Best bad credit loans for February 2026

What to consider with loans for bad credit

• Cost of borrowing: Bad credit loans carry higher interest rates and, after accounting for fees, APRs as compared to loans for borrowers with better credit. That’s because your lower credit score or checkered credit report makes you a greater risk to struggle in repayment, at least in the lender’s eyes. Improving your credit before applying for a loan can lessen this perception of risk — and save you money on interest over the course of your loan repayment.
• Loan terms: While reputable lenders typically advertise multiple term options — usually spanning one to seven years — they might only quote you one or two options if you’re seeking funding with bad credit. Choosing the shortest term you can afford will save you money over the long haul, as less interest will accrue onto your principal balance. Creating or optimizing your budget — and using a personal loan calculator — before you borrow can help clarify the right term length for your finances.
• Loan amounts: The lower your credit score, the lower the loan amount you might be offered by lenders. This, again, is a result of lenders attempting to manage their risk. If your credit level doesn’t allow you to borrow the amount you need, taking time to improve your financial situation or applying with a cosigner or co-borrower can help.
• Common fees: Bad credit lenders may be more likely to charge for originating your loan. Known as an origination fee, it can be up to 12% of your loan amount and is withdrawn from your loan funds at disbursement. The more you can improve your credit before applying for a loan, the better chance you’ll have of paying a lower origination fee or avoiding it altogether.

How to get a personal loan despite bad credit 

The ladder to getting a bad credit loan is similar to the steps of getting a personal loan, regardless of your credit standing. The key difference is speed. If you’re not in a rush for funds, taking the time to improve your credit can increase your odds of loan approval — and of nabbing a lower interest rate. 

Requirements for a personal loan with bad credit

Your credit is the primary factor considered by personal loan lenders. So, if your credit isn’t the best, you can hopefully make up for it in other categories — not only to qualify, but at a lower interest rate.

• Income: Financial institutions rarely cite a specific criteria, but like with credit score, the higher your income, the more likely you’ll qualify for funding. Increasing your income, perhaps with a request for a raise or a side hustle, can show lenders you’re more prepared for a successful payoff.
• Debt-to-income (DTI) ratio: A DTI below 50% might be required, but closer to 36% could unlock a lower APR. Paying down debt — easier said than done when you’re already looking for a loan — can swing your DTI in the right direction.
• Co-applicant: If you can’t qualify independently, you might consider a more creditworthy cosigner or co-borrower who shares equal repayment responsibility. Consider whether a family member or friend in your life would be qualified and willing to support your loan application (if they’re not willing to lend you cash directly).
• Collateral: Lenders that offer secured loans may accept anything from house fixtures to vehicles. Weigh the risks of ponying up personal property as collateral — it could be seized if you fail to repay your debt as agreed.

Risks of borrowing personal loans for bad credit

If you have bad credit and are in need of funds, a personal loan might seem like your saving grace. Reputable online lenders, in particular, make these loans accessible, fund them quickly and offer straightforward repayment options. But they also charge high interest rates, up to 35.99% in some cases, and could deliver too-short terms or too-high monthly dues.

Repaying such a high-interest loan is unlikely to be a solution for your finances. It could actually cause harm, eating up a chunk of your budget and leaving you little recourse until you’ve made it through the years-long repayment. It could also trap you in a cycle of debt.

Before you borrow, mitigate these risks as best you can. Take the time to improve your credit, and consider a co-applicant. And once you’re eligible, borrow only what you need and can realistically afford to repay. Then you’ll have a better chance at successful repayment, which will only improve your credit over time.

How we chose our best bad credit loan lenders

To select the best personal loans, Bankrate’s team of experts evaluated over 50 lenders. To earn a spot on our best bad credit loan list, a lender must offer loans in at least 80 percent of states and must have a minimum credit score of 620 or lower, a maximum annual percentage rate below 36 percent, and a minimum loan amount below $3,500. The best overall lender meets additional criteria, including a minimum credit score of 580 or lower, a co-borrower or cosigner option and a Bankrate Score above 4.5 stars.

We also assign each lender a Bankrate score based on a meticulous 20-point system, focusing on four main categories: