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Mandy Sleight has over 15 years of insurance knowledge and expertise in auto, home, life, health, pet, supplemental benefits, and other insurance products. She’s a sought-after insurance expert, appearing in Bankrate.com, Moneygeek.com, U.S. News & World Report, Reviews.com, CNET, and other publications, and she's been writing for Compare.com since 2023.
Mandy uses her background and experience working for well-known insurance companies like State Farm and Nationwide Insurance to create engaging and easy-to-understand content that helps readers make smarter insurance choices that have a positive effect on their budgets and finances.
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Nick Versaw leads Compare.com's editorial department, where he and his team specialize in crafting helpful, easy-to-understand content about car insurance and other related topics. With nearly a decade of experience writing and editing insurance and personal finance articles, his work has helped readers discover substantial savings on necessary expenses, including insurance, transportation, health care, and more. As an award-winning writer, Nick has seen his work published in countless renowned publications, such as the Washington Post, Los Angeles Times, and U.S. News & World Report. He graduated with Latin honors from Virginia Commonwealth University, where he earned his Bachelor's Degree in Digital Journalism.
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Licensed property and casualty insurance agent
10+ years editing experience
NPN: 20461358
John Leach is a licensed insurance agent who reviews and fact-checks articles for Compare.com. John has several years of experience reviewing and editing various insurance topics, and he also holds a valid personal lines producer license from the California Department of Insurance (NPN #20461358).
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If money’s been tight lately, you’re not alone. Unexpected bills, job changes, and rising costs can put anyone in a tough financial spot. When that happens, a personal loan might feel like one of the only options left.
In lending terms, “bad credit” usually means a score below 600 or a limited credit history.[1] While that can make borrowing harder, some lenders may still be willing to work with you. But that usually means higher interest rates and stricter terms.
Below is a breakdown of where to find loans for bad credit, how to compare options, and how to avoid scams and predatory lending traps.
Bad credit loans often come with higher APRs because lenders take on more risk when working with people who have lower credit scores.
Legitimate lenders check your credit and never guarantee approval. Promises of no credit check and guaranteed approval are common red flags of predatory lenders.
Safer alternatives, like credit union payday alternative loans, typically cost less than payday loans.
Loans for bad credit are personal loans for borrowers whose credit history and credit score (generally under 600) aren’t strong enough to qualify them for a traditional loan. These loans help people who might not qualify for traditional bank financing. This group can include those recovering from financial setbacks, self-employed individuals, and first-time borrowers.
But because lenders take on more risk for a bad credit loan, they charge higher APRs and may offer smaller loan amounts or shorter repayment terms. While these loans can provide quick access to needed funds, it’s important to compare options carefully and understand the total cost before borrowing.
Loan Category  | Typical Credit Score Range | Typical APR Range |
|---|---|---|
| Standard loans | 600–800+ | 4.00%–25.99% |
| Bad credit loans | 600 and below | 6.20%–35.99% |
Having bad credit can limit your loan options, but choices are still available. Online lenders can have more flexible eligibility requirements, making it easier to qualify for affordable monthly payments. They also consider factors beyond your credit score, like your work experience, your education level, and how you manage debt.
The following table lists some of the best lenders for bad credit loans that can fund quickly for unexpected expenses.
Lender | Minimum Credit Score | Maximum Loan Amount | APR | Funding Speed |
|---|---|---|---|---|
| Upstart | Varies by loan | $75,000 | 6.20%–35.99% | 1 business day |
| Avant | 550 | $35,000 | 9.95%–35.99% | 1 business day |
| Upgrade | 580 | $50,000 | 7.74%–35.99% | 1 business day |
We selected these lenders based on three main factors: accessibility, funding speed, and fee transparency. Each lender works with borrowers who have credit scores below 600 or a limited credit history. While their rates can be higher than standard personal loans, these lenders offer legitimate alternatives to high-cost payday loans.
