Best Bad Credit Loans of 2024

A low credit score doesn’t have to keep you from getting a personal loan to cover an emergency or consolidate debts, but borrowers with bad credit scores (629 or lower) may need to put in extra work to qualify.

Here are the steps to get a personal loan with bad credit, tips to boost your chances of approval and alternatives to consider.

1.What is a bad credit loan?

Bad credit loans are available to borrowers with bad or weak credit. Loans may be secured or unsecured, but are typically not secured by collateral such as a car or home.

According to the FICO scoring scale, a bad credit score ranges from 300 to 579. The weaker your credit score, the greater the risk to lenders, which is why bad credit loans are so costly. You may qualify for a loan, but you may end up being offered a higher interest rate by the lender or a lower loan amount than you want.

Borrowers with low or no credit scores can also obtain riskier loan types, such as payday loans and title loans.

2.What types of loans are available with bad credit?

Even with bad credit, you can choose from many types of loans, such as:

bad credit personal loan

With fixed interest rates of up to around 36%, personal loans are generally safer than payday loans, car title loans, or alternative installment loans. You can usually repay a fixed amount of the loan over several years.

These loans are usually unsecured, which means you don’t have to put up a valuable asset like your car or savings account as collateral. If you have bad credit, you may want to consider applying for a secured personal loan. Although a secured loan puts your equity at risk, you're more likely to get approved and get a better APR. Some lenders also allow co-signers on personal loans, which can help riskier borrowers get approved.

payday loans

A payday loan is a small, short-term loan designed to cover expenses until your next payday, when you can pay it back. Payday loans are considered predatory because lenders target consumers with poor credit scores and few options for getting cash quickly. The fees can be very high, often amounting to triple-digit annual interest rates. If you are unable to repay the loan in full by the end of the term, you can extend the loan by paying more.

Alternative Installment Loans

These loans may be similar to payday loans in that they are available to consumers with bad credit and tend to charge high interest rates, often well above 100%. Generally speaking, alternative installment loans feature fixed monthly payments, repayment terms ranging from a few months to a few years, and high interest rates.

Student Loans

Typically, you'll get the best value from a federal student loan, but for consumers with below-average credit, even private loans can offer students better terms than other loan options. Student loans tend to offer a wide range of repayment terms, with terms ranging from 5 to 20 years for private loans. You can qualify for federal student loans without a credit check, and you can add co-signers to help you qualify for private student loans.

Credit card cash advance

Like payday loans, credit card cash advances give you quick access to cash, but they come at a higher price. You'll typically pay a cash advance fee of at least $10, and the loan interest rate will be higher than the interest rate charged when you purchase. A credit card cash advance can be helpful if you pay it off quickly, but a cash advance can also increase your card balance, which can hurt your credit score.

3.How much money can I borrow with bad credit?

The amount you're eligible to borrow depends on several factors, including your credit score, debt-to-income ratio, and the services offered by your lender. Personal loan amounts for bad credit borrowers range from $1,000 to $50,000, depending on the lender and your creditworthiness.

4.How to get a personal loan with bad credit?

Here are the steps for people with bad credit to get a loan:

Check your credit report and fix any errors.

You can get your free credit report from the three major credit bureaus at AnnualCreditReport.com. Use your report to identify ways to improve your credit, such as paying off collection debt or paying off high credit card balances. Also, check for errors that may lower your score.

Figure out how much you need to borrow.

Make sure your monthly payments fit within your budget. Your loan amount, repayment term, APR, and any fees charged by your lender will help determine your monthly payments. The longer you take to repay the loan, the more you pay in interest, but the lower your monthly payments are.

Get prequalified to check interest rates and loan amounts.

Pre-qualification or pre-approval uses a soft inquiry that won't affect your credit score, allowing you to compare rates and terms before applying. A formal loan application may trigger a rigorous credit check, which may damage your credit.

Compare bad credit lenders.

Once you get a few offers, choose the most competitive one based on your credit profile. View rates, fees and terms.

apply for a loan.

This will trigger a hard inquiry, which may temporarily lower your credit score. If your application is denied, you will be notified of the factors leading to that decision.