Having a low credit score doesn’t automatically shut you out of the personal loan market — but it does change the game. In 2026, a growing number of US lenders specialize in borrowers with fair, poor, or limited credit, though the rates and terms they offer reflect the added risk. If your FICO score sits below 640, understanding how bad-credit personal loans actually work is the difference between a smart financial move and an expensive mistake.
What Counts as “Bad Credit” in the US?
Credit scores in the United States generally follow the FICO range of 300 to 850. Lenders loosely group borrowers into tiers: excellent (800+), very good (740–799), good (670–739), fair (580–669), and poor (below 580). When people talk about “bad credit,” they usually mean a score under 640. At that level, most mainstream banks will either decline your application or attach a high interest rate to offset their risk.
Your score isn’t the only thing lenders look at, though. They also weigh your income, employment stability, and existing debt load. A 590 score paired with steady income and low debt is a very different profile than a 590 score with erratic earnings — and lenders treat them differently.
Can You Actually Get Approved with Bad Credit?
Yes, but expect trade-offs. Lenders that serve subprime borrowers typically offer smaller loan amounts, shorter terms, and APRs that can climb toward the legal maximum of 36% (the rate cap many responsible online lenders voluntarily observe). The key is separating legitimate bad-credit lenders from predatory ones. Any lender advertising “guaranteed approval” or asking for an upfront fee before disbursing funds is a red flag — the kind of tactic we break down in our guide on how to identify and avoid personal loan scams.
Steps to Improve Your Odds of Approval
Before you apply, a few deliberate moves can meaningfully raise your chances and lower your rate:
Check your credit report for errors. Roughly one in five consumers finds a mistake on their report. Disputing an inaccurate late payment or a debt that isn’t yours can lift your score quickly. Our walkthrough on how to improve your credit score covers the exact process.
Lower your debt-to-income ratio. Paying down a credit card balance before applying reduces the share of your income already committed to debt, which lenders scrutinize closely.
Consider a co-signer or co-borrower. Adding someone with strong credit can unlock approval and a better rate. Just be sure both parties understand the obligations involved.
Use prequalification. Most reputable lenders let you check your estimated rate with a soft credit pull that doesn’t hurt your score, so you can compare offers before committing.
Secured vs. Unsecured Options for Bad Credit
If you can’t qualify for an unsecured loan, a secured personal loan — backed by a savings account, CD, or vehicle — can be easier to obtain and carries a lower rate because the lender’s risk is reduced. The catch is that you can lose the asset if you default. For a fuller comparison, see our breakdown of unsecured personal loan requirements.
What Bad-Credit Loans Really Cost
Suppose you borrow $5,000 over 36 months. A borrower with good credit might pay around 13% APR — roughly $169 a month. A bad-credit borrower at 32% APR would pay about $217 a month and hundreds more in total interest. Before signing, run the numbers with our guide on how to calculate your monthly payment so there are no surprises.
Frequently Asked Questions
What is the minimum credit score for a personal loan? Some online lenders approve scores as low as 560–580, though the best rates require 670 or higher. A handful of lenders focus specifically on the subprime market.
Will applying hurt my credit score? A formal application triggers a hard inquiry that may lower your score by a few points temporarily. Prequalification uses a soft pull and has no impact.
Can a bad-credit loan help my score? Yes. Making every payment on time builds positive payment history — the single largest factor in your score — and can gradually rebuild your credit.
How much can I borrow with bad credit? Amounts vary, but subprime borrowers are often capped between $1,000 and $10,000 until they establish a repayment track record.
The Bottom Line
Bad credit narrows your options and raises your costs, but it doesn’t make a personal loan impossible. Focus on legitimate lenders, use prequalification to compare, and treat the loan as a stepping stone to better credit rather than a quick fix. If your situation isn’t urgent, spending a few months raising your score first can save you hundreds — sometimes thousands — of dollars over the life of the loan.
Authoritative Sources and Further Reading
Consumer Financial Protection Bureau (CFPB) — Official U.S. consumer finance regulator
Federal Reserve — Consumer Credit Data
MyFICO — How Credit Scores Are Calculated
