Personal loans for bad credit can be a crucial lifeline for individuals facing financial difficulties but still seeking to borrow money for essential needs. Whether you’re looking to consolidate debt, cover an unexpected medical bill, or make a major purchase, a personal loan can offer a more flexible option than credit cards. However, for individuals with poor credit scores, finding a loan that fits their needs and financial situation can be challenging. In this guide, we will walk you through the best personal loan options available for bad credit in the U.S. in 2025, providing you with valuable insights into lenders, loan terms, and qualification requirements.
If you’re someone struggling with a less-than-perfect credit score, don’t despair. This article will help you understand how to qualify for a loan despite your credit history, review the top lenders offering personal loans for bad credit, and share tips on how to improve your chances of getting approved.
Who is This Guide For?
This guide is perfect for individuals with credit scores under 580, who may face challenges in qualifying for loans from traditional banks. Whether you’re new to borrowing or have had trouble managing credit in the past, this guide will provide the information needed to secure a loan. If you’re worried about high interest rates, limited options, or being denied, read on to find ways to increase your chances of approval.
What is a Personal Loan for Bad Credit?
A personal loan for bad credit is a type of unsecured loan designed for individuals who have a low credit score or a history of late payments, defaults, or bankruptcy. These loans are typically offered with higher interest rates compared to those available to borrowers with good credit. However, they can still provide an opportunity to secure funding for emergency expenses, debt consolidation, home improvements, or other financial needs.
Unlike secured loans, such as auto loans or mortgages, personal loans for bad credit don’t require collateral. This makes them an attractive option for people who may not have valuable assets to pledge as security.
Key Features of Bad Credit Personal Loans
-
Higher Interest Rates: Since the borrower is considered a higher risk, lenders compensate for this by charging higher interest rates.
-
Shorter Repayment Terms: Many lenders offering bad credit personal loans may offer shorter loan terms to limit their risk exposure.
-
Larger Loan Amounts: Depending on the lender and your financial situation, you might be able to secure a personal loan for larger amounts despite your credit score.
-
No Collateral Required: Most bad credit personal loans are unsecured, meaning they don’t require an asset, such as a car or home, to be pledged.
Benefits of Personal Loans for Bad Credit
-
Debt Consolidation: You can use the loan to consolidate high-interest debt into a single, more manageable payment.
-
Quick Access to Funds: Most personal loans for bad credit are processed quickly, giving you access to funds within a few days.
-
Flexible Use: Unlike some loans that must be used for a specific purpose, personal loans for bad credit typically allow you to use the funds however you need.
Top Lenders for Bad Credit Personal Loans in 2025
Finding the right lender is one of the most important steps when securing a personal loan for bad credit. Not all lenders offer the same loan terms, interest rates, or eligibility requirements. Below, we’ve reviewed some of the best lenders for bad credit in 2025, based on interest rates, loan amounts, and customer satisfaction.
1. Upstart
Upstart is a popular online lender that offers personal loans to individuals with less-than-perfect credit. The company uses advanced AI to evaluate borrowers’ creditworthiness, considering factors such as education and work history, in addition to credit score. This can work to your advantage if you have a relatively low credit score but a strong employment history or academic background.
-
Loan Amounts: $1,000 – $50,000
-
APR Range: 5.4% – 35.99%
-
Loan Term: 36 or 60 months
-
Pros: Quick application process, flexible requirements, considers more than just credit score
-
Cons: Higher interest rates for poor credit, fees for late payments
2. LendingClub
LendingClub is a peer-to-peer lending platform that connects borrowers with investors. It’s known for offering personal loans to borrowers with bad credit, though the rates are higher for those with low credit scores. LendingClub also provides loan amounts up to $40,000 and flexible repayment options.
-
Loan Amounts: $1,000 – $40,000
-
APR Range: 6.95% – 35.89%
-
Loan Term: 36 or 60 months
-
Pros: No prepayment penalties, large loan amounts, fixed monthly payments
-
Cons: Origination fees, eligibility requirements may be strict for the lowest credit scores
3. OneMain Financial
OneMain Financial offers personal loans to individuals with poor credit, making it a go-to option for those with credit scores in the 500-600 range. While the interest rates can be high, OneMain offers secured loan options, which can lower your interest rate if you pledge collateral.
