How to Get a Loan With Bad Credit: Options and Tips

You can get a loan with bad credit, but your best options are usually secured loans, loans with a co-signer, credit builder loans, or personal loans from credit unions and online lenders that work with lower scores. Expect higher rates and stricter terms. Checking your credit reports and comparing lenders can improve your chances.

Lenders see lower scores as higher risk, so the loans open to you often come with more paperwork and higher costs. This guide covers the loan types available with bad credit, steps that can strengthen your application, and the warning signs of predatory lenders.

What Counts as Bad Credit for a Loan?

A FICO score below 670 is generally considered below “good” credit. On the FICO scale, 580–669 is Fair, and anything below 580 is Poor. You can see how the bands compare in our guide to credit score ranges. To a lender, these ranges can signal missed payments, high credit utilization or other financial stress, which suggests a higher chance of default.

Here is what that usually means when you apply:

• Higher interest rates: Lenders charge more to offset the added risk, which raises the total cost of borrowing.
• Lower loan amounts: You may not qualify for the full amount you asked for.
• Stricter terms: Shorter repayment periods, larger down payments or more frequent payments are common.
• Fewer lenders: Many traditional banks decline applications below a certain score, which narrows your choices.

None of this means borrowing is off the table. It means the rules are different, and knowing what’s realistic is the first step.

What Types of Loans Can You Get With Bad Credit?

Secured Loans

Secured loans require collateral, something of value the lender can claim if you stop paying. Because the lender takes on less risk, approval is easier and rates tend to be lower than for unsecured loans.

Common examples include:

• Auto title loans: You pledge your vehicle’s title as collateral. Rates are still high, and missed payments can lead to repossession.
• Secured personal loans: Your savings account or certificate of deposit (CD) acts as collateral, so banks and credit unions can lend at lower rates.
• Home equity loans and HELOCs: If you own a home, you can borrow against your equity, but defaulting puts your home at risk.

Loans With a Co-signer

A co-signer with strong credit adds their name and financial reputation to the loan. Lenders see this as lower risk, which can lead to approval and better rates. The catch: your co-signer is legally responsible for the loan if you don’t pay, and late payments hurt both of your credit profiles.

Credit Builder Loans

Credit builder loans are designed to help people build or rebuild credit. Instead of getting the money upfront, the loan amount is held in a locked savings account while you make monthly payments. Once the loan is paid off, the money is released to you. Your on-time payments are reported to the major credit bureaus, which builds your payment history over time.

These loans are widely available through credit unions and community banks. They are one of the few borrowing products where the main goal is building credit rather than getting cash right away.

Unsecured Personal Loans for Bad Credit

Some lenders specialize in unsecured personal loans for borrowers with low scores. Approval is possible, but expect higher interest rates and origination fees than prime borrowers pay. Online lenders and credit unions are usually the most realistic places to start. Many credit unions offer “payday alternative loans” (PALs) capped at 28% APR by federal rule. If your score is very low, see our guide to loan options with a 500 credit score.

Payday Loans (Use Extreme Caution)

Payday loans are short-term, high-cost advances usually due on your next payday. The cost adds up quickly: according to the Consumer Financial Protection Bureau (CFPB, 2024), a $15 fee per $100 borrowed equals an APR of almost 400 percent on a typical two-week loan.

Many borrowers can’t repay the full balance in two weeks and roll the loan over, piling up fees that can exceed the amount they borrowed. Credit unions, nonprofit assistance programs, negotiated payment plans and even some credit card cash advances usually cost far less. Treat payday loans as a last resort.

How Can You Improve Your Chances of Loan Approval?

1. Check your credit reports first. You can get free reports from all three major bureaus (Equifax, Experian and TransUnion) every week at AnnualCreditReport.com. Here’s how to get all three credit reports. Reviewing them before you apply shows you what lenders will see and whether any errors are worth disputing.
2. Dispute inaccurate items. If you see late payments that were made on time, accounts that aren’t yours or outdated negative marks, you can challenge them under the Fair Credit Reporting Act (FCRA). Our guide explains how to dispute negative items on your credit report. With your authorization, Credit Saint can handle the dispute process for you.
3. Add a co-signer. A creditworthy co-signer can change how lenders view your application.
4. Offer collateral. A secured loan is often the difference between a “no” and an approval at a rate you can manage.
5. Show stable income. Pay stubs, tax returns and proof of regular direct deposits help lenders see that you can repay, even when your score is low.
6. Compare several lenders. Credit unions, online lenders and community banks each use different approval rules. Most offer pre-qualification with a soft credit check that doesn’t affect your score.
7. Lower your debt-to-income ratio (DTI). Paying down existing balances, especially credit card debt, can increase how much a lender is willing to lend.

How Do You Spot and Avoid Predatory Lenders?

When money is tight, some lenders take advantage of the urgency. Watch for these warning signs:

If a lender’s offer feels wrong, trust that instinct. Walking away from a predatory loan is almost always the better decision, even if it means waiting a few weeks while you look at other options.

What Should You Consider Before Taking a Bad Credit Loan?

• Total cost of borrowing: The interest rate is only part of the cost. Add up origination fees, prepayment penalties and any insurance add-ons to see the true price.
• Whether the payment fits your budget: Make sure the monthly payment fits your real budget, not just your hoped-for one. A missed payment can make your credit situation worse.
• Effect on your credit: On-time payments on a new loan can help rebuild your credit over time. Late or missed payments will hurt it further.
• Cheaper alternatives: Credit union payday alternative loans, nonprofit credit counseling, assistance programs, a payment plan with a creditor, or borrowing from family or friends may all cost less than a bad-credit loan.

How Can Credit Repair Help Before You Borrow?

If your reports contain errors, correcting them helps lenders see an accurate picture of your credit. Under the FCRA, you have the right to dispute any item that appears inaccurate, incomplete or unverifiable. Credit bureaus generally have 30 days to investigate a dispute, and information that can’t be verified must be corrected or deleted.

Credit Saint reviews all three of your credit reports, identifies items that may be inaccurate, unverifiable or outdated, and, with your authorization, challenges them with the credit bureaus and creditors. We follow the rules of the Credit Repair Organizations Act (CROA). Credit Saint has been in business since 2007 and offers a 90-day money-back guarantee.

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