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How to Get a Personal Loan with Bad Credit?

Qualifying for a personal loan is not always easy, especially if you currently have a less-than-great credit score to your name or if you have struggled with managing your debts and credit cards in the past. Knowing how to effectively obtain a personal loan even if you have bad credit is a way to ensure you have a lender available whenever you have an emergency or are in a time of need. While applying for a personal loan when you have bad credit may feel risky or impossible, the right tips and resources can help to expedite the process while increasing your chances of approval.

Check Your Credit Score

Checking your credit score periodically is extremely important when you want to improve your credit score and financial stability. Using websites such as CreditKarma can provide valuable insight into your current credit score along with options available to you to begin rebuilding it.

Work to pay off any debts you have to your name after reviewing your credit score. Whether you choose to pay off your debt in full by contacting creditors directly or by seeking a debt consolidation firm, the sooner you are capable of eliminating any and all debt from your credit report, the easier it becomes to rebuild your credit score and apply for personal loans.

Apply for a Secured Credit Card

Once you have started to pay off your debts or you have eliminated them altogether, consider applying for a secured credit card. A secured credit card requires you to pay a lump sum of money upfront for the use of a credit card with a set limit (based on your initial payment). Secured credit cards are a safe bet as you are paying for the money you are allowed to spend each month ahead of time. Making payments on time after receiving your secured credit card is a great way to begin rebuilding your credit score (even if you do not currently have a credit score to your name).

Pay Your Credit Card Bills On Time Each Month

Paying your bills and credit card debts each month within a timely manner is imperative to avoid losing out on the opportunity to boost your overall credit score. Avoid missing payments and always pay the minimum balance due each month to prevent long-term hassles with achieving financial stability and freedom.

Avoid Applying for Multiple Credit Cards or Lines of Credit Simultaneously

Always avoid applying for multiple credit cards or lines of credit at once, as this can quickly raise flags for banking institutions and loan officers. Avoid applying for credit cards for at least 3 months prior to applying for the personal loan you want to take out.

Consider an In-Person Interview With a Local Banking Institution or Credit Union

If you are unable to receive an automatic approval after applying for a loan or credit card online, consider meeting with a banking manager or loan advisor in-person at a local bank branch or credit union. Working together with a professional in-person may provide you with alternative solutions to increase your chances of loan approval.

Prove Your Employment

Proving your employment may be necessary if you do not have the credit score necessary to receive the personal loan you are seeking. Use W2s, references from employers, and pay stubs to show any loan office that you are generating an income that is suitable for the personal loan amount you desire.

Showcase Your Current Assets

If you currently own a home, vehicle, boat, or other major property, you may have the option to use the items as collateral when applying for a personal loan. Speak with the loan advisor or officer you are working with in-person to determine the overall value of your assets and how to go about using them as collateral to get the funds you require in your personal loan.

Consider Seeking Out a Co-Signer to Help Expedite the Approval Process

An alternative option available for those without credit (or low credit scores) who are in need of a personal loan is to have a co-signer help facilitate the process. Seek out a co-signer in your family or circle of friends who currently has a great credit score and is willing to assist you with obtaining your personal loan. Keep in mind that co-signers immediately become responsible for the loan amount you receive if you are unable or unwilling to keep up with the payments owed on the loan each month. You should have mutual trust with the co-signer you choose while also maintaining the ability to generate a steady and reliable income to avoid putting them at risk when applying for a personal loan.

What Can Stop You From Receiving a Personal Loan?

Even if you have been rebuilding your credit and working towards improving your financial stability, there are a few hangups that may prevent you from getting the approval you are seeking. Some of the most notable causes of getting denied for a personal loan include:

1. Legal judgments: Rulings against you that have yet to be paid or collected

2. Lawsuits: Both current and past lawsuits may impact your chances of getting approved for a personal loan depending on the nature of the lawsuit itself

3. Foreclosure: If you have faced a foreclosure judgment in the past that is not yet resolved, you may not be approved for a personal loan

4. Bankruptcy: Declaring bankruptcy can negatively impact your chances of a personal loan approval depending on when you last filed for bankruptcy


Understanding the importance of rebuilding your credit and maintaining a steady job is essential anytime you are in need of a personal loan (regardless of your reason). Whether you are in need of a personal loan to purchase a new car, pay off current credit cards, or even cover medical expenses you have recently incurred, knowing how to properly go about seeking a lender for a personal loan while adequately preparing for the application is a way to drastically improve your odds of being approved.

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