Getting approved for a loan with a low credit score is possible, but the way you go about it matters more than it does for someone with good credit. Apply at random and you collect denials, hard inquiries and, eventually, an offer from the kind of lender that makes a bad situation worse. Approach it in order, and you can often borrow at a rate under 36% APR, sometimes much lower, while setting up your score to recover.
The four levers that work are a co-signer, collateral, the right type of lender (credit unions above all), and a few quick fixes to your credit file before you apply. The thing to avoid is the predatory end of the market, which exists specifically to serve people who feel they have no other choice.
This guide is written for US borrowers in 2026 and covers personal borrowing. If you are trying to buy a house, see our separate guide to getting a home loan with bad credit. This article is general information, not financial advice.
What counts as a low credit score?
Most US lenders use FICO scores, which run from 300 to 850. The bands below are the ones FICO itself publishes, and they are a fair guide to how lenders will treat you.
| FICO range | Rating | What to expect for an unsecured personal loan |
|---|---|---|
| 300–579 | Poor | Most mainstream lenders decline; credit unions, secured loans and co-signers are the realistic routes |
| 580–669 | Fair | Approval possible with online lenders and credit unions, usually at higher APRs and lower amounts |
| 670–739 | Good | Broad approval at mid-range rates |
| 740 and above | Very good to exceptional | Best rates and highest limits |
Your score is only part of the decision. Lenders also look at income, debt-to-income ratio (DTI), how recent your negative marks are, and whether the trend is improving.
What should you do before you apply?
A few weeks of preparation can move you into a better pricing tier, or turn a denial into an approval.
- Pull all three credit reports for free at AnnualCreditReport.com and dispute errors.
- Pay down credit card balances. Utilization is recalculated every month, so getting cards below about 30% of their limits, and ideally below 10%, can lift a score quickly.
- Bring past-due accounts current and keep them that way.
- Ask to be an authorized user on a relative’s long-standing, low-balance card.
- Add positive data. Some free services let you add rent, utility and phone payments to your credit file, which can help thin or damaged files with certain scoring models.
- Lower your DTI. Paying off a small installment loan or documenting extra income can matter as much as the score.
- Stop applying for new credit until you are ready to shop for this loan.
Which loan options work best with a low credit score?
| Option | Typical cost | Why it works with low credit | Main risk |
|---|---|---|---|
| Credit union personal loan | Federal credit unions are capped at 18% APR on most loans at the time of writing | Member-focused underwriting that looks beyond the score | Membership and sometimes a waiting period |
| Payday alternative loan (PAL) | APR capped at 28%, small application fee | Designed for members who might otherwise use payday lenders | Small amounts, up to $2,000 |
| Co-signed or joint loan | Priced largely on the stronger applicant’s credit | Lender relies on the co-signer’s score and income | Co-signer is fully liable; the relationship is on the line |
| Share-secured or CD-secured loan | Often a few points above the savings rate | Your own deposit is the collateral | You need savings to begin with |
| Online lender for fair credit | Commonly high-20s to 36% APR plus origination fee | Accepts scores in the high 500s to 600s; fast funding | Expensive; fees reduce the amount you receive |
| CDFI or nonprofit lender | Moderate, mission-driven pricing | Flexible standards, often paired with coaching | Limited availability by region |
Credit unions and payday alternative loans
If you remember one thing from this article, make it this: join a credit union. Credit unions are nonprofit and member-owned, they tend to weigh your relationship and income alongside your score, and their rates are legally capped. Many federal credit unions also offer PALs, small loans of up to $2,000 with terms of up to 12 months and an APR ceiling of 28%. You can search for one you are eligible to join at MyCreditUnion.gov, run by the National Credit Union Administration.
Adding a co-signer or co-borrower
A co-signer with good credit and steady income can transform your application, since the lender can rely on their profile. Not every lender allows co-signers, so ask first. Be honest with the person you ask: the loan appears on their credit report, a late payment damages their score, and if you default, the lender can pursue them for the full balance. Set up autopay so you never miss a payment on someone else’s credit.
Secured loans: using collateral carefully
Collateral lowers the lender’s risk and therefore your rate. The safest version is a share-secured or certificate-secured loan, where you borrow against your own savings at a credit union or bank. The savings stay frozen while you repay, and you build credit along the way, which is the idea behind the products in our guide to using a loan to build your credit score. Personal loans secured by a paid-off vehicle from a mainstream lender can also be reasonable, but they are not the same as a car title loan, covered below.