-
Loan Amounts: $1,500 – $20,000
-
APR Range: 18.00% – 35.99%
-
Loan Term: 24 – 60 months
-
Pros: In-person service available, flexible loan terms
-
Cons: High interest rates, secured loans required for lower rates
4. Marcus by Goldman Sachs
Marcus offers personal loans with no fees, which is rare in the world of bad credit personal loans. Though the APRs can still be high for individuals with low credit scores, Marcus provides fixed-rate loans with no origination fees, prepayment fees, or late payment fees.
-
Loan Amounts: $3,500 – $40,000
-
APR Range: 6.99% – 24.99%
-
Loan Term: 36 – 72 months
-
Pros: No fees, quick funding, high loan limits
-
Cons: Higher rates for poor credit, minimal customer support options
5. Avant
Avant is an online lender that focuses on helping individuals with credit scores of 600 and below. It offers a quick and easy application process, and loans are generally approved within one business day. Avant also has a reputation for providing loans to borrowers with bad credit, making it a reliable choice for people in need.
-
Loan Amounts: $2,000 – $35,000
-
APR Range: 9.95% – 35.99%
-
Loan Term: 24 – 60 months
-
Pros: Quick approval, no prepayment penalties
-
Cons: High fees, higher rates for those with the lowest credit scores
How to Improve Your Chances of Getting Approved for a Loan
Securing a personal loan for bad credit can be difficult, but there are ways to improve your chances of approval. Lenders want to see that you’re financially responsible and capable of repaying the loan.
1. Check Your Credit Report for Errors
Before applying for a loan, review your credit report to ensure there are no errors that could negatively affect your score. Disputing inaccuracies can help improve your credit score.
2. Consider a Co-Signer
If your credit score is low, consider applying with a co-signer who has a stronger credit history. This can increase your chances of getting approved and potentially lower your interest rates.
3. Secure the Loan
Some lenders may offer lower interest rates for secured loans. If you have an asset, such as a car or savings account, you may be able to pledge it as collateral for a better rate.
4. Shop Around for the Best Rates
Different lenders offer different rates, terms, and fees. Take the time to compare multiple loan options before making a decision. Some lenders may have more lenient eligibility criteria, which could help you secure a loan with better terms.
Conclusion: Is a Personal Loan for Bad Credit Right for You?
Personal loans for bad credit can offer a way to get back on your feet financially, but they come with higher interest rates and stricter terms. It’s important to weigh the pros and cons of borrowing with bad credit and consider alternatives, such as credit counseling or a secured loan, if necessary.
If you’re confident that a personal loan is the best option for you, follow the steps outlined in this guide to find the best loan for your situation. By improving your credit score, exploring different lenders, and carefully reviewing loan terms, you can secure a loan that helps you meet your financial needs and goals.
FAQs
-
Can I get a personal loan with a credit score under 500?
While it’s challenging, some lenders specialize in offering personal loans to individuals with credit scores under 500. Expect higher interest rates and more stringent eligibility requirements. -
What is the best personal loan for bad credit in 2025?
The best loan depends on your individual financial situation, but lenders like Upstart, OneMain Financial, and Marcus by Goldman Sachs are good options for people with bad credit. -
Do personal loans for bad credit require collateral?
It depends on the lender. Some lenders offer unsecured loans, while others may require collateral to lower interest rates. -
How can I improve my credit score quickly to get a better loan?
Paying off existing debt, disputing errors on your credit report, and ensuring timely payments can improve your credit score over time. -
Are there any personal loans with no fees?
Marcus by Goldman Sachs offers personal loans with no fees, including no origination fees, prepayment penalties, or late payment fees.
Ready to secure the best personal loan for bad credit? Explore your options and apply today to find the right lender for your financial needs. Whether you need funds for debt consolidation, emergency expenses, or personal projects, a personal loan might be the solution you’ve been looking for. Don’t let your credit score hold you back—take action now and start improving your financial future.
