Personal loans are available from lenders who focus on credit history beyond just your score

A low credit score does not automatically disqualify you from borrowing. Many lenders — credit unions, online lenders, and some banks — offer personal loans to people with scores below 620, though the terms will reflect the higher risk. You will pay a higher interest rate than someone with excellent credit, and you may need to provide collateral or a co-signer, but the loan itself is obtainable.

The key is understanding which lenders actually work with lower scores and what each type requires. A bank that advertises rates starting at 6% typically means 6% for borrowers with scores above 740. An online lender advertising rates from 6% to 36% is telling you they lend across the spectrum — and you need to know where you fall in that range before you apply.

Key Takeaways

  • Credit unions, online lenders, and some banks offer personal loans to borrowers with scores below 620, though interest rates will be higher than for excellent credit.
  • You will need proof of income, a valid ID, and a bank account; a co-signer or collateral can lower your rate or increase approval odds.
  • Comparing offers from at least three lenders takes one to two weeks and shows you the actual rate you may have access to for, not just the advertised range.
  • Repayment terms typically run two to seven years; a longer term lowers your monthly payment but costs more in total interest.
  • Avoid lenders charging upfront fees before you receive money, and read the fine print for prepayment penalties that could lock you into paying interest.

Where to find lenders who work with lower credit scores

Credit unions are often the most flexible option. They are member-owned, not profit-driven, and many have programs specifically for people rebuilding credit. You must join the credit union first — usually by opening a savings account with a small deposit — but membership fees are typically under $25. Call ahead and ask if they offer personal loans to members with scores below 620; many do.

Online lenders advertise openly that they lend to people with lower scores. Companies like Upstart, LendingClub, and OppFi are designed to assess borrowers on factors beyond credit history — income stability, employment length, and bank account history. The application is entirely online and takes 10 to 20 minutes. Approval can come within hours, though funding takes one to three business days.

Banks vary widely. Large national banks rarely approve personal loans for scores below 620. Regional and community banks are more likely to consider your full financial picture, not just the score. Call your current bank first — they already know your account history and may offer better terms than a stranger would.

Credit card companies sometimes offer personal loans to existing cardholders, even with lower scores. Check your online account or call the number on the back of your card and ask about personal loan options.

What you need to prepare before applying

Lenders will ask for the same core documents regardless of your credit score. Have these ready before you start: a government-issued ID (driver's license or passport), proof of income (recent pay stubs, tax returns, or bank statements showing regular deposits), and your Social Security number.

You will also need to provide your current address and phone number, and the lender will ask about your employment — how long you have been at your current job and your job title. If you are self-employed or have been at your job less than a year, bring documentation: a business license, tax returns, or a letter from your employer confirming your hire date and income.

Have a bank account in your name ready. Lenders require direct deposit or electronic transfer to fund the loan, and they will verify the account is active before approving you. If you do not have a bank account, open one before applying — most banks do this free and online in under 10 minutes.

How a co-signer or collateral affects your odds and your rate

A co-signer is someone with better credit who agrees to repay the loan if you do not. Adding a co-signer can lower your interest rate by 2 to 5 percentage points and increases your approval odds significantly. The co-signer does not receive the money, but their credit is on the line — they need to understand that before signing.

Collateral — a car, savings account, or other asset you pledge as security — also lowers your rate. If you default, the lender can seize the collateral to recover their money. Secured personal loans typically carry rates 3 to 8 percentage points lower than unsecured loans for the same borrower. The trade-off is clear: lower rate, higher risk to your assets.

If you have a savings account with money in it, some lenders will let you use that as collateral while you borrow against it. You keep the money in the account, but the lender freezes it as security. This is lower risk than pledging a car or home.

Comparing offers and understanding what the rate actually means

Apply to at least three lenders before deciding. Each application triggers a hard inquiry on your credit report, but multiple inquiries within 14 to 45 days (depending on the credit bureau) count as a single inquiry for scoring purposes. Spacing applications over two weeks minimizes the damage to your score.