Get funds for debt consolidation, emergencies, and more.
Multiple types of loans are available to people with poor or limited credit histories. Loan options range from traditional personal loans to newer tools like cash advance apps.
It’s important to understand how each type works before you apply. Some loans help you rebuild credit over time, while others work best for short-term emergencies. Learning the differences can help you choose the safest option that fits your financial needs.
Unsecured loans are usually fixed-rate installment loans that don’t require collateral.[2] Banks, credit unions, and online lenders offer unsecured personal loans. Eligibility criteria vary by lender but usually include financial health, income, and a credit check.
Annual percentage rates (APRs) range from 6.49% to 35.49% for loan amounts up to $50,000, though larger amounts are usually available only for highly qualified borrowers. These loans are best for debt consolidation and emergency expenses, like vet bills. They’re relatively low risk but could hurt your credit if you miss a payment.
Secured loans require collateral, such as a vehicle, a bank account, or your house. Because the lender has something to claim if you default, approval may be easier for borrowers with poor credit. APRs for secured loans range from 4% to 35.99% for loans up to $75,000.
Secured loans are best for people with bank account savings or for home improvement projects. Collateral can help you get a better interest rate than you would with an unsecured loan. But your lender can take your collateral if you fail to make on-time payments.
PALs are small loans available through federal credit unions as a safer alternative to payday loans.[3] Borrowers can get $200 to $2,000 in funds with repayment terms of one to six months and APRs up to 28%. Some lenders even offer PALs without checking your credit report.
The risk is lower than with payday loans, and loan application fees can’t exceed $20. You’ll need to be a member of a credit union to apply for a PAL. You can locate a credit union you may qualify for at MyCreditUnion.gov.
Cash advance apps allow users to borrow small amounts from an upcoming paycheck. Most advances range from $25 to $750. Apps typically charge a subscription, per-transaction, or monthly fee instead of traditional interest. Approval often depends on checking account activity rather than credit scores, and you usually get instant access to funds on a credit or debit card.[4]
Apps can help you cover short-term cash gaps. Still, frequent use may lead to a borrowing cycle if your expenses regularly exceed your income.
Cash advance apps may cost less than a payday loan but are still effectively much more expensive than traditional types of loans. In fact, the average APR for cash advance apps (also known as earned wage advances) is 330%, according to the National Consumer Law Center.[5]
A co-signed personal loan involves another person who agrees to take responsibility for the debt if you can’t repay it. Having a co-signer with good credit can boost your approval odds and sometimes lower interest rates. Loan amounts and APRs are usually comparable to other personal loans.[6]
This option works well for borrowers with limited credit history, but you can damage your co-signer’s credit if you miss payments or pay late. And if you stop repaying the loan, your co-signer will be responsible for making all remaining payments.
A credit-builder loan is a low-risk loan option that helps establish or build credit history by reporting on-time payments to all three credit bureaus. The lender holds the loan amount in a savings account while you make monthly loan repayments. You get the funds after you finish paying it off.[7]
Loan amounts are usually small, typically $300 to $1,000. Rates can vary widely but are typically lower than some other types of bad credit loans.
Even with bad credit, you have multiple lender types to choose from. Traditional banks often have strict requirements and prefer lending to people with good credit. But the following lenders can often help borrowers with bad credit get the funding they need.
Online lenders are one of the most common sources of bad credit loans. These companies operate entirely online and often use flexible approval criteria, such as income, education, and employment history.
Many offer loan amounts from $1,000 to $50,000, with APRs ranging from around 6% to 36%. Funding is usually fast, often the same day or within one or two business days. While convenient, online loans may carry higher interest rates than credit unions.
Credit unions are member-owned, non-profit financial institutions. Because they don’t focus on profit, credit unions typically offer lower rates for personal and auto loans, even with bad credit.
Rates typically range between 8.39% and 20.29% for personal loan amounts up to $25,000. Some lenders may charge a small application or origination fee.
