How to Get a Loan With Bad Credit in 2026
Bad credit doesn’t mean no options. It means fewer options, higher rates, and more homework before you apply.
This guide covers 7 real, legitimate paths to get a loan with bad credit in 2026 — from specialized online lenders to credit unions, secured loans, and co-signers. Each one works. Each one has a catch. Knowing both is what helps you pick the right one.
What Counts as “Bad Credit” in 2026?
Before diving in, let’s define the territory:
- Poor credit: FICO score below 580
- Fair credit: FICO score 580–669
- Good credit: FICO score 670–739
- Very good / Excellent: 740 and above
Most traditional banks won’t approve personal loans for scores below 670. Some draw the line at 700.
But here’s the key fact: about 14% of adult Americans have FICO scores below 580, according to CNBC Select data. That’s tens of millions of people who need borrowing options — and the options do exist.
The trade-offs are real: expect higher APRs, origination fees, shorter terms, and lower loan amounts than borrowers with good credit receive. A borrower with a sub-580 score applying through lending marketplaces in 2026 can expect APRs near or above 30%, according to Credible marketplace data from March 2025 through February 2026.
That’s expensive. But it’s legal, regulated, and vastly cheaper than a payday loan at 300–400% APR.
Option 1: Online Lenders That Specialize in Bad Credit
Who it’s for: Anyone with a credit score between 300 and 669 who needs $1,000–$75,000 and wants fast approval online.
Best apps to check:
Upstart
- APR: 6.60%–35.99%
- Loan amounts: $1,000–$75,000
- Min. credit score: 300 (effectively no minimum)
- Origination fee: 0%–12%
- Funding: Next business day in 99% of cases
- Soft credit check for prequalification: Yes
Upstart’s AI model evaluates education level, employment history, and earning potential alongside credit score. This matters enormously for people with thin credit files or recent financial setbacks. About 84% of Upstart loans are processed fully automatically — no human review, near-instant decision for most applicants.
Upgrade
- APR: 7.74%–35.99%
- Loan amounts: $1,000–$50,000
- Min. credit score: 580
- Origination fee: 1.85%–9.99%
- Funding: 1–4 business days
- Secured and co-signed loans: Yes
Upgrade accepts borrowers at 580+, offers secured and co-signed options (more on both below), and provides multiple rate discounts. More flexibility than Upstart for borrowers who hover around the 580–640 range.
Avant
- APR: Approximately 9.95%–35.99%
- Loan amounts: $2,000–$35,000
- Min. credit score: ~580
- Origination fee: Up to 9.99%
- Funding: As fast as next business day
- Customer service: 7 days a week, 13–15 hours/day
Avant is one of the few lenders with seven-day customer service availability — helpful if you’re navigating your first loan and have questions. Rates are lower than average for the bad-credit tier. No co-borrower or collateral option, so you apply solo.
The honest reality about online bad-credit lenders:
The lower your credit score, the higher your rate will be. On a $10,000 loan at 30% APR over 5 years, you’d pay roughly $8,900 in total interest — nearly as much as you borrowed. That’s why these loans make sense for genuine emergencies or debt consolidation from even higher-rate debt (like credit cards), but not for discretionary spending.
Always prequalify (soft pull) with multiple lenders before committing. Use Credible, LendingTree, or NerdWallet’s comparison tools to see multiple offers in one place.
Option 2: Credit Unions and Payday Alternative Loans (PALs)
Who it’s for: People who need $200–$2,000 quickly and want the lowest possible regulated rate.
How credit unions differ from banks:
Credit unions are nonprofit, member-owned financial institutions. They return profits to members through lower fees and better rates. Federal credit unions cap personal loan APRs at 18% — one of the lowest hard limits in the industry.
And critically: they’re more likely to consider your full relationship with the institution, not just your credit score. If you have direct deposit with a credit union, a checking account in good standing, or have been a member for 6+ months, that history counts in your favor.
Payday Alternative Loans (PALs) — what they are:
The National Credit Union Administration (NCUA) allows federal credit unions to offer two types of PALs specifically designed for members who might otherwise turn to predatory payday lenders:
PAL I:
- Loan amount: $200–$1,000
- Maximum APR: 28%
- Maximum application fee: $20
- Term: 1–6 months
- Membership required: At least 1 month before applying
PAL II:
- Loan amount: Up to $2,000
- Maximum APR: 28%
- Maximum application fee: $20
- Term: 1–12 months
- Membership requirement: None — you can apply as soon as you join
Neither type allows a rollover (borrowing a new PAL to pay off an existing one). The NCUA prohibits it specifically to prevent the debt cycle that payday loans create.
