How to Get a Personal Loan with Bad Credit

How to Get a Personal Loan with Bad Credit
Rebecca Hosley
on March 22, 2020
Read in 2 min

When you need access to cash today, personal loans can be a quick, convenient option. But what about people with a low credit score? Is it possible to get a personal loan when you have bad credit?

The answer is yes, but borrowers should proceed with caution to make sure the loan doesn’t cost them more than they can afford in the long run.

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How Do Bad Credit Personal Loans Work?

Loans for people with bad credit work much the same as they do for everyone else: you apply for a loan through a lender and then, if approved, you pay it back – with interest. However, it’s important to first understand how to evaluate different loan options to choose the best one for you now. This includes:

  • Annual percentage rate (APR). The APR dictates the amount of interest you’ll be charged while repaying the loan. The lower the APR, the less you’ll pay in interest. People with bad credit can expect to pay a higher APR.
  • Monthly payment. This is the amount you will be expected to pay each month on the loan. It is determined by how much you borrow, the interest and loan term.
  • Loan term. This is the amount of time you have to repay the loan. It is normally a fixed monthly amount that you pay for a set period, such as three years. Try to avoid the temptation to choose a longer repayment period to reduce monthly payments, since it will cost you more in interest.

Now that you know how to evaluate the terms of a loan, it’s time to find a lender.

Personal Loan Options for People with Bad Credit

People with bad credit scores may find it a challenge to get approved by a traditional lender, like a bank. However, there are other lenders willing to take a chance on borrowers of all credit types, including:

Credit unions. As a nonprofit financed by its members, credit unions are often more willing to lend to people with lower credit scores. Some offer programs specifically designed for people with poor credit, but they may not approve all types of borrowers.

Online lenders. Many online lenders will work with consumers who have a low credit score. However, in some cases they may issue loans with higher interest rates.

Payday loans. Designed specifically for people with bad credit, some payday loans can be challenging to pay off due to high interest rates, which can average 390 to 780% for a two-week loan. Make sure you are confident you can pay it back, plus the interest, in a timely manner.

Before applying for any type of loan, make sure to do your research to ensure you’re getting the best terms possible and will be able to pay it back on time. By doing this not only do you avoid additional interest and potential financial penalties, you’re also building up your credit score, which can help you qualify for more favorable loan terms in the future.


Disclaimer: This is not legal or financial advice. Please consult a legal or financial advisor for your specific situation.

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Rebecca Hosley Finance Journalist

Rebecca Hosley is a content writer based in Chicago.

She frequently writes about small business, insurance and finance.

In her free time, she enjoys trivia, craft beer and disc golf.

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The lenders and lending partners you are connected to will provide documents that contain all fees and rate information pertaining to the loan being offered, including any potential fees for late-payments and the rules under which you may be allowed (if permitted by applicable law) to refinance, renew or rollover your loan. Loan fees and interest rates are determined solely by the lender or lending partner based on the lender’s or lending partner’s internal policies, underwriting criteria and applicable law. has no knowledge of or control over the loan terms offered by a lender and lending partner. You are urged to read and understand the terms of any loan offered by any lenders and lending partners and to reject any particular loan offer that you cannot afford to repay or that includes terms that are not acceptable to you.

Late Payments Hurt Your Credit Score

Please be aware that missing a payment or making a late payment can negatively impact your credit score. To protect yourself and your credit history, make sure you only accept loan terms that you can afford to repay. If you cannot make a payment on time, you should contact your lenders and lending partners immediately and discuss how to handle late payments.