Most require membership to apply, and the application process can take weeks, similar to traditional banks.
Peer-to-peer lending platforms connect borrowers directly with individual investors who fund loans.[8] P2P lenders focus less on risk-based pricing, which means you may qualify more easily for a loan with bad credit but might pay an origination fee and a high APR.
You can get a free prequalified loan offer online to see if you qualify and what your loan terms will be before completing the online application.
CFDIs are mission-driven lenders that serve low-income communities and borrowers who may struggle to qualify elsewhere. The government awards funds to lenders to use specifically for underserved borrowers. Loan products, terms, and eligibility vary by lender.
You can search for available lenders in your state using the CDFI Fund’s Searchable Award Database.
See rates and offers from top-rated lenders.
Getting a loan with bad credit follows a process, just like any financial product. Here’s a step-by-step guide:
Review your credit reports from all three bureaus for errors and dispute any inaccuracies to improve your loan approval chances. You can get free credit reports from all three credit bureaus (Equifax, Experian, and TransUnion) at AnnualCreditReport.com.
Decide how much you actually need. Borrowing only what you can repay reduces your risk of default.
Many lenders allow you to prequalify with a soft credit pull that won’t affect your credit score, helping you compare rates and loan terms before committing. Use a loan calculator to make sure you can afford the monthly payments.
Collect proof of income, government ID, and any required financial documents.
A co-signer with good credit may improve approval odds and lower your rate.
Submit your application online or in person, including all required information.
You should receive funds within a few days of approval
Pay on time to avoid late fees and help rebuild your credit
A predatory lender is a company that targets vulnerable borrowers with unfair, abusive, or deceptive loan terms. They often charge extremely high fees or interest rates between 140% and 662%.[9] Borrowers with bad credit are frequent targets, so it’s essential to know how to differentiate a legitimate, high-cost loan from a predatory or scam lender.
Red flags to watch for:
Guaranteed approval: Legitimate lenders will assess your financial situation, even if they don’t do a credit check. No one can promise approval for every applicant.
Up-front fees: Some lenders charge bad-credit borrowers a small application fee, usually $20 or less. Be cautious if a lender demands a large up-front payment before providing funds.
Pressure to sign immediately: Scam lenders often use high-pressure tactics to get you to sign without taking the time to review the loan agreement carefully and make an informed decision.
No credit check: While safe products like PALs exist, a “no credit check” promise can hide abusive loan terms.
Always verify a lender’s registration and licensing in your state before signing any documents.
Feature | Safe Lender | Predatory Lender |
|---|---|---|
| Credit check | Soft pull for prequalification, hard pull for final approval | Usually none |
| Interest rates | High, but disclosed before signing | Extremely high, often hidden, rates |
| Approval process | Clear and defined | Quick guarantees, little to no eligibility verification |
| Approval guarantee | Never guarantees approval | Promises guaranteed approval |
| Regulatory oversight | Licensed and registered | Varies by state |
| Typical repayment terms | Clear and reasonable | Short, aggressive, or unclear |
| Fees | Transparent and documented | Up-front or hidden fees |
If a traditional bad credit loan isn’t the right fit, you can consider several legitimate alternatives. These options can help you cover outstanding bills or emergency expenses, pay down credit card debt, or access cash without the high interest rates and fees that bad credit lenders may charge.
Some service providers, like hospitals, doctors’ offices, and utility companies, offer payment plans that let you spread costs. These often come with no or low interest, making them cheaper than a loan.
They work well for people who can commit to regular, manageable payments and want to avoid taking on new debt.
You may be able to borrow money from your retirement account, typically up to 50% of your balance or $50,000, whichever is less. Interest rates are usually low, and payments go back to your account. But missed payments can trigger taxes and penalties if you’re under 59 1/2.
A 401(k) loan is best for borrowers with steady income who can repay quickly. Loan terms are usually five years or less.
