispute any inaccuracies at AnnualCreditReport.com
• Pay down existing credit card balances to reduce your utilization ratio
• Apply for the amount you actually need — not the maximum
• Show proof of stable income (pay stubs, bank statements)
• Consider a smaller loan amount to start

Loans to Avoid

When you have bad credit, predatory lenders come knocking. Avoid payday loans (APRs of 300–400%), title loans (you risk losing your car), and any lender offering “guaranteed approval” without reviewing your application.

Q: Can I get a personal loan with a 550 credit score?

Yes, but your options are limited. You’ll likely need to work with a credit union, online subprime lender, or provide collateral or a co-signer. Expect APRs between 20–36%. Focus on improving your score over the next 6–12 months to access better rates.

Q: How fast can I get a personal loan with bad credit?

Many online lenders offer same-day or next-day funding once approved. The application itself takes 10–15 minutes.

The Bottom Line

Bad credit is not a life sentence. With the right lender, a stable income, and a realistic loan amount, approval is very possible. Use our Personal Loan Calculator to see what different loan amounts and rates will cost you monthly before you apply.