Having a low credit score can feel like a closed door when you need to borrow money. But the personal loan market has evolved — there are lenders who specifically work with borrowers across all credit profiles, including scores below 600.
Here’s what you need to know about personal loans for bad credit.
What Is Considered “Bad Credit”?
Credit scores below 600 are generally considered poor or bad credit by most traditional lenders. Scores between 600–639 are considered fair. If you’re in either range, you may have been turned down by a bank or credit union — but that doesn’t mean there are no options.
Who Offers Personal Loans for Bad Credit?
Several types of lenders work with lower credit scores:
- Online lenders — Companies like Upstart, Avant, and LendingPoint specialize in borrowers with less-than-perfect credit. They use alternative data beyond just your credit score.
- Credit unions — If you’re a member of a credit union, they often have more flexible underwriting than banks.
- Secured personal loans — If you have an asset to use as collateral, some lenders will approve you based on the collateral rather than credit score alone.
What Rates Should You Expect?
Bad credit personal loans come with higher interest rates — that’s the tradeoff for approval with a lower score. APRs typically range from 18% to 36% for borrowers with poor credit, compared to 7–12% for excellent credit borrowers.
That said, a personal loan at 25% APR is still often better than carrying a credit card balance at 29% APR — especially if it consolidates multiple cards into one fixed payment.
How Much Can You Borrow?
With bad credit, most lenders will start you with smaller loan amounts — typically $500 to $10,000. As you build a track record of on-time payments, you may qualify for larger amounts and better rates over time.
Will Applying Hurt My Credit Score?
Checking your rate through a pre-qualification tool (like Proper Path Loans) uses a soft credit inquiry, which does not affect your score. A hard inquiry only happens when you formally apply with a specific lender — and even then, the impact is typically small and temporary.
Tips for Borrowers with Bad Credit
- Compare multiple lenders — rates vary significantly between lenders for the same credit profile
- Borrow only what you need — smaller loan amounts are easier to get approved for
- Make every payment on time — a personal loan can actually help rebuild your credit if managed well
- Avoid predatory lenders — if a lender doesn’t disclose the APR upfront or charges excessive fees, walk away
The Bottom Line
Bad credit personal loans exist, and they can be a useful financial tool when used responsibly. The key is comparing your options and understanding the full cost before you commit.