By some estimates, up to 30% of Americans have either poor or bad credit.

Bad credit can be caused by everything from late payments to the amount of debt you’re carrying. Regardless of the reasons for it, your bad credit affects your ability to access loans.

But getting personal loans with bad credit isn’t impossible. In fact, there’s an entire industry of lenders specifically catering to people with low credit scores.

So who are they and how do you access them? Keep reading to find out.

What is Bad Credit?

Anytime you apply to borrow money, to get a new credit card, or to consolidate your debt, it’s possible that your credit will come under investigation. Most reputable money lenders will check your credit score when you apply for any of the above. Your credit score is an easy way for them to figure out whether they’re going to loan you money.

Most credit scores range on a scale from 330 to 830. While any score below 630 is considered a bad credit score, any score in the midrange and lower can make it difficult to qualify for a personal loan. Specifically, it’ll make it difficult to secure a loan from traditional lenders like big banks.

Your credit score can be affected by late payments, civil judgments against you, carrying too much debt, maxing out credit cards, or other negative information about you and your finances. But you might also run into problems securing a loan if you have little or no credit history.

Your credit score is how a lender determines whether you can be trusted to pay back your loan. That’s why a low or bad credit score makes it difficult to get a personal loan – because many people with poor credit become delinquent on their accounts.

What Is a Personal Loan?

You can look for personal loans from a number of different lenders. Traditionally, national banks and community banks, credit unions, and online lenders are the most common sources of personal loans.

The loans they provide are usually unsecured. Meaning that you don’t need to provide collateral such as a car or home to get a loan from these financial institutions.

You’ll pay back your personal loan according to an installment plan. These terms are defined and agreed upon before you receive the loan. Terms cover how much you’re borrowing, at what interest rate, for how long, and when/how you will make payments.

Where to Look for Personal Loans with Bad Credit

Having bad credit limits your options when it comes time to look for a personal loan. Bad credit means you’ll likely have to accept higher interest rates and as well as unfavorable terms – or, at least, less favorable terms than someone with good credit.

That’s why you’ll want to take the utmost care when choosing a lender to borrow from. You’ll have to find a lender that helps your financial situation, not one that makes it worse.

So where do you start? You have 3 options.


The most traditional source of personal loans are national and community banks. However, these lenders have strict lending standards and guidelines. Meaning that if you have a credit score anywhere below 620, you’re probably not going to get an unsecured personal loan from a big bank.

Credit Unions

A credit union is a nonprofit financial cooperative that is owned by members. Their lending standards are usually less strict than a big bank.

There are some credit unions that cater to people with poor credit. These programs provide personal loans to consumers with poor credit history but with favorable terms.

Their terms are usually more flexible than an online lender and they also charge lower interest rates.

Online Lender

While not as traditional as banks and credit unions, the advent of the internet brought us, online lenders. While some online lenders have standards as strict as banks, others tailor to people with bad credit.

These lenders often charge high-interest rates and have other requirements that need to be met. They may look into your employment history and ask for bank account information to determine your ability to pay back the loan. Learn more about online lenders before going this route.

What to Do If You’re Denied

If you’ve been denied by the traditional lender’s notes above, there are a few things you can do. We’ve listed these in more detail below.

Get a Cosigner

A cosigner is a 3rd party that agrees to pay your loan if you default. Typically, your cosigner is a friend or family member that you’re close to and who trusts you. This person has good credit and, by offering to cosign, can help improve your chances of getting a loan.

Ask Friends or Family

If you need a personal loan quickly and you don’t qualify because of your credit score, you might think about asking friends or family for some financial help. These people won’t deny you a loan based on your bad credit but, before you accept the money, make sure you have repayment terms. You should also discuss items like a payment schedule and whether interest will be charged.

Improve Your Credit

If you have bad credit, this should be a priority regardless of whether or not you need a loan. If you start paying at least your minimum payment on time, paying down your debts, and improving your credit utilization, your credit score will improve.

Remember that improving your credit score is a long-term process toward financial freedom and your score won’t change overnight or even over the course of a couple of months.

More Financial Help

Getting personal loans with bad credit is difficult, but it’s certainly not impossible. First, look at traditional lenders such as banks, credit unions, and online lenders. If and when those don’t work out, you might consider a personal loan from a family member, a cosigner, or working to improve your credit.

And when you need more financial advice, we’ve got you covered. Check out our financial blog for all the guidance you’ll ever need.

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