How to Get a Personal Loan With Bad Credit (2026 Guide)

What Is "Bad Credit" for Personal Loans?

Lenders define "bad credit" differently, but most use the FICO scale as a benchmark. Here's how the industry categorizes credit scores in the context of personal loan underwriting:

Credit Score Range	Classification	Loan Availability
300–579	Very Poor (Bad Credit)	Limited — specialized lenders only
580–669	Fair Credit	Moderate — most online lenders approve
670–739	Good Credit	Good — most lenders compete for your business
740–850	Very Good / Exceptional	Best rates and terms available

If your score falls below 580, you are in the "bad credit" tier. This doesn't mean you're out of options — it means you need to be more strategic about where you apply and how you present your overall financial picture.

Lenders also factor in your income, employment stability, and debt-to-income (DTI) ratio alongside your credit score. A borrower with a 560 score but a stable income and low DTI often gets approved where a higher-score borrower with unstable income does not.

Best Lenders for Bad Credit in 2026

Not all lenders serve borrowers with bad credit. These are the most accessible options for scores below 620, based on minimum score requirements, approval rates, and loan terms:

Lender	Min. Score	APR Range	Best For
Upstart	580	7.80%–35.99%	Thin credit files, recent grads
Avant	600	9.95%–35.99%	Fair credit, fast funding
OneMain Financial	No minimum	18.00%–35.99%	Secured and unsecured options
OppFi	No minimum	160%–179%*	Emergency funds only — high cost
NetCredit	No minimum	34%–99.99%	Last resort when others decline

*OppFi and similar lenders should only be used as a last resort. Their effective APRs can be extraordinarily high.

For most borrowers with bad credit, Upstart and Avant offer the best combination of accessibility and reasonable pricing. Avant, in particular, is transparent about fees and has a strong track record of approving near-prime borrowers who have been turned down elsewhere.

Also consider local credit unions — they often use more holistic underwriting that looks at the full relationship, not just a three-digit score. Membership is usually easy to obtain.

What APR Should You Expect With Bad Credit?

Interest rates for bad credit personal loans are significantly higher than for borrowers with good or excellent credit. Here's a realistic picture of what to expect based on score range:

Credit Score Range	Average APR (2026)	Monthly Payment on $10k/36mo
720+	9%–12%	$318–$332
660–719	14%–20%	$342–$371
580–659	22%–30%	$384–$424
Below 580	30%–36%	$424–$454

The difference between a 580 score and a 720 score on a $10,000 loan paid over 3 years is roughly $1,800–$2,500 in additional interest. That's the financial incentive to improve your score before borrowing, even if it means waiting 60–90 days.

5 Ways to Improve Your Approval Odds

Even with a sub-620 credit score, these strategies can significantly increase your chances of getting approved — and at a lower rate:

1. Add a Co-Signer
A co-signer with good or excellent credit (670+) takes on equal legal responsibility for the loan. This dramatically reduces lender risk, often allowing approval at rates 8–15 percentage points lower than you'd get alone. The co-signer's credit will be impacted if you miss payments, so choose someone who trusts you.

2. Offer Collateral (Secured Loan)
A secured personal loan is backed by an asset — typically a savings account, certificate of deposit, or vehicle. OneMain Financial, for example, offers secured personal loans that are easier to qualify for than their unsecured counterparts. If you default, the lender claims the collateral rather than pursuing you legally.

3. Try a Credit Union
Credit unions are member-owned nonprofits with less rigid underwriting than commercial banks. They look at your banking relationship, payment history with them directly, and other factors. Many credit unions offer "credit builder loans" specifically designed to help members improve their scores.

4. Reduce Your Debt-to-Income Ratio
Most lenders cap DTI at 40–50%. If your monthly debt payments (including the new loan) would exceed 40% of your gross monthly income, consider paying down existing debts first or applying for a smaller loan amount.

5. Apply for a Smaller Loan Amount
Requesting $5,000 instead of $10,000 reduces lender risk and can turn a denial into an approval. Once you've made 6–12 on-time payments and potentially improved your score, you can refinance or apply for additional funds at a better rate.

Alternatives to Bad Credit Personal Loans

If personal loan rates seem too high, or if you're getting denied, consider these alternatives:

• Credit union Payday Alternative Loans (PALs) — Capped at 28% APR by the NCUA. Available up to $2,000 for 1–12 months.
• 401(k) loan — Borrow against your retirement savings at low interest (you pay yourself back). Risk: if you leave your job, the loan becomes immediately due.
• Peer-to-peer lending — Platforms like Prosper match borrowers with individual investors. May have more flexible approval criteria.
• Negotiate with creditors — If the loan is to pay off existing debt, call your creditors directly and ask for hardship programs, lower rates, or extended terms.
• Nonprofit credit counseling — A nonprofit credit counselor can help negotiate a Debt Management Plan (DMP) with your creditors that consolidates payments at reduced interest rates.

Warning Signs of Predatory Lenders

Borrowers with bad credit are specifically targeted by predatory lenders. Know these red flags before signing anything:

Legitimate lenders always disclose the APR before you sign. Under the Truth in Lending Act (TILA), they are legally required to provide a Loan Estimate with full cost disclosure. If a lender resists giving you the APR in writing, walk away.

Check any lender's state license at your state banking regulator's website before applying. You can also verify lenders through the Consumer Financial Protection Bureau (CFPB) complaint database at consumerfinance.gov.