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Find the Best Personal Loan for Your Needs

Everyone needs a loan sometimes. Whether it’s a few dollars because you left your wallet at home, or something bigger, access to money is essential to getting by.

So what happens when you need a loan but have a bad credit score? Thankfully, there are options for people looking for personal loans with bad credit. However, before you go looking for a loan from a bank or other financial institution, it’s important to understand what you should expect.

Personal Loans for Credit Scores Under 600

This article will explain what your credit score means and how it impacts your ability to get loans and credit. Then it will go through some different steps you can take to find a loan with bad credit. It doesn’t matter if you have a 500 credit score. Personal loans are something everyone needs sometimes. This guide will help you get the money you need when you need it.

How to Get a Personal Loan if Your Credit Score is under 600

500 Credit Score Personal Loans

Your options for a personal loan with a 500 credit score are somewhat limited. Most banks won’t be an option with that credit score. This is especially true for unsecured bad credit loans

Your best option is to take some time to repair your credit score. The good news is that the farther away your credit score is from the mean, the easier it is to raise your score. Your situation may improve if you are looking for a 570 credit score personal loan or even a 540 credit score personal loan. 

If you can’t wait for your credit score to climb and need a personal loan now, then you still have a few options. This includes getting a personal loan with 520 credit score and even perhaps with a credit score under 550. 

First, try online lenders. These lenders, like Lending Club personal loans and, search a broad array of lenders. They also take more factors than your credit score into consideration. That’s because these lenders operate differently from traditional banks.

Traditional banks have a pool of money that they draw from for personal loans. They use the profit on those loans to help meet their business expectations. The expectations on a traditional bank can be rather higher.

Some online lenders operate in a different system. They take money from individual investors. They divide this money into separate pools based on each lender’s level of acceptable risk. Therefore, they’re more likely to have money they can draw on for a personal loan for your unique situation. 

Also, there are some banks you can try. However, you’re not going to get approved at the largest and most well-known commercial banks. One option is One Main financial. This bank has been operating for more than 100 years. They specialize in helping people with low credit scores get the personal loan they need. Therefore, they’re your best bet if you can’t find approval for personal loans online. Of course, it would help a lot if you are able to raise your score. You'll be able to get a 590 credit score personal loan and even a 598 credit score personal loan. 

400 Credit Score Personal Loans

Your options for personal loans no credit check or with a credit score of 400 are even more limited. There are a few things you should expect in this situation.

First, you should expect to get a lot of denials on your applications. Most lenders aren’t going to be willing to take a risk on someone with a credit score of 400. That’s because such a low credit score signals to the lender that you’re at a high risk for default. You'll have better chances if you can improve your score. You could then consider a 450 credit score personal loan or even a 480 credit score personal loan. 

Second, even if you get approved, you should expect to pay a lot more for your loan than many other people. That’s because your credit score plays a large role in determining the interest rates you’re offered. If your credit score is at 400, then the interest rates are going to be very high.

Interest rates for a 400 credit score personal loan are going to be high because you present as an extremely high risk of default. In fact, we recommend that you be extra careful about accepting any loan offers with this credit score, as a lot of predatory lending companies like to function in this range.

You may have some options though. One example of a service you could use is This lender specializes in matching people with poor credit with lenders. They’ve been in business since 1998. However, they charge a maximum interest rate of 35.99%, which means you’ll be paying a lot for a personal loan at that credit score. However, you’ll get funding within 24 hours if you’re approved for a loan. Also, the faster you pay back the loan, the lower your overall interest payments will be.

What Your Credit Score Means

Your credit score is a number that represents how much of a risk you are to a company extending you a loan or line of credit. There are several factors that go into your credit score. However, the biggest one is your payment history.

Credit scores work on a range from 350 to 800. The higher your score, the less of a risk you present to lenders and creditors. That means you can have a hard time getting loans and credit if you have a 400 credit score. Personal loans usually require a score of 620 or greater. That’s the bottom edge of what most lenders consider “fair” credit. This can make getting loans for fair credit challenging.

