skip to main content

How to Get a Loan with Bad Credit

Written by
Ashley Altus, CFC
Ashley Altus is a personal finance writer who covered financial planning with a focus on money management and household finance for OppU. She is a Certified Financial Counselor through the National Association of Credit Counselors. Her work has appeared with O, the Oprah Magazine; Cosmopolitan Magazine; The Smart Wallet; and Float.Today.
Read time: 3 min
Updated on April 24, 2024
man wearing a white shirt and black tie explaining how to get a loan with bad credit
Learn how bad credit loans work and tips for applying.

A personal loan can provide assistance when you need money quickly. Those with good credit will usually receive more loan offers with lower interest rates. If you have a bad credit score, it can be challenging to find a personal loan, but with a little bit of research, you can secure one too.

Whether you need a personal loan to pay for a major expense or an unexpected bill, the  four steps below may help you get a loan with poor credit.

Step No. 1: Review your credit report

Assess your credit report to help determine if you may qualify for certain loans. It’s also important to check your credit report for errors before you apply for a loan. Inaccuracies can lower your credit score and hinder you during the application process.

Many lenders will review your credit history to see if you qualify for a loan and help determine the conditions of the loan, loan amount, and interest rate. If you have a low credit score, your loan will typically have a higher interest rate and be for a smaller amount than someone with a good credit score. For more on bad credit loans, be sure to read the OppU Guide to Bad Credit Loans.

Step No. 2: Research lenders and loan options

Ensure you get the best personal loan by comparing lenders, from online lenders to credit unions.

Lenders have different ways to assess your creditworthiness and will have their own credit score requirements. Many lenders will use major credit bureaus, such as Experian, Equifax, and TransUnion, to review your credit history.

Some lenders will pre qualify you for a loan using a soft credit check, which will not hurt your credit. Prequalifying for a loan isn’t a promise of approval if you apply, but it can provide useful insight into the lender’s different loan products.

No two lenders are the same, but most personal loans are either unsecured or secured loans. Secured loans require collateral, such as a home, car, or other valuable possession. The asset you put up for collateral can be repossessed if you are unable to make a payment.

Unsecured loans are determined based on your creditworthiness. A credit card is an example of an unsecured loan. Unsecured loans usually have higher interest rates than secured loans because they are not secured with collateral.

Step No. 3: Gather your personal information

Once you’ve reviewed lenders and loans, collect your identifying information to prepare for filling out the loan application.

Most financial institutions will ask for the following:

  • Annual income
  • The name of your employer
  • Social Security number
  • Driver’s license number
  • Outstanding debt(s)
  • Typical household expenses
  • If you rent or own your home

Step No. 4: Choose the best loan for you

Choose one loan and start by only applying for that one. Applying for many loans in a short period of time can hurt your credit score. It can also decrease your chances of approval and increase your interest rates.

Carefully review the loan terms and consider features such as funding speed and the cost of the loan.

Step No. 5: Consider improving your credit score before you apply

To better your chances of lower interest rates and lender options, improve your credit score before you apply for a loan. Improving your credit score is a slow process. If you need money in a crunch, there may not be enough time to improve your score.

Review your credit report to identify areas for improvement before you apply for a loan to boost your credit score. Paying your bills on time and reducing your debts can help you receive better loan conditions and more favorable rates.

Avoid late payments

Lenders consider past payment history to gauge future payment performance. When you pay late or less than the amount due, it can negatively affect your credit score.

Reduce your debts

Having a high credit utilization, the ratio between your debt to credit limit, influences your credit score. Decrease your outstanding debts before applying for a loan to improve your score for a better loan rate.

Please note the below article contains links to external sites outside of OppU and Opportunity Financial, LLC.  These sources, while vetted, are not affiliated with OppU. If you click on any of the links you will be sent to an external site with different terms and conditions that may differ from OppU’s policies. We recommend you do your own research before engaging in any products or services listed below. OppU is not a subject matter expert, nor does it assume responsibility if you decide to engage with any of these products or services.

Related Articles


California Residents, view the California Disclosures and Privacy Policy for info on what we collect about you.