No minimum credit score is required for PALs. The credit union evaluates income and account standing, not a FICO number.
How to find a PAL-offering credit union:
Visit MyCreditUnion.gov and use the credit union locator. Search for federal credit unions in your area. Call ahead and ask whether they offer PALs — not every credit union does.
Some credit unions allow anyone in the US to join by making a small donation to an affiliated nonprofit (typically $5–$10). This route is worth exploring if no local credit union serves you naturally.
The honest downside:
PAL amounts are small (max $2,000). If you need more than that, a PAL alone won’t solve your problem. Also, not every federal credit union offers them — you’ll need to shop around. And the PAL I one-month membership requirement means you can’t walk in on Monday and borrow by Tuesday.
Best for: People who need emergency cash under $2,000 and can plan even 2–4 weeks ahead. Also excellent as a first loan to build a credit union relationship before applying for a larger loan later.
Option 3: Secured Personal Loans
Who it’s for: Borrowers who own an asset — car, savings account, certificate of deposit, home fixtures — and are willing to use it as collateral.
How it works:
A secured loan uses collateral to reduce the lender’s risk. If you stop paying, the lender can seize the collateral. Because the risk is lower for them, you’re more likely to get approved and more likely to receive a lower APR — even with bad credit.
Common types of secured personal loans:
Car-secured loans: Several lenders (including Upstart) allow you to use your vehicle title as collateral. This lowers your APR compared to an unsecured loan. Caution: if you miss payments, you could lose your car. Only use this option if you’re confident in your repayment ability.
Savings-secured or CD-secured loans: Some banks and credit unions let you borrow against your own savings account or certificate of deposit (CD). The money in your account acts as collateral — it’s frozen during the loan term but returned once you pay off the loan. APRs are extremely low (often 2–5% above the savings rate), and approval is nearly guaranteed because the lender holds your money as backup.
Home fixture-secured loans (Best Egg): Best Egg offers a unique secured personal loan that uses permanent home fixtures (built-in appliances, cabinets, permanently installed home features) as collateral — without requiring you to tap home equity. Minimum credit score is around 600, and the secured option gives you access to lower rates than their unsecured product.
The mechanics of a secured personal loan:
- You apply with the lender and identify your collateral.
- The lender places a lien on the asset during the loan term.
- You make monthly payments as agreed.
- Once the loan is paid off, the lien is released.
The honest downside:
The risk is real: you can lose your car, your savings, or your home fixtures if you default. Never use an asset you cannot afford to lose as collateral. If there’s any doubt about your ability to repay the loan, an unsecured option — even at a higher rate — is safer.
Best for: Borrowers with bad credit who have real assets and a stable income. The combination of collateral + consistent income often unlocks approval and rates that unsecured bad-credit loans can’t match.
Option 4: Add a Co-Signer or Co-Borrower
Who it’s for: Borrowers who have a family member or close friend with good credit (670+) who is willing to share legal responsibility for the loan.
Co-signer vs. co-borrower — the difference:
A co-signer guarantees the loan. If you miss payments, they’re responsible. Their credit is on the hook if you default, but they don’t typically use the loan funds themselves.
A co-borrower shares the loan equally — both people are responsible for repayment, and both use the funds. Co-borrowers are more common in joint purchases.
What a co-signer actually does for your application:
The lender evaluates the stronger credit profile of the two applicants. If your co-signer has a 720 credit score, you may suddenly qualify for a loan you’d otherwise be rejected for — and at rates based on their creditworthiness, not yours.
According to WalletHub, even a cosigner with a credit score as low as 600 can help, though a score of 670 or higher is where the real benefits kick in. A cosigner at 750+ can be the difference between a 30% APR and a 15% APR on the same loan.
Lenders that allow co-signers or co-borrowers:
- Upgrade — co-signed loans, 580+ credit score for primary borrower
- LendingClub — joint loans with co-borrower
- SoFi — joint loan option
- Prosper — peer-to-peer, allows co-applicants
- First Tech Federal Credit Union — joint loans, strong option for credit union members
What to agree on before you apply:
Before asking someone to co-sign, have an honest conversation about:
- Who will make the monthly payments (typically you, the primary borrower)
- What happens if you can’t pay (the co-signer covers it)
- How you’ll give them peace of mind (share payment confirmations each month)
- The co-signer’s understanding that missed payments will damage their credit
The honest downside:
Co-signing puts real strain on relationships. If you miss payments, the co-signer’s credit takes the hit — not just yours. This has broken friendships and damaged family relationships. Only pursue this route if you are genuinely confident you can repay the loan. Never ask someone to co-sign on a loan you’re not certain you can manage.