Some lenders offer hardship loans for emergencies like medical bills or job loss. They may offer lower interest and flexible repayment terms but often require an origination fee. They’re ideal for urgent needs, but you usually need to provide proof of job loss or that you meet the income requirement.
Non-profits and government agencies may offer assistance programs that help you meet basic needs, like food, shelter, and utilities. These act like grants, so there are no repayments or interest.
Certified credit counseling agencies can help you create a debt management plan, negotiate with creditors, and avoid predatory lenders. Costs are usually low, and it’s great for people looking to manage debt long-term rather than get immediate cash.
Consulting with a credit counselor generally won’t hurt your credit. But, if you enroll in a debt management plan, you can expect to see your credit scores drop — at least in the short term.
If all else fails, a trusted friend or family member may loan you some money. They may offer funds with no interest and flexible repayment terms, helping you avoid predatory lenders. Loved ones are also less likely to care about your credit. But a loan from a family member or friend won’t help improve your credit score.
It’s important to treat a loan from a loved one the same way you would any other debt. Credit experts generally advise you to create a written contract that spells out the interest rate and repayment terms. Be sure to repay the debt on time, as agreed.
See options side by side from top lenders.
Bad credit can make it difficult to get the money you need at an interest rate you can afford. It’s important to know how bad credit loans work and what your options are before taking out a loan. Here’s some additional information to help get you started.
You can usually get money fast from online lenders, PALs from credit unions, or by using cash advance apps. Prequalifying can speed up the process. Many fast lenders provide funds the same day you’re approved or within one business day.
Small personal loans or payday alternative loans (PALs) from credit unions are typically the easiest to qualify for. Lenders focus more on income and banking history than on your credit score, though interest rates may be higher.
Yes. Some online lenders and credit unions approve borrowers with credit scores as low as 500. But rates will usually be higher, and loan amounts may be smaller to manage repayment terms and risk.
Yes. Online lenders, peer-to-peer platforms, and credit unions offer $3,000 loans and may approve applicants with bad credit. Eligibility criteria vary by lender but usually require proof of income, bank activity, and employment history.
A hardship loan is a personal loan for people who need to cover expenses during a crisis, such as a medical emergency or job loss. Lenders usually fund these loans within a day or two of approval. Interest rates and repayment terms vary by lender.
Not if you repay on time. Timely payments can even help improve your credit score. But missing payments or defaulting on the loan can significantly damage your credit and increase borrowing costs.
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Mandy Sleight has over 15 years of insurance knowledge and expertise in auto, home, life, health, pet, supplemental benefits, and other insurance products. She’s a sought-after insurance expert, appearing in Bankrate.com, Moneygeek.com, U.S. News & World Report, Reviews.com, CNET, and other publications, and she's been writing for Compare.com since 2023.
Mandy uses her background and experience working for well-known insurance companies like State Farm and Nationwide Insurance to create engaging and easy-to-understand content that helps readers make smarter insurance choices that have a positive effect on their budgets and finances.
Nick Versaw leads Compare.com's editorial department, where he and his team specialize in crafting helpful, easy-to-understand content about car insurance and other related topics. With nearly a decade of experience writing and editing insurance and personal finance articles, his work has helped readers discover substantial savings on necessary expenses, including insurance, transportation, health care, and more. As an award-winning writer, Nick has seen his work published in countless renowned publications, such as the Washington Post, Los Angeles Times, and U.S. News & World Report. He graduated with Latin honors from Virginia Commonwealth University, where he earned his Bachelor's Degree in Digital Journalism.
Licensed property and casualty insurance agent
10+ years editing experience
NPN: 20461358
John Leach is a licensed insurance agent who reviews and fact-checks articles for Compare.com. John has several years of experience reviewing and editing various insurance topics, and he also holds a valid personal lines producer license from the California Department of Insurance (NPN #20461358).
