You can get a loan with bad credit, but you’ll pay more for it and need to be selective about where you borrow. Lenders that specialize in subprime borrowers typically accept credit scores as low as 300 to 600, depending on the company. The key is finding a legitimate lender with reasonable rates while avoiding predatory options that can trap you in a cycle of debt.
What Counts as “Bad Credit”
Most lenders consider a FICO score below 670 to be subprime, and scores below 580 fall into the “poor” category. The lower your score, the fewer options you’ll have and the higher your interest rate will be. Scores below 500 are unlikely to qualify for a personal loan from most online lenders. If your score is between 500 and 650, you have real options, but you’ll want to understand what each one costs before signing anything.
Online Lenders That Accept Lower Scores
Several online lenders specifically serve borrowers with damaged credit. Upstart accepts scores as low as 300, making it one of the most accessible options. Upgrade and Best Egg set their floor at 600. OneMain Financial and Universal Credit don’t publicly disclose minimum score requirements, which often means they evaluate applications on a case-by-case basis using income and other factors alongside your credit history.
Interest rates for these loans vary widely. Online lenders offering bad credit loans typically charge APRs ranging from roughly 20% to 36%. To put that in perspective, a $5,000 loan at 30% APR over three years would cost you about $2,600 in interest alone. Lenders with the lowest rates, like LightStream (which caps at around 25% APR) or credit unions (often under 18%), generally require higher scores or existing membership.
Most financial experts consider 36% APR the ceiling for an affordable loan. If a lender quotes you anything above that, you’re likely entering predatory territory.
Secured Loans Lower the Bar
A secured loan requires you to pledge something you own as collateral, such as a car, savings account, or investment account. Because the lender can seize that asset if you stop paying, secured loans are easier to qualify for with a low credit score and typically carry lower interest rates than unsecured options.
The tradeoff is real risk. If you put up your car and default on the loan, the lender can repossess it. Only borrow against an asset you can afford to lose in a worst-case scenario. That said, for borrowers who can’t qualify for an unsecured personal loan, a secured loan backed by a savings account or certificate of deposit can be a solid way to borrow at a lower rate while also building credit history through on-time payments.
Credit Union Payday Alternative Loans
If you need a small amount of cash quickly, federal credit unions offer Payday Alternative Loans (PALs) that are far cheaper than payday lenders. These loans range from $200 to $1,000 with repayment terms of one to six months. The application fee is capped at $20, and interest rates stay well below what payday lenders charge.
You’ll need to have been a credit union member for at least one month to qualify. You can take out up to three PALs within a six-month period, as long as they don’t overlap. If you’re not currently a member of a credit union, joining one is usually straightforward. Most have low minimum deposits to open an account, and many serve broad geographic areas or employer groups.
What Lenders Look at Beyond Your Score
Your credit score is important, but it’s not the only factor. Lenders also evaluate your income, employment stability, and debt-to-income ratio (DTI), which is the percentage of your monthly gross income that goes toward debt payments. A DTI below 36% signals to lenders that you can handle additional debt comfortably. Once your DTI climbs above 43%, approval gets significantly harder.
You can calculate your DTI by adding up all your monthly debt payments (rent or mortgage, car loan, minimum credit card payments, student loans) and dividing by your gross monthly income. If you earn $4,000 a month and your existing debt payments total $1,200, your DTI is 30%. Some lenders for bad credit borrowers weigh steady income more heavily than your score, so having a reliable paycheck or provable self-employment income can help offset a low number.
Other Borrowing Options Worth Considering
If you can’t qualify for a personal loan or need money faster, a few alternatives are worth exploring before turning to high-cost lenders:
- Employer cash advance: Some employers offer paycheck advances at no cost or very low fees. Ask your HR department.
- Credit card cash advance: If you already have a credit card, a cash advance carries fees and higher interest than regular purchases, but the cost is still far lower than a payday loan.
- Negotiating with creditors: If you need a loan to cover a specific bill, contact the creditor directly. Many will set up a payment plan that reduces your monthly obligation without requiring you to borrow at all.
- State and local emergency assistance: Many local governments run programs for rent, utilities, or medical expenses that can eliminate the need to borrow.
- Borrowing from family or friends: Uncomfortable but often interest-free. Writing down the terms, even informally, protects both sides.
How to Spot Predatory Lenders
When your credit is low, you’re a target for lenders who profit from desperation. Payday lenders are the most common example. They typically confirm your income and checking account, hand you cash or deposit it electronically, then require repayment in full (plus fees) on your next payday. APRs on payday loans routinely exceed 400%.
Watch for these red flags with any lender. Loans with APRs above 36% are a warning sign. Lenders that require post-dated checks or direct access to withdraw from your bank account on specific dates are using payday loan structures, even if they market themselves differently. Some online lenders have adopted terms like “payday alternative” in their branding without actually being credit unions or following the same borrower-friendly rules. Always read the loan agreement and confirm the total cost of borrowing, including all fees, before you sign.
Steps to Improve Your Odds
Before you apply, a few moves can meaningfully improve your chances and reduce what you’ll pay. Check your credit reports for errors through AnnualCreditReport.com. Disputes over incorrect late payments or accounts that aren’t yours can sometimes boost your score by several points within 30 to 45 days.
Pay down any credit card balances you can. Your credit utilization ratio (how much of your available credit you’re using) heavily influences your score, and even small reductions can help. If your cards are maxed out and you can bring one below 30% of its limit, that change alone may nudge your score upward.
When you do apply, avoid submitting applications to multiple lenders within a short window unless they offer prequalification with a soft credit check. Hard credit inquiries from formal applications can temporarily lower your score by a few points each. Many online lenders now let you check your rate without affecting your credit, so use that feature to compare offers before committing to a full application.
Finally, borrow only what you need and can realistically repay. A smaller loan amount with a shorter term means less total interest paid, and consistent on-time payments will start rebuilding the credit score that got you here.