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Personal Loans for Bad Credit in 2025: How to Get Approved and Find the Best Rates
Having bad credit does not mean you cannot qualify for a personal loan — it means you need to be a smarter, more strategic borrower to find legitimate lenders, avoid predatory loan products, and manage the higher costs that come with below-average credit scores. Millions of Americans with credit scores below 580 successfully obtain personal loans each year through the right combination of lender selection, application strategy, and credit improvement tactics.
This guide identifies the best personal loan lenders for bad credit in 2025, explains how to maximize your approval odds, helps you understand what bad credit loans actually cost, and outlines concrete strategies to improve your credit score quickly so future borrowing costs you less.
What Counts as Bad Credit for Personal Loan Purposes?
Credit scores generally fall into ranges that lenders use to categorize borrower risk. FICO scores — the most widely used credit scoring model — range from 300 to 850. Scores below 580 are generally considered poor credit, scores from 580 to 669 are considered fair credit, scores from 670 to 739 are good credit, and scores above 740 are considered very good to exceptional credit.
Most traditional bank personal loans require minimum credit scores of 660 to 680. Online lenders and credit unions tend to be more flexible, with many working with borrowers in the 580 to 640 range. Specialized bad credit lenders and personal loan companies focused on near-prime borrowers may approve loans for borrowers with scores as low as 550 to 580, though the interest rates and fees reflect the higher risk.
Best Lenders for Bad Credit Personal Loans
Avant specializes in personal loans for borrowers with fair to bad credit, with a minimum credit score requirement of approximately 580. Avant offers loan amounts from $2,000 to $35,000 with APRs ranging from 9.95 to 35.99 percent and repayment terms of 12 to 60 months. Avant charges an administration fee of up to 4.75 percent.
Upstart uses an AI-driven underwriting model that considers factors beyond traditional credit scores, including education, employment history, and area of study, making it more accessible to thin-file borrowers and those with limited credit history. Upstart’s minimum credit score requirement is 300 in some states.
OneMain Financial is one of the few lenders with physical branch locations across the country that specifically targets subprime borrowers. OneMain offers secured and unsecured personal loans with no minimum credit score requirement, making it accessible to borrowers with very poor credit. APRs are high — typically 18 to 35.99 percent — but the company is legitimate and widely accessible.
LendingClub operates as a peer-to-peer lending marketplace and considers borrowers with credit scores as low as 600. Loan amounts range from $1,000 to $40,000 with terms of 36 or 60 months.
Credit unions deserve special mention as consistently among the most borrower-friendly sources of personal loans for bad credit. As member-owned nonprofit financial institutions, credit unions often offer lower interest rates and more flexible underwriting than commercial banks, particularly for members with established relationships. Joining a credit union often requires meeting specific membership criteria based on employer, location, or association membership.
Predatory Loan Products to Avoid
Not all lenders targeting bad credit borrowers are legitimate. Payday loans, which charge fees equivalent to APRs of 300 to 400 percent or more, trap millions of Americans in debt cycles each year. Payday alternative loans from credit unions — called PALs — offer similar small dollar amounts at regulated interest rates capped at 28 percent APR and are a far superior alternative.
Car title loans use your vehicle as collateral and charge extremely high interest rates. If you cannot repay, you lose your car. Rent-to-own schemes and high-cost installment loans from some online lenders can carry effective APRs exceeding 100 percent. Any loan product with an APR above 36 percent is generally considered predatory by consumer advocates and should be avoided if any alternatives exist.
How to Improve Your Chances of Getting Approved
Adding a creditworthy co-signer to your personal loan application can dramatically improve your approval odds and interest rate. A co-signer with good credit essentially vouches for your repayment and takes on legal responsibility for the debt if you default.
Secured personal loans — where you pledge collateral such as a savings account or vehicle — are easier to qualify for with bad credit because the lender has a means of recouping losses if you default. Some banks and credit unions offer credit builder loans specifically designed to help people establish or rebuild credit history.
Reducing your debt-to-income ratio before applying — by paying down existing balances or increasing income — improves your approval odds significantly. Most lenders prefer debt-to-income ratios below 40 percent.
