Personal loans can be a helpful way to cover the cost of major expenses. When applying for a loan, having a good to excellent credit score generally allows you to qualify for the most competitive interest rates and loan terms.

Even with a score of 550, it is still possible to get a loan. While it’s often more difficult to get approval with a score this low, there are lenders who specialize in providing loans to individuals with bad credit.

Can you get a personal loan with a 550 credit score?

Though it may be more challenging to find a lender that’s willing to work with you, it is indeed possible to obtain a loan with a credit score of 550.

Most lenders require a minimum credit score of between 600 and 650, but some lenders specialize in personal loans for those with lower scores. Often the interest rates for such loans are far higher and the repayment terms less favorable. In some cases, you may not be able to borrow as much as applicants who have higher scores.

“This type of loan is a specialty for a very few lenders who have forceful collection arms and a capacity for risk,” says Michael Sullivan, personal financial consultant for the non-profit credit counseling agency Take Charge America. “Any lender dealing in such loans expects many defaults and losses, and acts accordingly. The result is that a personal loan is almost always a bad deal for the consumer with poor credit.”

What kind of credit score is 550?

A credit score of 550 is considered deep subprime, according to the Consumer Financial Protection Bureau. In fact, any score below 580 falls into the deep subprime category. The Fair Isaac Corporation (FICO), which is one of the most widely used credit scoring methods, categorizes credit scores of 579 or lower as poor.

Scores in this range are well below the average of U.S. consumers, according to FICO. For lenders, a score deemed poor or subprime is a red flag and indicates that you are a risk with regard to borrowing.

“In general, 550 is a very poor score on the FICO score range of 300 to 850 where the average score is about 716,” says Sullivan. “To be that low, a consumer would almost certainly have an extensive record of late payments and defaults. Creditors would define a 550 score as subprime credit and treat it as a high-risk account.”

How to get a personal loan with a 550 credit score

Obtaining a loan with bad credit will be more challenging so it’s important to be thoroughly prepared and understand how best to navigate the process.

Do your research: A variety of lenders offer loans for bad credit so do your research and identify the potential options. Some of the well-known lenders to consider include Upgrade, where the minimum credit score requirement is 560, and Avant, which lends to those with credit scores as low as 580.

Shop around: Borrowing and application requirements typically vary by lender, so it’s important to apply for prequalification with more than one lender to find out where you might be successful. Some lenders websites even include a prequalification tool that allows you to review your eligibility odds and potential interest rate. Remember, prequalification is not the same thing as preapproval. Prequalification allows you to find out whether you might qualify without the lender conducting a hard credit check that could ding your credit score further.

Consider secured loans: As the name implies, a secured loan is secured by some form of collateral that you provide. This could be a house, a car or some other item of value. Because you are providing collateral, these loans often come with a better interest rate and terms. It’s important to consider these loans carefully because you are putting a valuable asset at risk if you fail to repay the debt as agreed.

Try credit unions and local banks: While a credit score of 550 can limit your options, it can sometimes pay off to reach out to local lenders in your area such as credit unions or community banks. “Often, having an existing relationship with a community institution is helpful, as they usually have more flexibility and may be willing to take a holistic look at your finances and evaluate your application based on more than just your credit score,” says debt attorney Leslie Tayne, founder of Tayne Law Group.

Find a cosigner: If you’re ultimately unable to secure a loan on your own, you might consider finding a cosigner who has a solid credit score. Taking this step can improve your odds of approval. “Many lenders will provide loans if they are guaranteed by someone with good credit,” says Sullivan.

Alternatives to personal loans

If you’re unsuccessful obtaining a personal loan or the interest rates you’re offered are too steep, there may be some other options available. You’ll want to avoid resorting to predatory lenders, however, that charge skyhigh interest rates.

“Predatory borrowing options such as payday or title loans are incredibly risky and expensive and often trap borrowers in a cycle of debt,” says Tayne.

The good news is there are other options that allow you to avoid predatory lending.

Improve your credit: Not in a rush to get the money? Consider spending some time working on boosting your credit score. Once your score is higher you can try applying for a loan once again and will likely qualify for more favorable terms.

Personal loan from a friend or relative: If you have a more immediate need, it may be possible to obtain a personal loan from a friend or relative. You will want to identify someone with whom you have a good relationship and feel comfortable sharing personal financial details. If you pursue a loan with a friend or relative, it’s still important to have an agreement in writing stipulating such things as monthly payment amount and repayment timeline.

401(k) loan: Those who have an employer-sponsored 401(k) plan might consider taking a loan from their retirement fund. These types of loans don’t require an application or a credit check. “They also come with low interest, which you pay back to yourself anyway,” says Tayne.

How to improve your credit score

If you have a credit score that is considered deep subprime or poor, there are several steps that can help improve your financial profile. Some of the steps work more quickly than others, so it is important to apply a mixture of the following options.

Check your credit report for errors: Start by making sure the raw information on your credit report that is used to calculate scores is correct. Federal law entitles you to a free copy of your credit report from the major credit bureaus every 12 months. You can obtain credit reports from the three main credit reporting bureaus for free by visiting “If you detect any errors, follow the directions on each agency’s website to correct the issues,” says Freddie Huynh, a vice president with the debt consolidation company Freedom Debt Relief.

Pay bills on time: Paying bills on time is a major factor when it comes to calculating your credit score. It accounts for 35 percent of the overall score. Moving forward, be sure to make all payments on time.

Reduce debt balances: Another major factor contributing to your credit score is the amount owed. It makes up 30 percent of the score. By reducing your outstanding debt, you can increase your credit score.

Maintain old credit cards: The length of your credit history also factors into your credit score, accounting for 15 percent of the score. Credit history is the amount of time you’ve had accounts open. It’s best not to close old credit accounts even after the balance is paid off, as this can reduce your overall length of credit history.

Open a secured credit card: Secured credit cards require making a refundable deposit in order to obtain a small line of credit from a financial institution. Typically, this involves making a deposit of about $500, though in some cases it may be less. By using the card to make small, daily purchases and paying the bill in full each month, you can improve your credit score.

“Secured credit cards are typically issued to people with no credit or poor credit,” says Huynh. “This would include someone who needs to rebuild credit following bankruptcy, who needs help in building credit for the first time or who has a very difficult time managing spending and use of a credit card.”

Bottom line

Obtaining a loan with a credit score of 550 is possible, but you’ll need to invest the time in shopping around to find lenders willing to work with you. This is time well spent, as it will also allow you to find the most competitive rate possible. If you’re ultimately unsuccessful in obtaining loan approval, consider redirecting your efforts to improving your credit score and then reapplying for a loan in a few months.