Online lenders that accept fair credit
A number of online lenders approve scores in the high 500s and 600s, sometimes using income, employment and bank account data as well as the score. Expect APRs toward the upper end of the mainstream range and an origination fee taken out of the proceeds. Use prequalification, which relies on a soft credit pull, to see real offers without affecting your score, then compare them against a credit union quote. Rate-setting is explained in our guide to the best personal loans with low interest.
How to apply: step by step
- Define the need. Borrow the smallest amount that solves the problem. Smaller loans are easier to approve and cheaper to carry.
- Clean up your file using the checklist above, and know your score before lenders tell you.
- Start with a credit union or your existing bank, where your account history counts.
- Prequalify with three to five lenders in the same two-week period. Compare APR, fees, term and total repayment.
- Decide whether a co-signer or collateral is worth it based on how much it cuts the APR.
- Gather documents: ID, Social Security number or ITIN where accepted, recent pay stubs or tax returns, bank statements and proof of address.
- Submit one full application to the best offer. Read the agreement for prepayment penalties and add-on products such as credit insurance, which you can decline.
- Set up autopay and a calendar reminder. On-time payments on this loan are what rebuild your score.
Which lenders and loans should you avoid?
Predatory lenders target people with low scores because they assume you will not shop around. The most common traps are these.
- Payday loans: two-week loans with fees that typically work out to around 400% APR, and a rollover cycle that keeps borrowers paying for months. Many states ban or cap them. Read our analysis of payday loans’ pros and cons first.
- Car title loans: triple-digit APRs secured by your vehicle. Miss payments and you can lose the car you need to get to work.
- High-cost installment loans: these look like ordinary personal loans but carry APRs of 100% or more in states that allow it. Always find the APR on the disclosure.
- “No credit check, guaranteed approval” offers: no responsible lender guarantees approval. The phrase usually signals either extreme pricing or a scam.
- Advance-fee loan scams: you are “approved”, then asked to pay an upfront fee or “insurance” by gift card, wire or crypto. The loan never arrives. Genuine fees are deducted from the loan, never paid in advance.
A useful rule of thumb is the 36% line. Consumer advocates, many state laws and the federal Military Lending Act all treat 36% APR as the upper limit of responsible lending. Verify that any lender is licensed with your state’s financial regulator, and report problems to the Consumer Financial Protection Bureau at consumerfinance.gov or to the FTC.
What if you are denied?
A denial comes with rights. The lender must send an adverse action notice stating the main reasons or telling you how to get them, and naming the credit bureau it used. You are then entitled to a free copy of that report if you request it within 60 days. Use the reasons as a to-do list: “high utilization” means pay down cards; “insufficient income” means a smaller loan or a co-borrower; “recent delinquency” means time and clean payments.
Meanwhile, look at alternatives that are not loans at all. Ask creditors for hardship plans, ask medical providers for interest-free payment arrangements, check whether your employer offers paycheck advances, and call 211 for local rent and utility assistance. If the underlying problem is too many existing balances, a nonprofit credit counselor can assess whether a debt management plan beats any of the debt consolidation loans you could qualify for.
Frequently Asked Questions
What is the lowest credit score that can get a personal loan?
There is no universal minimum. Some online lenders publish minimums in the mid-to-high 500s, and credit unions may approve lower scores for members with steady income or savings to pledge. Below about 580, a co-signer or secured loan is usually the difference between approval and denial.
Will applying for several loans hurt my score further?
Prequalification does not, because it uses soft inquiries. Full applications create hard inquiries, each of which can cost a few points. Do your comparison shopping through prequalification, then submit a single formal application.
Are “bad credit loans” advertised online legitimate?
Some are from licensed lenders and some are lead generators that sell your details to whoever pays. Check the lender’s name against your state regulator’s license database, look for a physical address and clear APR disclosures, and never pay anything upfront.
Can I get a loan with a low score and no bank account?
It is much harder, because mainstream lenders fund and collect through a checking account, and the lenders that do not are mostly high-cost. Opening a basic or “second chance” checking account at a credit union or bank is a worthwhile first step.
How fast can I raise my score enough to qualify for better rates?
Paying down card balances and correcting errors can show results within one or two billing cycles. Recovering from late payments or collections takes longer, typically many months of clean history. If the loan is not urgent, waiting three to six months while you work on the file can save a lot of interest.
Bottom line
A low credit score narrows your options; it does not remove them. Tidy your credit file, start with a credit union, use a co-signer or your own savings as security if that meaningfully lowers the rate, and compare prequalified offers before you commit. Treat 36% APR as your ceiling, never pay a fee upfront, and let on-time payments on the loan you do take become the first step toward not needing a guide like this next time.