If you’re dealing with a low credit score and need fast access to funds, personal loans for bad credit in 2025 offer a reliable solution. Whether it’s for emergency expenses, debt consolidation, medical bills, or home repairs, having the right lender on your side can make a big difference. In this guide, we’ll explore the best personal loans for bad credit in 2025, how they work, top lenders, application tips, and more.
What Is a Bad Credit Personal Loan?
A bad credit personal loan is designed for borrowers with low or poor credit scores—typically below 580 on the FICO scale. These loans can be either secured (backed by collateral) or unsecured and usually come with higher interest rates due to the perceived risk to lenders.
Despite the challenges, several reputable lenders specialize in offering personal loans to people with bad credit, and in 2025, competition among online lenders has made the process more transparent and borrower-friendly.
Top 5 Best Personal Loans for Bad Credit in 2025
Here’s a curated list of trusted lenders offering personal loans for bad credit in 2025:
1. Upgrade
Best for: Debt consolidation and fast funding
Loan amount: $1,000 – $50,000
APR: 8.49% – 35.99%
Minimum credit score: 560
Funding time: As fast as 1 business day
Why choose Upgrade:
Upgrade stands out for its quick funding, simple application process, and flexible repayment options. It’s ideal for people with fair to poor credit who need funds fast.
2. Upstart
Best for: Borrowers with limited credit history
Loan amount: $1,000 – $50,000
APR: 6.4% – 35.99%
Minimum credit score: 580
Funding time: 1 – 2 business days
Why choose Upstart:
Upstart uses AI-based models to evaluate non-traditional credit factors such as education, job history, and income—making it a strong choice for people with little or no credit.
3. OneMain Financial
Best for: In-person service and secured loan options
Loan amount: $1,500 – $20,000
APR: 18% – 35.99%
Minimum credit score: None
Funding time: Same day (in some cases)
Why choose OneMain Financial:
With branches across the U.S., OneMain offers personal support, which can be comforting if you prefer in-person service. You can also use collateral to secure better loan terms.
4. Avant
Best for: Low credit score borrowers
Loan amount: $2,000 – $35,000
APR: 9.95% – 35.99%
Minimum credit score: 550
Funding time: Next business day
Why choose Avant:
Avant targets borrowers with credit scores as low as 550. If you’ve been turned down by others, Avant might still give you a chance—especially if you have consistent income.
5. LendingPoint
Best for: Fast approval and mid-range credit
Loan amount: $2,000 – $36,500
APR: 7.99% – 35.99%
Minimum credit score: 600
Funding time: Same or next business day
Why choose LendingPoint:
LendingPoint focuses on near-prime borrowers (600–680) but also considers alternative data. They offer flexible payment dates and quick funding.
How to Qualify for a Personal Loan with Bad Credit
While bad credit can limit your options, lenders in 2025 are increasingly open to evaluating the full financial picture, including:
- Income & employment stability
- Debt-to-income (DTI) ratio
- Bank statements
- Collateral (for secured loans)
- Co-signer options
To improve your chances:
- Check your credit report for errors and dispute any inaccuracies.
- Pay down existing debts to improve your DTI.
- Add a co-signer if you can—this can significantly reduce your APR.
- Offer collateral like a car or savings if needed.
- Prequalify with multiple lenders to compare offers without hurting your credit.
What to Watch Out For
When applying for personal loans with bad credit, be cautious of:
- Predatory lenders who charge sky-high interest rates or hidden fees.
- Payday loans and title loans, which often trap borrowers in a cycle of debt.
- Upfront fees—legit lenders deduct fees from your loan, not charge before disbursement.
- Prepayment penalties—check if your lender allows early repayment without extra fees.
Always read the fine print and choose lenders with transparent terms and clear repayment schedules.
Alternatives to Personal Loans for Bad Credit
If you don’t qualify for a personal loan, here are some alternatives:
1. Credit Union Loans
Credit unions often offer lower interest rates and are more lenient with bad credit applicants, especially if you’re already a member.
2. Secured Loans
Use a savings account, vehicle, or other assets as collateral to get better loan terms.
3. Buy Now, Pay Later (BNPL)
For smaller purchases, consider platforms like Klarna or Afterpay, which don’t always require a strong credit score.
4. Borrow from Friends/Family
Not ideal, but may be helpful if you set clear repayment terms.
5. Side Hustles or Gig Work
Use temporary work to raise emergency funds instead of borrowing at high interest.
Pros and Cons of Bad Credit Personal Loans
Pros:
- Access to funds even with poor credit
- Fixed monthly payments
- Opportunity to improve your credit score
- Fast approval and funding (especially online)
Cons:
- Higher interest rates
- Lower borrowing limits
- Risk of default if not managed properly
- Potential fees (origination, late payment, etc.)
How to Apply for a Bad Credit Personal Loan in 2025
Step-by-step guide:
- Check your credit score: Use free tools like Credit Karma or AnnualCreditReport.com.
- Determine how much you need: Only borrow what you can repay.
- Research lenders: Use comparison websites and check reviews.
- Prequalify online: Most lenders offer a soft credit check to show estimated rates.
- Submit documents: Typically includes ID, proof of income, and bank info.
- Review and accept the offer: Make sure the APR, monthly payment, and term are reasonable.
- Get funded: Funds are usually deposited within 1–3 days.
FAQs: Best Personal Loans for Bad Credit in 2025
1. Can I get a loan with a 500 credit score in 2025?
Yes, lenders like OneMain and Avant consider borrowers with scores as low as 500–550.
2. Do bad credit loans hurt my credit score?
Only if you miss payments. In fact, on-time payments can help rebuild your credit.
3. Is it better to go with a credit union or online lender?
Credit unions may offer better rates, but online lenders are faster and often easier to qualify with.
4. What’s the average interest rate for bad credit loans in 2025?
Typically between 18% – 35.99%, depending on your profile and lender.
5. Are there no-credit-check personal loans?
Be cautious. These are often payday lenders or scams. Legit lenders will do a soft or hard credit check.
Final Thoughts
Bad credit doesn’t have to be the end of your financial road. In 2025, more lenders than ever are offering accessible, fair, and transparent loan options—even to those with credit challenges. Whether you go with Upgrade, Upstart, or OneMain, make sure you compare offers, read the fine print, and choose the lender that best fits your financial situation.
By managing your loan responsibly, you not only meet immediate needs—but also take a solid step toward improving your credit and financial future.