How to Apply for a Loan with Bad Credit
Having bad credit doesn’t mean you’re out of options when you need a loan. While a low credit score can limit your choices, many lenders offer loans tailored to people with credit challenges. From online lenders to credit unions and secured loans, there are multiple ways to get financial help—even with a score below 580. Here’s a guide to the best loan options for bad credit, what you’ll need to qualify, and how to apply.
What Is Considered Bad Credit?
Credit scores range from 300 to 850. According to FICO:
- 580–669 is considered fair.
- Below 580 is considered poor.
Lenders view scores under 580 as risky, so they may charge higher interest rates or require additional conditions like collateral or a co-signer. Fortunately, some lenders cater specifically to borrowers in this credit range.
Top Loan Options and Specific Lenders
1. OneMain Financial – Best for Secured & Unsecured Loans
OneMain Financial offers both secured and unsecured personal loans to borrowers with bad credit. Loan amounts range from $1,500 to $20,000.
To qualify, you need:
- Valid government ID.
- Proof of income.
- Bank account.
- Collateral (for secured loans).
You can apply online and finalize the loan at a local branch.
Pros
- Accepts low credit scores.
- Fast funding, often within one day.
- Local branches available for in-person service.
Cons
- APRs range from 18% to 35.99%, which is high compared to prime loans.
- Origination fees may apply.
2. Upstart – Best for Fast Online Loans with Soft Credit Checks
Upstart uses alternative data like education and employment history in addition to credit scores to assess risk. Loans range from $1,000 to $50,000.
To qualify, you need:
- Minimum credit score of 300.
- U.S. bank account.
- Proof of steady income.
You can apply online and get prequalified without affecting your credit score.
Pros
- Low minimum credit score.
- Fast funding (often next-day).
- No prepayment penalty.
Cons
- High APRs (up to 35.99%).
- Origination fee up to 10%.
3. Avant – Flexible Personal Loans for Fair to Poor Credit
Avant offers personal loans from $2,000 to $35,000 and accepts borrowers with credit scores as low as 580.
To qualify, you need:
- Minimum credit score of 580.
- Monthly income of at least $1,200.
- Active checking account.
You can apply online and receive a decision within minutes.
Pros
- Fast approval and funding.
- Reports payments to credit bureaus (helps rebuild credit).
- Flexible repayment terms.
Cons
- Administration fee of up to 4.75%.
- APRs up to 35.99%.
4. SeedFi Borrow & Grow Plan – For Building Credit and Savings
SeedFi offers a unique loan where part of the loan is given upfront, and the rest is placed into a savings account that you unlock after full repayment.
To qualify, you need:
- Credit score as low as 520.
- Proof of employment.
- U.S. address.
Applications are only done through SeedFi’s official site.
Pros
- Builds savings and credit at the same time.
- Low monthly payments.
- Reports to all three credit bureaus.
Cons
You don’t get full loan amount upfront.
Smaller loan amounts compared to traditional lenders.
5. Local Credit Unions – Low Rates and Member-Friendly Terms
Credit unions like Navy Federal, PenFed, and Alliant Credit Union often offer Payday Alternative Loans (PALs) or bad-credit personal loans with lower interest than online lenders.
To qualify, you need:
- Membership in the credit union (some have easy eligibility).
- Stable income.
- Low DTI (debt-to-income) ratio.
To apply, you need to join the credit union. Applications can be done either in-person or online.
Pros
- Low APRs.
- Smaller loan minimums available.
- Personalized service.
Cons
- Must become a member.
- Slower approval process than online lenders.
Tips for Applying With Bad Credit
- Check your credit report first. Go to AnnualCreditReport.com to access your free report. Dispute any errors that could be lowering your score.
- Prequalify without affecting credit. Many lenders, like Upstart and Avant, offer a soft credit check during prequalification so you can see estimated rates without impacting your score.
- Prepare documentation. Gather your photo ID, proof of income, bank statements, and any supporting documents before applying to speed up the process.
- Consider a co-signer. If you’re having trouble qualifying, a co-signer with good credit may help improve your chances and get you a lower interest rate.
Getting a loan with bad credit is challenging, but not impossible. Online lenders typically offer bad credit loans with flexible terms. Always compare interest rates, fees and terms carefully before committing, and make on-time payments to help rebuild your credit over time.