This can have several impacts on your ability to get a loan or line of credit. We’ll go through those next so that you know what to watch for.

How Your Credit Score Impacts Loans and Credit

The first and most obvious way that a low credit score impacts your ability to get a personal loan is by making it more difficult to get approval. However, that’s not the only problem you’ll find when you’re looking for personal loans with a low credit score. This section covers what you need to watch out for even if you do get approved for personal loans with a bad credit score.

Interest Rates

The first thing you need to watch out for is high interest rates. Lenders set an interest rate based on how much of a risk they think the borrower is to default on a loan. A higher risk needs a higher potential reward. Interest rates are how lenders generate a profit on lending. Therefore, if you have a low credit score, you should expect high interest rates.

This can be a problem for lots of people. Many people with a low credit score also have lower incomes. Even if you don’t have a low income, it’s likely that you have lots of other obligations that make it hard to pay the bills on time.

Some lenders that specialize in giving personal loans to people with lower credit scores charge outrageously high interest rates. Some of them go up to 199%. That means if you borrow $500, you’ll pay back nearly $1500. There’s a good chance that, if you’re borrowing $500, you won’t be able to meet the payments to cover the amount you’ll need to repay.


Another way that having a low credit score affects the loans you get approved for is through the terms you’re offered. People with better credit scores are generally given a longer amount of time to repay the loan. However, if you have a low credit score, you’ll likely be offered shorter terms on repayment. This has two effects.

First, your payments each month will be much higher. That’s because you need to repay the loan plus interest in a shorter period of time. As a result, your monthly payments go up. That can make it hard to meet your bills or balance your budget.

The second effect is that it’s easier to default on these kinds of loans. A shorter repayment term means that one or two missed payments can result in default. That lets the lender take you to court or send your account to a collections agency.

Predatory Offers

Finally, you need to be aware of predatory lending offers. There are some less ethical lenders in the world. They realize that someone looking for a loan with a bad credit score doesn’t have many places to go. As a result, they’ll construct terms and repayment schedules that are almost impossible to meet. They then use all kinds of tactics to collect on these loans. As a result, you can be hounded by calls and letters, taken to court, and more.

Personal Loans for Credit Scores Under 600

Ways to Get a Personal Loan with Bad Credit Score

There are a few things you can do to get a loan even if you have bad credit. We’ll cover those here. Even if you don’t have the minimum credit score for a personal loan from a credit union, you still have options.

Rebuild Your Credit

First, you can rebuild your credit. The way credit scores work is that it’s very easy to move from the extreme ends of the score range to the middle. For example, someone with a 750 score might lose 100 points if they’re late on a payment, whereas someone with a 600 score might lose only 10.

In the same way, small steps toward rebuilding your credit can have a huge impact on your score. Make sure you pay all of your bills on time. You should also check to see if the bills you pay on time report to the credit reporting agencies. Ask your landlord, utility companies, or anyone else to whom you make regular payments to report those payments. This series of on-time payments can do a lot to raise your score.

You can also seek help from credit repair methods. You can hire a company to help with this or you can do it yourself. These include getting a secured credit card and challenging inaccurate items on your credit report.

A secured credit card is a good way to start rebuilding your credit score. Nearly anyone can qualify for a secured credit card. The card is secured with the cash amount of the credit limit. So if you get a $500 secured credit card, you give the card company $500 as collateral. That means if you default on the bill, the company doesn’t lose any money.

As long as you make your payments on time, this can be a great way to build your credit. It also increases the amount of revolving credit you have available. That can lower your credit utilization and thus boost your credit score.

Even boosting your credit score a little bit can make a huge difference in the terms and interest rates you’re offered. A personal loan for 550 credit score is very different from a 580 credit score personal loan. And almost anything is better than what you’ll find for personal loans credit score under 500.