Best for: People with a trusted family member or close friend with good credit who understand the risk clearly and are willing to help.
Option 5: Credit-Builder Loans
Who it’s for: People who have bad credit primarily because of thin credit history — not past defaults — and want to build their score while getting access to funds.
How credit-builder loans work:
A credit-builder loan is unusual. Instead of giving you the money upfront, the lender holds the loan amount in a secured savings account or CD. You make monthly payments over 6–24 months. At the end, you receive the money you paid in — plus any interest earned on the savings account. The lender reports every payment to the three major credit bureaus.
The result: By the time the loan term ends, you’ve built a payment history of 12–24 months of on-time payments — the single most powerful factor in improving a FICO score. Many borrowers see score increases of 30–60 points over a 12-month loan term.
Where to get credit-builder loans:
- Credit unions — most offer some form of credit-builder or share-secured loan
- Community banks — check smaller local institutions
- Self (formerly Self Lender) — a fintech that specializes in credit-builder loans, available online nationwide. Monthly payments from $25–$150. Loan amounts from $520–$1,700 over 12–24 months.
- Kiva — offers 0% interest small business credit-builder loans (requires a business purpose)
The honest downside:
You don’t get the money upfront — which makes credit-builder loans useless for genuine emergencies. They’re a tool for building credit over time, not for solving an immediate cash problem. Also, if you miss a payment, you damage the credit you were trying to build. Set up autopay from day one.
Best for: Borrowers who aren’t in immediate financial crisis but have thin credit files and want to build a score over 12–18 months to qualify for better loans in the future.
Option 6: Borrowing From Family or Friends
Who it’s for: People who have a trusted family member or friend with available funds and the willingness to lend informally.
Why it can work:
No credit check. No origination fee. No APR — or a very low one set by mutual agreement. No risk of predatory terms. If the relationship is strong and both parties are honest about the arrangement, this is often the cheapest borrowing option available to anyone with bad credit.
How to do it right:
The biggest risk with informal family loans isn’t financial — it’s relational. Disputes about repayment timelines, missed payments, and assumptions about interest have ended countless relationships.
To protect both parties:
- Put it in writing. A simple loan agreement with the amount, repayment schedule, interest rate (if any), and signatures. Search “promissory note template” online for a free starting point.
- Agree on a specific repayment schedule — monthly payments on a fixed date, not “whenever I can.”
- Pay it back exactly as agreed. Late payments to a lender hurt your credit. Late payments to family members hurt something more important.
- Make it official if amounts are significant. For loans over $10,000, the IRS requires a minimum interest rate (the Applicable Federal Rate) to be charged to avoid the loan being treated as a gift for tax purposes.
The honest downside:
Money changes relationships. If you cannot repay and the lender is a family member, the fallout can be permanent. Be completely honest about your financial situation, your repayment plan, and your risks before asking. If there’s meaningful doubt about your ability to repay, do not put your relationship at risk — pursue one of the other six options instead.
Best for: People with strong, honest relationships with financially stable family members or friends who understand the risks and want to help without involving a third-party lender.
Option 7: Lending Marketplaces (Compare Multiple Offers at Once)
Who it’s for: Anyone who wants to see their real options across multiple lenders with a single soft credit pull.
How lending marketplaces work:
Sites like Credible, LendingTree, and NerdWallet connect you with 5–30 lenders simultaneously. You enter your information once, and their algorithms match you with lenders whose requirements you’re likely to meet. You see multiple pre-qualified offers side by side — APRs, loan amounts, terms, monthly payments — and then choose.
The critical feature: these initial rate checks are soft pulls. They do not affect your credit score. Only when you formally apply with your chosen lender does a hard inquiry occur.
For bad-credit borrowers, marketplaces are valuable for two reasons:
- They show you which lenders are even willing to work with your credit profile — before you waste hard inquiries on applications that will be denied.
- They create competition between lenders, which can surface better terms than going directly to a single lender’s website.
Marketplace options:
Credible — Strong for personal loans. Shows APR ranges, fees, and terms clearly. Partners include Upstart, LendingClub, Best Egg, and others. The Best Rate Guarantee offers a $200 gift card if you close with a better rate than what you prequalified for.
LendingTree — The largest marketplace with 300+ lender relationships. Shows up to 5 personalized loan offers within minutes. LendingTree also offers credit monitoring tools while you shop.
NerdWallet — Comparison tool with editorial ratings alongside offers. Useful for understanding not just the rate but the lender’s reputation and features before choosing.
