Best Personal Loans for Bad Credit in July 2026

Understanding that you have opportunities to borrow money even if you have a poor credit score is important. Read on to discover your options before pursuing the right course of action for your circumstances.

Technically, there’s no such thing as bad credit, at least in the world of credit-scoring models. FICO is the most popular credit scoring model in the US, and has a scoring range from 300 to 850.

FICO considers anything below 580 a Poor credit score.

Another credit-scoring model you may have heard of is VantageScore. It has the same 300-850 scoring range, and considers anything below 600 to be a Subprime credit score.

So, while “bad credit” isn’t an official term, it’s pretty accurate in that it is the lowest rung on the credit score ladder. But, on the bright side, there’s plenty of room for improvement, right?

Having bad credit makes it harder to borrow money, and you’re likely to be saddled with high interest rates, high fees, and limited loan amounts. While a low credit score can increase a loan’s overall cost, you can still access one if you need it.

It’s difficult to qualify for a bank loan when you have bad credit. However, alternative sources of personal loans are specifically designed for subprime borrowers. The most efficient way to get this type of loan is by using an online lending network.

Think of these as loan matchmaking services that can connect you with a network of direct lenders experienced in assisting subprime borrowers. To start, you fill out an online request form on the service’s website to prequalify for a loan.

The prequalification requirements are generally limited to the following:

• Age: You must be at least 18 years old.
• Citizenship: You must be a US citizen or resident.
• Income: You must reliably collect a specified minimum amount of income or benefits each month.
• Bank account: You must have an active bank or credit union account registered in your name.
• Identification: You must provide a Social Security number, valid email address, bank account details, and work and/or home phone numbers.

Once you fill out the loan request form, the matching service finds the best direct lender for you and directs you to their website. From there, you finish the application by providing any additional needed details.

You may have to give the lender permission to access your credit report (a hard inquiry) from one of the major credit bureaus — Experian, TransUnion, or Equifax — unless you select a no-credit-check loan option.

The lender will then retrieve your credit report, quickly evaluate your application, and give you a decision in seconds.

If your application gets approved, the lender will send you a loan agreement detailing all the rates and terms. Make sure to review this carefully.

You should read and understand all the loan terms, including the interest rate and fees, before agreeing to accept the money. You’re under no obligation to accept the loan offer.

If you decide to accept a loan offer, you’ll need to complete the loan paperwork and e-sign the agreement. You should receive your loan proceeds as a cash deposit to your bank account within one to two business days.

The lender may automatically debit your bank account to collect the loan payments.

Generally, these loans are repaid in three to 72 monthly fixed installments. You can usually repay the loan without penalty. There is no charge to use a loan network.

Personal loans (even those for bad credit) come in many different forms. Some are unsecured loans, which means you don’t have to provide any collateral. Other options rely on collateral because the lender doesn’t want to assume that much risk.

Here are some common types of loans people with subprime credit seek out — and qualify for:

Credit Card Cash Advances

Your unsecured or secured credit card may allow you to take out a cash advance. The maximum amount you can borrow is usually some percentage of the card’s credit limit.

Interest, which accrues daily starting on the transaction date, is usually higher than that of a personal loan.

The APR for credit card advances is also usually higher than the APR for purchases. The best thing about credit card advances is that they are available immediately without the need for approval.

However, because these are expensive loans, they are best suited for short-term borrowing.

Home Equity Loans

If you own a home and have accumulated equity in it, you can unlock your equity through a home equity loan or home equity line of credit. Your equity is equal to the current value of your home minus the remaining amount of your mortgage.

Banks and other sources will let you borrow some percentage of your equity, commonly up to 80%. But your credit score is a factor in the interest rate you’ll pay.

A home equity loan is a lump sum amount that you repay over a set number of installments. If you miss payments, the lender can foreclose on your home, so these loans can be risky.

A home equity line of credit (HELOC) is an alternate option with a little more flexibility. It is like a revolving credit account, similar to a credit card, but it’s backed by your home, and the repayment structure is quite different.

