Personal loans
Personal Loans for Bad Credit: Options and Costs
Below a credit score of roughly 640, personal loan pricing rises steeply and the market fills with high-cost products designed to look like loans. There are legitimate options — credit unions, secured loans, co-signers and payday alternative loans — and there are products that will make the situation permanently worse.
Data snapshot
- Year over year
- +0.29 pts
- 12-month range
- 11.14% – 11.86%
Average rate on a 24-month personal loan at commercial banks, from the Federal Reserve's G.19 release. Online lenders and credit unions price around this benchmark rather than at it.
Where to look first
Start with a credit union, especially one you already bank with. Federal credit unions cannot charge more than 18% APR on most loans, and many offer payday alternative loans of a few hundred to a couple of thousand dollars at capped rates with small application fees.
Community development financial institutions and some local banks run similar programmes with manual underwriting, which means a human reads the file rather than a score cut-off rejecting it automatically.
Secured loans and co-signers
A share-secured loan pledges your own savings as collateral: the rate is low, the approval near-automatic, and the payment history rebuilds your score while the deposit stays put. It is the cheapest borrowing available to someone with weak credit who has any savings at all.
A co-signer with strong credit can unlock a mainstream rate, but the debt appears on their report and a missed payment damages both files. Never use a co-signer for an amount they could not comfortably repay themselves.
Products to refuse
The high-cost end of the market is where a temporary shortfall becomes a permanent one.
- Payday loans: fees that annualise into triple-digit APRs, structured to be rolled over.
- Auto title loans: you can lose the car, and with it the ability to work.
- Advance-fee 'guaranteed approval' offers: no legitimate lender charges a fee before funding.
- Rent-to-own and lease-to-own retail finance: total cost often two to three times the cash price.
Improve the file before borrowing if you can wait
Even 60 to 90 days changes pricing materially. Pay every revolving balance down below 30% of its limit — ideally below 10% — dispute inaccurate entries on all three reports, and avoid any new applications during the window.
If the need is genuinely urgent, borrow the smallest amount over the shortest term you can service, and refinance once your score recovers. A small, well-paid loan is also a rebuilding tool: it adds an instalment account and a clean payment record.
What people search for
Monthly US search volume for the questions this page answers, from our keyword research set.
| Search query | Monthly searches | Difficulty |
|---|---|---|
| personal loans for bad credit | 165,000 | 80 |
| get a personal loan with bad credit | 135,000 | 84 |
| loan bad credit | 110,000 | 84 |
| a loan for bad credit | 96,200 | 81 |
| bad credit loans | 90,500 | 81 |
| bad credit auto loans | 49,500 | 46 |
| personal loan with bad credit | 47,500 | 85 |
| bad credit personal loans | 40,500 | 84 |
| personal loan bad credit | 40,500 | 85 |
| car loan bad credit | 22,400 | 45 |
Frequently asked questions
Start here
Best Personal Loans: How to Compare Lenders
Compare on APR, fees and term — not the advertised headline rate.
Read the guideDebt Consolidation Loans: When They Save Money
One payment, one rate — if the maths and the habits both work.
Read the guidePersonal Loan Rates: What Drives the Price You Pay
How lenders build your APR, and the levers that lower it.
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