Get a Cosigner

The next option you have if you can’t get approved for a personal loan because of a bad credit score is to get a cosigner. A cosigner is a person that agrees to be responsible for the debt should you default. This greatly increases your odds of getting a personal loan.

Many lenders have special programs for cosigners. They allow cosigners to be released from their obligations after someone has made a certain number of on-time payments. Getting a personal loan with a co-signer and making on-time payments is a great way to boost your credit score, so this can also function as a type of credit repair.

Borrow from a Friend or Relative

You can also ask people you know for a loan forgoing the need to apply for a personal loan at a bank or with an online lender. Friends and relatives don’t usually check credit scores. If you know someone that can afford the amount of money you’re looking for, you can ask them for the loan.

You’re going to get better results with this method if you come to the conversation prepared. You should be able to explain the reason you want the loan. You should also come with a prepared amortization schedule. This shows what payments you’ll make and when you’ll make them. You can package that document together with a written agreement about the loan. This makes the loan legally enforceable. That may make the person you’re asking more willing to lend to you.

Get a Secured Loan

The other option for a personal loan with a bad credit score is to get a secured loan. A secured loan means that you’re offering some kind of collateral. If you default on the loan, then the lender can seize the collateral to make up the loss.

Lenders will accept many different things as collateral. One of the most common types of secured personal loans is a home equity loan. If own your home and have been paying your mortgage for a while, then a home equity loan may be your best bet. A DCU loan uses you current savings as collateral.

A home equity loan happens when you borrow money against the equity you have in your house. Lenders are more willing to offer these types of loans to people with bad credit because of the stakes involved. After all, no one wants a lien on their house. They’re also more willing to make these kinds of loans because they can be confident they’ll recoup their investment.

However, you need to be careful. If you default on a home equity loan the lender will put a lien on your house. That means they have first rights to the proceeds if you sell the house. For example, if you take out a $10,000 home equity loan and default on it, and then sell your home for $100,000, you’ll only get $90,000 from the sale.

It’s also important to keep in mind that your primary mortgage holder will also get home sale proceeds before you or your home equity lender get them. That means you might sell your home and walk away with next to nothing to show for it.

Look for a Bad Credit Lender

Finally, there are lenders that specialize in working with people that have bad credit. It’s important to carefully review the details of any loan you accept from these lenders. There are plenty of them that conduct business in a fair and ethical way. However, there are some bad credit lenders that seek to exploit people in a tough situation.

Personal Loans for Credit Scores Under 600

Carefully review the interest rate and terms on any loan you’re offered. Most importantly, review the amortization schedule. This will tell you how much you have to pay and when you have to make each payment. Be sure that you’ll be able to make the payments that are listed. If you’re even a little bit in doubt, then you should try to look elsewhere for the money you need. That’s because failing to make a payment on time can hurt your credit score even more.

Additionally, late payments frequently come with all kinds of fees and charges. These charges can rapidly increase the amount you need to pay back to the lender. Sometimes they can make it impossible to repay the loan and force you into bankruptcy. That’s why you need to be sure you understand every aspect of your loan agreement before you accept it.

Summarizing Bad Credit Score Personal Loans

As you can see, it can be difficult to find easy loans for bad credit. However, you do have options. If you don’t need the loan for an emergency, then you should try to wait and rebuild your credit. Focus on making on-time payments and lowering your credit card balance. Those two steps will go a long way towards boosting your credit score.

If you need the loan for an emergency, then try the steps we’ve listed above. Look for someone to act as a co-signer. You can also ask a friend, relative, or even your employer for a loan. If all else fails, there are companies that specialize in low-credit score loans. You can try them. Many people have found that these lenders offer the exact kind of relief they need. However, make sure you’re not taken advantage of by someone looking to capitalize on your bad situation. Predatory loans and lending offers will only make things worse for you in the long-run.

Robert is our in-house expert on personal loans and finance. He got an MBA, specializing in Finance, before joining the workforce. After working for multiple Fortune 500 companies in the past decade, he brings a wealth of knowledge and experience to the table.