Home equity loans are usually very cost-efficient and don’t depend primarily on your credit score. Hence, they are a good choice if you have bad credit. Of course, they won’t work for you if you don’t own your home.

Auto Cash-Out Refinancing

This works similarly to a home equity loan, but it’s backed by your car instead of your home. These refinancing transactions allow you to borrow more than the remaining balance on your current loan.

If you have a current car loan, you can replace it with a new one that comes with its own rates and terms. Missed payments may result to your car being repossessed by an agent. However, this type of loan often offers a good deal and is usually less affected by your credit score.

Rather, your monthly income and expenses help determine whether you can afford the loan.

Payday Loans

These loans are secured by your next paycheck, and they don’t require good credit for approval. The catch is that they usually have exorbitant interest rates.

The high rates may lead to “rolling over” a payday loan, which is basically taking out another payday loan to cover the last payday loan.

Payday loans are secured by your next paycheck, and they don’t require good credit for approval — but the catch is that they typically have exorbitant interest rates.

If you aren’t careful, you could get caught in a debt spiral with no end in sight. And short-term lenders typically don’t even report your payments to the credit bureaus, so you aren’t helping your credit score either.

Pawnshop Loans

You can borrow against personal belongings at a pawnshop. Typical pawn items include cameras, laptops, watches, and jewelry. If you don’t reclaim your property after a set period, the pawnshop can sell it.

These loans can be pricey because you typically borrow only a small portion of the pawned item’s value. Even so, they remain a feasible option for those looking for loans without a credit check.

Credit Builder Loans

Think of this less as a traditional loan and more as a smart investment in your credit future. Instead of receiving funds upfront, you’re making regular payments to a credit union or fintech service, which are reported to the credit bureaus to help you build your credit history.

The payments are returned to you after the loan term ends. Credit Builder loans provide a way to save money and improve your credit over a period of one to two years.

If other options aren’t working, you might consider borrowing money from family or friends. These loans often come with low or no interest and flexible terms. However, if you fail to repay, it could strain your relationship with the lender.

Relying on any of these options, however, may mean you’re overextended. You should only use a loan when it’s necessary, so if you find yourself in a cycle of applying for loans often, you need to make a plan to break it.

Consider these types of loans if you really must take out a bad credit personal loan to meet urgent expenses. Each has its merits and can be a suitable way to access the financial resources you need.

Consider your situation and how each of these loan types may best serve you. Each has a unique loan amount, loan term, origination fee, and minimum credit score requirement.

Cash Loans

Getting a cash loan from a lender or from a private source may be the most straightforward type of personal loan you can obtain. Cash loans may require some form of collateral or prearranged commitment to pay — either automatically, as is the case of a payday loan money transfer, or even via a post-dated check.

You might also consider getting a cash loan from a friend or family member, which could be a better option. Typically, a friend or relative won’t run a credit check or charge an origination fee or penalties for missing a payment.

If you decide to borrow from a friend or relative, think about signing a personal loan agreement that outlines the loan terms — ideally, with a lower interest rate than a subprime lender would offer.

Emergency Loans

Emergency loans are frequently associated with the workplace, in which you request an advance on future earnings or on accumulated vacation pay. If an employer offers such an option, this may be a viable alternative.

Emergency loans can also be requested and withdrawn from funds that you have contributed to, such as a 401(k), an individual retirement account, a healthcare flexible spending account, or a similar account.

Emergency loans are usually short-term, lasting between 30 and 90 days. It’s essential that the creditor, borrower, and any cosigner clearly define the loan amount and terms to ensure the loan works well for everyone involved.

Installment Loans

An installment loan is simply a loan that is paid back over time in incremental (and usually equal) payments. Installment loans are typically used for purchases of big-ticket items such as furniture, vehicles, and even houses.

Typically, installment loans require borrowers to have at least fair credit. However, if your credit score is strong enough to qualify, this option could work well for you.