The honest downside:
Marketplaces make money by referring you to lenders — which means they have a financial incentive to show you offers from partners, not necessarily the absolute best offers available. Use multiple comparison sites and compare the results. Any lender not on a particular marketplace’s network won’t appear in results.
Also: after you submit your info to a marketplace, expect to receive follow-up calls and emails from multiple lenders. Be prepared for that volume.
Best for: Anyone starting the research process. Do this first, before applying directly anywhere. It takes 5–10 minutes, costs nothing, and shows you the range of what’s actually available for your credit profile.
What to Do Right Now (Step-by-Step)
Step 1 — Get your actual credit score and report. Don’t guess. Go to AnnualCreditReport.com for free reports from Experian, Equifax, and TransUnion. Check for errors — incorrect late payments, accounts that aren’t yours, or paid debts still showing as unpaid. Disputing and correcting errors is free and can raise your score within 30–45 days.
Step 2 — Run a marketplace prequalification. Go to Credible or LendingTree and prequalify. See which lenders will work with your score and what rates they’re offering. This takes 5 minutes and won’t touch your credit score.
Step 3 — Compare your top two or three offers. Look at APR (not just the interest rate), origination fee, monthly payment, and total cost over the life of the loan. The total cost is what matters most — not the monthly payment number.
Step 4 — Check your local credit union. If you’re already a member or can join easily, call and ask about personal loans or PALs. Credit union APRs for unsecured loans are capped at 18% — significantly lower than most online lenders.
Step 5 — Consider a secured loan or co-signer if rates are too high. If the offers you’re seeing exceed 30% APR, a secured loan or co-signer may dramatically reduce your rate. Both options require more setup, but can save thousands in interest on a multi-year loan.
Step 6 — Accept the best offer and set up autopay immediately. Payment history is 35% of your FICO score — the single biggest factor. Every on-time payment builds your credit. Every missed payment damages it further. Autopay ensures you never accidentally miss a payment.
Red Flags: How to Spot a Predatory Lender
Bad-credit borrowers are a major target for scammers and predatory lenders. These warning signs are worth knowing:
- “Guaranteed approval” before reviewing your application. No legitimate lender can guarantee approval without checking income or credit.
- Fees required before receiving the loan. Real lenders deduct origination fees from the loan — they never collect money before disbursement.
- APR not disclosed clearly. Any lender who avoids stating the APR and only mentions the payment amount or a fee is hiding the real cost.
- APR above 36%. Consumer protection advocates and most state attorneys general consider 36% the ceiling for responsible lending. Above that, you’re in payday loan territory.
- Pressure to sign immediately. Legitimate lenders let you take time to review terms. Urgency tactics exist to prevent you from comparison shopping.
- No NMLS number listed. Verify any lender at nmlsconsumeraccess.org to confirm they are properly licensed in your state.
Frequently Asked Questions
Can I get a loan with a 500 credit score?
Yes, but your options are limited. Upstart (score 300+) and Avant (~580+) are among the few reputable lenders. Expect APRs of 25%–35.99%. Credit unions with PALs and secured loans are better alternatives if you have a low score.
Will applying hurt my credit score?
Prequalification (soft pull): no. Formal application (hard pull): typically 5–10 points, temporarily. If you apply with multiple lenders within a 14-day window, FICO typically counts all inquiries as one, minimizing the impact.
How fast can I get money with bad credit?
Upstart funds 99% of loans the next business day. Avant and Upgrade typically fund within 1–2 business days. Credit union PALs can often be approved and funded same day if you apply early enough. Secured savings-backed loans depend on your institution.
Does getting a bad-credit loan help rebuild my credit?
Yes, if the lender reports to the major bureaus (Experian, Equifax, TransUnion) — and almost all reputable personal loan lenders do. Six to twelve months of on-time payments can meaningfully raise a low score. Credit-builder loans are specifically designed for this purpose.
What if I’m rejected everywhere?
Start with a credit-builder loan from a credit union or from Self. Use a secured credit card with a small limit ($200–$500 deposit) and pay it off in full every month. After 6–12 months of positive history, your score will be meaningfully higher and more lenders will approve you.
Disclaimer
This article is for informational purposes only and does not constitute financial or legal advice. Interest rates, fees, eligibility requirements, and lender terms are subject to change. All figures reflect publicly available data as of early March 2026.
Always verify current terms directly with each lender before applying. Approval is not guaranteed and depends on your individual credit profile, income, and other factors assessed by each institution. If you are struggling with debt, consider contacting a nonprofit credit counseling agency — such as those accredited by the National Foundation for Credit Counseling (NFCC) — before taking on additional debt.
