10 Hacks To Help You Get A Personal Loan with Bad Credit of February 2024

Rachel Morey
Last Update: July 11, 2023 Loans

When you need a loan, having bad credit can reduce your choices significantly. While it’s more difficult to get a loan when you have credit issues, it isn’t impossible.

First Things First

Before you start looking for a lender, check your credit. Your FICO scores may not be as low as you think. Here’s how you can get free access to your FICO score:

Discover offers a Free Credit Scorecard with the corresponding FICO score to its credit card and banking customers. If you don’t have a Discover card and aren’t sure you’ll qualify, you can still get a free Discover bank account to determine your FICO score.

Any lender, mortgage servicer, or credit card issuer that participates in FICO Score Open Access can offer you a free look at your FICO scores. You’ll also get information on some of the most influential factors that can change your scores. If you have an account with an institution that participates in FICO Score Open Access, contact them and ask for your FICO scores right away.

What to Look for When You Check Your FICO Scores

Your FICO scores are a snapshot of your past financial behavior. Lenders use this score to make a quick decision about whether to lend you money and how much interest and fees to charge.

Factors that make up your FICO score:

  • Payment history: 35%
  • Total amounts owed: 30%
  • Length of credit history: 15%
  • Credit mix: 10%
  • New credit 10%

As you can see, the most important factor is your payment history. If you have late payments, accounts in collections, a short credit history, or if you owe a lot of money to multiple lenders, you may have a low FICO credit score.

In general, if you have a FICO credit score of 670 to 800, you can easily access personal loans with low interest rates and good terms. With scores between 580 and 669, you may pay more interest and fees for a personal loan, and you’ll have fewer choices. Scores between 300 and 579 are considered “very poor” by most lenders. You may still be able to get a loan but expect to pay high interest rates and origination fees.

If you have a low FICO score, it may be due to mistakes in your credit reports. Federal law entitles you to a free credit report from Equifax, Experian, and TransUnion once every 12 months at AnnualCreditReport.com.

If you find mistakes, let the credit bureau know right away. They have 30 days to prove that the information is correct or remove it from your report. Simply fixing mistakes could be enough to bump up your FICO credit scores, giving you easier access to personal loans.

Here’s How to Get a Personal Loan with Bad Credit

Bad credit isn’t a problem when it comes to getting a personal loan, but you’ll have to work a bit harder to get access to the money you need.

  • Shop around: Never take the first offer for a personal loan. Check with multiple lenders and look for hidden fees like early payment penalties and origination charges. Even if you have bad credit, you don’t have to take a loan with terms that put your financial future in harm’s way. Pay special attention to origination fees and early-payment penalties, which can make it difficult or even impossible to pay off your personal loan.
  • Add a co-signer: Even if your credit is terrible, having a co-signer with a decent FICO score can help you get the personal loan you need. If you get a co-signer, be sure to make your payments on time, though. One wrong move could ruin your progress toward a higher score and destroy your cosigner’s credit, as well.
  • Go into your bank: Getting a personal loan online is convenient, but you may have better choices at your bank or credit union. Go in or call to speak with a loan officer. Ask whether they have personal loan programs for customers with credit challenges. Many lenders offer credit-building loans with shorter terms and lower loan amounts to help you repair your damaged credit.
  • Consider a secured loan: If you have something of value, your lender may consider it collateral and approve your application. Be sure to ask about secured loans as an alternative to personal loans when you talk with your bank’s loan officer.
  • Use a credit card instead: It may be easier to get approved for a credit card if you need a few hundred dollars for a short amount of time. While you could end up paying high interest rates and a fee to open the account, many credit card issuers approve applicants with credit scores as low as 500.
  • Ask about borrowing a smaller amount: If you get denied for the amount of money you want, consider whether you could make do with less. Some lenders won’t approve a borrower with bad credit if they ask for a large sum of money.
  • Shorten your repayment term: Not only will you pay less interest over time, but you could also be more likely to get approved if the lender understands that you can pay back the money in a shorter amount of time.
  • Wait until you can increase your score: If you know your FICO credit score is on the rise and you can put off borrowing money for a few months, you could end up paying a much lower interest rate for access to a personal loan.
  • Use an alternative lender: Check with companies like Upstart. They use information about your educational background and work experience to help with the loan qualification process.
  • Check out peer-to-peer lending networks: If you don’t have much experience with borrowing money and your credit scores show a lack of activity, you may still end up with a low credit score. Peer-to-peer lenders often consider your income, work history, education, and the reason for your personal loan while giving less weight to your credit history. Check out Lending Club, which offers personal loans up to $40,000.

Can a Personal Loan Help My Credit?

Any time you borrow money from a lender who reports your payment activity to the credit bureaus, you have a chance to improve your credit. New information makes more of a difference to your credit scores than old information, so it’s crucial to stay current on your loans and credit cards.

Even one late payment can drop your FICO scores, making it even more difficult for you to access credit in the future. In fact, one payment made more than 30 days late can impact your FICO scores within just a few weeks. To get your scores back up, you’ll need to take months’ worth of on-time payments on every one of your accounts.

What if I Can’t Get The Personal Loan I Need?

If your credit is in such bad shape that you can’t get approved for a personal loan, you may be tempted to contact a PayDay Lender. Before you go this route, consider that the average APR for payday loans is now 400%. The Consumer Financial Protection Bureau (CFPB) considers payday loans as predatory financial products designed to trap borrowers in a never-ending cycle of crippling debt.

Another tempting option when you need a personal loan but have bad credit is to put up your vehicle as collateral. Not every state allows this type of lending, however. If you don’t make every payment on time, the lender has the legal right to take your vehicle, sell it at an auction, and sue you for the balance of your loan (plus any fees they pile on.)

Alternative Payday Loans

Call your bank or credit union or contact a local credit counseling agency to ask about alternatives to payday loans in your community. Many lenders have options for people with bad credit who need access to funds. This type of loan isn’t always advertised, so you’ll have to ask for it. You can open a savings account with a $5 deposit to become a credit union member.

OppLoans.com is an alternative payday lender with high interest rates, but its 59% – 160% APR is still much lower than a typical payday loan provider. They don’t conduct credit checks, and the approval is easy, but with interest rates this high, you run the risk of being trapped with a high amount of debt in exchange for fast access to a small amount of cash.

For example, if you borrow $1,000 at 100% APR, you’ll repay a total of $1,619.91. This isn’t ideal, but it’s still much less than you’ll owe if you borrow $1,000 from a payday lender at 400% APR, where you’ll repay $4,130.65.


Having bad credit shouldn’t keep you from accessing the funds you need. However, it’s crucial to shop around and make sure you understand the terms of your personal loan. The first step to finding a cheap personal loan is to understand your current credit situation. Armed with this knowledge, you can locate a loan with the best possible terms to help you reach your financial goals.


Rachel Morey

Rachel Morey is a journalist specializing in automotive, insurance, and finance content. She has been writing professionally for nearly a decade and has projects in print and broadcasting. A native Iowan, Rachel as a special fondness for the open roads of rural America.

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