Consolidating High-Interest Debt

A debt consolidation loan is a type of personal loan that is typically used to pay off high-interest rate credit cards or other debt. As the name suggests, it’s a way to combine or consolidate your disparate debt payments into a single payment each month.

Use caution with this type of personal loan and only consider it if you can get a substantially lower overall interest rate. Also, if you choose to go the route of a debt consolidation loan, you need to have the discipline to stick to a budget and not add to your existing debt.

If you take out a personal loan, whether secured or unsecured, to consolidate debt, be cautious about accumulating more credit card debt. This could create a financial hole that’s tough to escape.

It can be tempting to turn to any available source when you’ve got a bad credit score and are in need of cash. However, some subprime personal loans simply aren’t worth the risk based on the minimal reward.

Remember, better options may be out there for accessing the financial resources you need. So, here are some common situations or financial needs when getting a high-interest personal loan would not make sense:

Private Student Loans

When you need a loan to pay for higher education, private student loans offer less flexibility than their government-backed equivalents.

Some examples of why private student loans are a poor choice include:

• They have variable interest rates that can suddenly rise.
• They offer no loan deferment, forbearance, or forgiveness like federal loans do.
• They are offered by institutions designed to make a profit.

Consider a federal student loan instead of one issued by a private lender. Some students with a poor credit score make the mistake of using a payday lender that charges a high interest rate and a prepayment penalty to cover the cost of books and other living necessities.

The repayment term from such a predatory lender makes this loan option a disastrous one, trapping students in a cycle of debt.

Small Business Loans

When you’re in need of cash to start, expand, or fund your small business, turning to a bank or lending institution for a small business loan can be tempting. You can also explore invoice financing or a merchant cash advance. However, this isn’t always a good idea.

Loans for small businesses can often come with high interest rates and exorbitant terms — especially if you have bad credit. Instead of invoice financing, a merchant cash advance, or something similar, consider a loan offered through the Small Business Administration.

This government-funded agency offers loans with reasonable rates and terms for things from expansion to short-term working capital.

Construction Loans

A construction loan is a loan type that is also usually short in duration. They are frequently used to pay for the costs of building a new home, after which you can apply for a standard mortgage, VA loan, or FHA loan.

The problem with many construction loans is that they can be expensive and risky. It used to be that small builders and developers could get their own financing and could lend the homeowner the money as part of the construction process.

The situation changed significantly after the home mortgage crisis. Now, homeowners are responsible for obtaining construction loans, and if any issues arise during construction, they’re financially liable.

The lenders and networks we ranked in this article are all easy to use, and you can qualify for many options despite having bad credit. So, the short answer is that any of the above companies can help you find a loan quickly.

But you don’t want to get just any loan quickly; you want the one that is best for your situation. That’s why we created this interactive tool, so you can find one that matches your needs:

As we’ve covered, it may be easier than you think to get a loan when you have bad credit. But is there any minimum score you need to qualify?

Both direct lenders and lending networks set their own rules regarding a borrower’s minimum credit score (if any), range of loan amounts, interest rates, fees, and repayment periods.

You may not get an upfront answer to that question from some lenders, which is why prequalification can be such a useful tool.

Traditional lenders are members of the banking system, including banks, credit unions, and savings and loan associations. Alternative lenders are a variety of loan sources outside the banking system.

Frequently, the discussion of traditional versus alternative lending falls within the business loan context, but personal loans are also available from traditional and alternative sources.

The lending networks used by the personal lender-matching services include alternative lenders such as private finance companies that specialize in direct online loans to subprime borrowers. Another type of alternative lender is a peer-to-peer (P2P) online marketplace, such as Lending Club and Peerform.

Becoming a P2P lender is open to anyone, from wealthy individuals to groups of investors. Typically, P2P lenders conduct their own loan assessments, often using unique methods to evaluate borrowers’ eligibility.

Alternative methods go beyond credit ratings to assess the borrower’s employment and educational background.

The biggest downside of a P2P loan is that it may take longer to get your money than if you were to use a lender-matching network to obtain a direct loan.