When you receive an offer, you will see the interest rate, the loan amount, the term (how many months to repay), and the monthly payment. The interest rate is the percentage of the loan you pay annually. A $5,000 loan at 24% interest over 36 months costs you about $1,900 in interest alone — the total you repay is $6,900. At 36% interest over the same term, you pay about $2,900 in interest. That 12-percentage-point difference costs you $1,000 extra.

Ask each lender for the Annual Percentage Rate (APR), which includes the interest rate plus any fees spread across the loan term. The APR is the true cost of borrowing and is what you should compare across lenders. Federal law requires lenders to disclose the APR before you sign.

Red flags to watch for before signing

Avoid any lender charging an upfront fee before you receive the money. Legitimate lenders deduct fees from the loan amount or add them to your first payment. If someone asks for payment before funding, it is a scam.

Read the fine print for prepayment penalties — fees charged if you pay off the loan early. Some lenders penalize early repayment to protect their interest income. If you think you might pay off the loan ahead of schedule, choose a lender with no prepayment penalty.

Check whether the lender reports to the credit bureaus. If they do not, paying on time will not help rebuild your credit. Most legitimate lenders report, but some do not — ask before signing.

Verify the lender is licensed in your state. Each state regulates lending differently. Search your state's attorney general website or banking regulator for the lender's name; if they are not listed, that is a warning sign.

How loan terms affect your monthly payment and total cost

A longer repayment term lowers your monthly payment but increases the total interest you pay. A $5,000 loan at 24% interest costs about $155 per month over 36 months (total repaid: $6,900) or about $105 per month over 60 months (total repaid: $7,900). The longer term saves you $50 a month but costs you $1,000 more overall.

Choose the shortest term you can afford. If the monthly payment strains your budget, you risk missing payments, which damages your credit further and may trigger default fees. A longer term you can actually pay is better than a shorter term you cannot.

Some lenders allow you to change your term after approval but before funding. If you are unsure, ask whether you can adjust the term once you see the monthly payment in writing.

What happens after you receive the money

The lender will deposit the loan into your bank account within one to three business days of approval. You will receive a loan agreement showing the amount, rate, term, monthly payment, and due date. Set a calendar reminder for the due date — missing even one payment reports to the credit bureaus and can lower your score by 100 points or more.

Make payments on time, every month. After 12 to 24 months of on-time payments, your credit score will begin to recover. Once your score improves, you can refinance the loan with a lower-rate lender, which saves you money on the remaining balance.

Frequently Asked Questions

Can I get a personal loan with a credit score below 580?

Yes, but options narrow and rates rise. Online lenders and credit unions are your best bets. Scores below 580 are considered very poor, so expect rates above 30% and a requirement for collateral or a co-signer. Some lenders have a hard floor at 580 or 600, so you may need to apply to five or more lenders to find one willing to work with you.

Will applying for a personal loan hurt my credit score?

Each application triggers a hard inquiry, which lowers your score by a few points temporarily. Multiple inquiries within 14 to 45 days count as one inquiry, so applying to three lenders in two weeks causes less damage than spreading applications over three months. The impact fades within three to six months.

What if I have no income or irregular income?

Lenders require proof of income, but it does not have to be a traditional job. Self-employment income, disability payments, Social Security, and unemployment benefits all count. Bring tax returns or bank statements showing deposits for at least three to six months. Some online lenders accept bank account history as proof of income if you cannot document employment.

Can I use a personal loan to pay off credit card debt?

Yes, and it often makes financial sense. Personal loan rates for lower-credit borrowers are typically 24% to 36%, while credit card rates run 18% to 25% — sometimes higher. The real benefit is consolidating multiple payments into one fixed payment with a set end date. Once you pay off the cards, close them or stop using them to avoid running up new debt.

What if I am denied by every lender I apply to?

Wait three to six months and rebuild your credit before applying again. Pay all bills on time, reduce credit card balances, and correct any errors on your credit report. You can request a free credit report from annualcreditreport.com and dispute inaccuracies. A credit union may also work with you on a smaller loan amount or require a co-signer, which you can revisit once your score improves.