How to Get a Personal Loan with Bad Credit in 5 Steps

Having a low credit score can make getting approved for a personal loan more challenging but not impossible. This guide provides tips for improving your chances of successfully securing a personal loan, even with less-than-stellar credit.

1. Check and Dispute Credit Report Errors

Review your credit report for mistakes negatively impacting your score. Dispute any erroneous information with the bureaus. Fixing errors can raise your score.

2. Lower Your Debt-to-Income Ratio

Lenders look at your monthly debt payments vs. income. Pay down debts and consolidate balances to one loan to reduce this ratio and look more affordable.

3. Gather Required Documentation

Have recent pay stubs, tax returns, government IDs and any other required paperwork ready. Demonstrating steady income improves approval odds.

4. Apply with Subprime Lenders

Online lenders, credit unions and subprime lenders are often more likely to approve bad credit borrowers than major banks. Cast a wide net.

5. Leverage Collateral or Co-Signers

Offering collateral like a vehicle title or savings account or adding a creditworthy cosigner can sway lenders to approve your application.

Having a game plan and taking steps to improve your credit can help those with low scores access financing. Don’t give up; persistence and preparation increase your chances.

How to Get a Personal Loan with Bad Credit in 5 Steps


Q: What minimum credit score is required?
A: Scores as low as 550 may be approved but 600+ is ideal. Scores under 580 have high denial rates.

Q: How much can I borrow?
A: Those with poor credit may only qualify for $1,000 – $5,000 loans initially. Loan amounts increase alongside improved scores.

Q: Are the interest rates higher?
A: Yes, credit scores under 600 pay higher rates ranging from 15-35% generally. Improving your score lowers rates substantially.

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Q: Should I avoid payday loans?
A: Yes, payday loans charge excessively high interest rates and aggressive terms. Only use as a very last resort.

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