Traditional lenders are typically the slowest lenders, but they do offer in-person guidance and assistance that may be lacking from an online lender. Also, if you can get a traditional loan despite having bad credit (which is not likely), you’ll probably get a good interest rate.

A secured loan is backed by collateral, such as cash, securities, your house, or your car. Credit cards are available in secured and unsecured varieties, whereas home loans and car loans are, by definition, always secured.

Unsecured loans are backed only by your promise to repay and include student loans and personal loans.

When you take out a secured loan, you give the lender a lien on the collateral property securing the loan. The lien allows the lender to repossess the collateral if you default on the loan.

In virtually all cases, the collateral’s value exceeds the loan amount, which helps defray the added legal and operational costs of liquidating the collateral.

Secured loans are often non-recourse, meaning the lender can seize only the collateral property when a borrower defaults. With recourse loans, lenders can sue borrowers who have defaulted for their personal property to recover the loan amount.

A secured loan can be recourse, meaning the lender can go after additional property if the collateral is insufficient to repay the loan (i.e., if there is a deficiency).

Foreclosures occur when homeowners default on their mortgages. When you default on your car loan, a repo agent can seize your vehicle. After the borrower liquidates the collateral, any amounts more than the loan (and associated costs) are returned to the borrower.

You can freeze creditor action by filing for bankruptcy. The court will then control your assets and how they are to be distributed to your creditors. The process is orderly, and you may emerge debt-free, but your credit rating will suffer for up to 10 years.

Typically, secured loans have lower interest rates than do unsecured ones. The reason is that secured loans are less risky, so the lender can afford to charge the borrower a lower rate. Most personal loans are unsecured, but banks and credit unions may offer personal loans secured by cash deposits and/or financial securities.

We think of instant loans as ones in which you receive a decision on your loan application within about 10 minutes of starting the process, although some may take more time or less.

Fast decisions and next-day funding are some of the chief reasons why consumers apply for instant online loans.

BadCredit.org offers numerous reviews of online lenders, and that’s a great place to start. We examine the reputation and ratings of various lending services to award each one an overall rating.

You can read our reviews, find a lender that interests you, and then click on the link to the lending company.

After clicking on the link, you’ll be transferred to the lending service’s website where you can do more investigating and complete a loan request form. The service will prequalify your request and then transfer you to a direct lender where you complete your loan application.

If approved, your loan proceeds will be deposited into your bank account in the next one to two business days.

The best way to increase your odds is to improve your personal credit score. One of the fastest ways to boost your score is to remove (either by your own efforts or through a credit repair company) erroneous or incomplete negative information from your credit reports.

Cleaning up your credit reports can give your scores a quick boost in just a few months. If you keep paying your bills on time and maintain low debt levels, your credit score will likely improve over time.

One metric, your debt-to-income (DTI) ratio, measures your level of debt. Most lenders want to see a DTI ratio no higher than 36%, although you can get a government-backed mortgage with a DTI ratio as high as 43%.

If you have credit card debt, reduce your credit utilization ratio (i.e., total credit used divided by total credit available) below 30%. Your CUR accounts for 30% of your credit score, so paying down debt can help your score rise.

You might find it useful to consolidate your credit card debt through 0% APR balance transfers, allowing you to focus on paying off one card balance at a time.

Other things you can do to help your personal credit score are keeping old credit card accounts open, using a wide mix of loans and credit, and not applying for new credit more than once or twice per year.

These are minor factors that go into the calculation of your FICO credit score. Another step you can take is to sign up for Experian Boost, a program that can add dozens of points to your score.

A credit score of 500 is considered Very Poor on the FICO scale, which can severely limit your financing choices. While it’s possible to get a personal loan with such a low score, the expense might outweigh the benefits.

You might end up paying the highest interest rate a lender can legally charge, along with extra fees. This could lead to repaying significantly more than the initial loan amount.

Lenders charge high interest rates because a lower credit score signals a higher risk for them. They aim to recover as much money as possible early on in case of a default later in the loan period.