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.

Having bad credit may limit your options, but it doesn’t leave you without any. The right loan will depend on how much you need, how quickly you need it, and whether you’re willing to provide collateral.

Unsecured Personal Loans

Most personal loans are unsecured, meaning you don’t have to provide a car, home, or other asset as collateral. Instead, lenders consider your credit history, income, employment, and existing debts when deciding whether to approve you.

Unsecured loans tend to have higher interest rates for borrowers with bad credit, but they don’t put your property at risk if you fall behind.

Secured Personal Loans

A secured personal loan requires collateral, such as money in a savings account, a vehicle, or another valuable asset. Providing collateral may make it easier to qualify or help you receive a lower interest rate.

The trade-off is that the lender may take the collateral if you fail to repay the loan.

Emergency Loans

An emergency loan is generally a personal loan designed to provide relatively fast funding for an unexpected expense, such as a medical bill or urgent home repair. Some lenders can deposit approved funds within one business day, although fast approval and funding are never guaranteed.

Debt Consolidation Loans

A debt consolidation loan lets you combine several debts into one monthly payment. This option may make repayment easier to manage and could save you money if the new loan has a lower interest rate than your existing debts.

Before accepting one, compare the total interest and fees—not just the monthly payment—to make sure the loan actually lowers your borrowing costs.

That preserves the useful categories while removing the tangents about weddings, boats, businesses, pawnshops, construction projects, and nearly every other reason a person could borrow money.

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 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.

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 the 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.

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.

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 keep old credit card accounts open, use a wide mix of loans and credit, and do not apply 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.

Having bad credit doesn’t mean you’re out of borrowing options. The lenders and lending networks above work with a range of credit profiles and can help you compare loan amounts, interest rates, and repayment terms without spending hours searching on your own.

Just remember that the easiest loan to get isn’t always the best one to take. Compare your offers carefully, make sure the monthly payment fits your budget, and review all rates and fees before signing a loan agreement.