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.

A bad credit lender-matching service connects 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.

Once your application is approved, the lender will send you a loan agreement detailing all the rates and terms. It’s important to review this thoroughly.

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.

We’re diving into bad credit personal loans today. Often called signature loans, these only require you to sign your name on the loan agreement to get started.

They are unsecured loans, which means you don’t have to provide any collateral to secure this kind of loan, although many lenders will accept collateral if you would otherwise not qualify.

Other loan sources for folks with bad credit include:

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.

Automobile 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. Missing payments might lead 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 your 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 a small loan 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 Loan

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.

Family and Friends

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.

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.

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.

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) or a similar account, but these can come with severe tax penalties that may have a ripple effect on your finances for years.

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.

Military Loans

If you’re actively serving in the military, you might be eligible to take out certain types of loans. Be sure to consult your command to see if this option is available to you.

Another type of military loan is a Veteran’s Administration loan (VA loan) for the purchase of a home. This type of military loan is available to anyone who has served and was honorably discharged from active service.

Because these loans are guaranteed by the government, they offer service members great terms and rates.

Wedding Loans

Getting married can be a huge expense. If you need cash to pay for some or all your wedding costs, you may want to consider a wedding loan.

When you’re planning a wedding, personal loans can be a fantastic way to handle expenses. Many lenders provide loans specifically for wedding costs, offering repayment terms that can stretch up to seven or eight years.

If you already own a home, consider using your home equity line to secure a wedding loan, which often has a lower interest rate.

Government Loans

The government offers different types of loans for several specific purposes through various agencies. Some examples of government loans include small business and business expansion loans, housing loans, student or education loans, farming loans, and even disaster relief or emergency loans.

To learn more about the specific government loan type you’re interested in, check with the appropriate agency or government-sponsored enterprise (GSE) responsible for issuing these loans.

Debt Consolidation Loans

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.

Below is our list of the types of subprime personal loans you should avoid and why. Remember, better options may be out there for accessing the financial resources you need.

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 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.

Hard Money Loans

Hard money loans are often seen as a last resort for those with bad credit. They’re used when getting a conventional mortgage or home equity loan is out of reach.

A hard money loan uses the value of a property as the collateral, but often with untenable terms.

These loans are more expensive and have higher origination costs than a standard mortgage, VA loan, or FHA loan, making them impractical as a personal loan for most borrowers.

Commercial Loans

A commercial loan is money that is usually lent to a business instead of to an individual. These loans are also sometimes referred to as industrial loans or business loans.

They are usually secured by property — sometimes a personal residence — and are frequently used to fund business operations or expenses. These loans are usually short-term and can be very risky.

For these reasons, commercial loans are a poor choice for a personal loan.

Boat Loans

Buying a boat is a big expense, and you should consider carefully whether taking out a personal loan is in your best interest. However, if you’ve found a great deal on a boat and need a loan, some bad credit lenders will grant subprime boat loans for folks with less-than-perfect credit.

Like auto loans, boat loans often require a significant down payment. But if you’re able to make it, you could soon be enjoying your new boat.

And, as with any loan, if you make payments on time, you could turn your poor credit into an excellent credit score over time.

Bridge Loans

Bridge loans are loans designed to bridge a gap between the purchase of something and the permanent source of financing for it. Bridge loans are usually of very short duration. Because of this, they can charge an extremely high APR.

A bridge loan that charges 6% interest for a loan that comes due in three months can be more expensive than if you borrowed on a credit card. And, due to their short duration, they are not a wise choice as a personal loan.

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 that allows you to compare loans based on your needs and credit score:

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.

All the lender-matching services we’ve reviewed can find you loans of $1,000, so we’d recommend starting at the top of our list with 24/7 Lending Group, which can arrange personal loans starting at $500, despite your bad credit profile.

You fill out a quick loan request form that goes out to a network of lenders, and can then finish applying on the website of the lender you match with.

24/7 Lending Group doesn’t have any minimum credit score to apply, and even says that some of its lending partners work exclusively with borrowers who have poor credit.

Plus, when you fill out a loan request form, it won’t result in a hard inquiry on your credit report. So, your score will be safe while you check out your options.

Bad credit makes getting a personal loan harder, so you can probably imagine how much it complicates the process of obtaining a loan for your business. The lender-matching services discussed earlier specialize in personal loans rather than business loans.

That being said, you can do several things to overcome obstacles standing between your business and a loan:

• Prepare yourself before applying: Part of applying for a business loan has to do with impressing the lender with your knowledge and professionalism. Gather and organize all the relevant information, including your business and personal credit reports, bank and financial statements, tax returns, and a business plan. Be ready to explain why you need the loan and exactly how you will use the funds.
• Apply to a traditional lender: You may be able to qualify for a small business loan from a traditional lender that works with businesses that have marginal credit.
• Focus on smaller institutions: Applying for a conventional loan at a regional or community bank, or at a local credit union, can considerably improve your chances. Be ready to make your case and to demonstrate you are of good character. If you are initially turned down, find out why and see what changes you can make to overcome the institution’s objections.
• Visit the website of the Small Business Administration (SBA): You may qualify for an SBA-guaranteed loan with competitive terms, lower down payments, no required collateral, and flexible overhead requirements. Loans guaranteed by the SBA as small as $500 are available. You can find an SBA loan program, such as the one for startups, that is geared to companies with bad credit.
• Get a business credit card: If your bad credit is preventing you from getting a business loan, apply for a basic business credit card. By paying your credit card bills on time, you can boost your business’s credit rating, thereby improving your chances for a regular business loan in the future.

Look upon the task of obtaining a business loan as a learning experience that encourages you to sharpen your critical thinking and your persuasive abilities.

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 personal lender-matching services include alternative lenders such as private finance companies that specialize in direct online loans to subprime borrowers. Another major type of alternative lender is the modern fintech (financial technology) company.

While older models like peer-to-peer (P2P) lending have largely faded, today’s fintech lenders use similar unique methods to evaluate a borrower’s eligibility.

These alternative methods go beyond standard credit ratings to assess the borrower’s cash flow, employment, and educational background. 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, you’ll probably get a much better 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 secure a loan, you provide the lender with a lien on the property used as collateral. This lien gives the lender the right to repossess the property if you fail to repay 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 among the chief reasons consumers apply for instant online loans.

At BadCredit.org, we have in-depth reviews of many online lenders and networks, so those are 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 complete a loan request form. The service will prequalify your request and then transfer you to a direct lender, where you fill out the final loan application.

If approved, your loan proceeds will typically be deposited into your bank account within 1 to 2 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 scores 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.

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.