Quick answer: With a credit score under 630, most mainstream US banks will decline a personal loan, but credit unions, online lenders that weigh income over score, and secured or co-signed loans are realistic paths. Rates, fees and loan sizes vary widely by lender and by state. Applicants with damaged credit typically see APRs well above prime, origination fees deducted from the proceeds, and smaller loan amounts — check each lender’s own disclosures rather than any published range. Anything advertising “guaranteed approval, no credit check” is a red flag the FTC associates with advance-fee loan scams: legitimate lenders will not promise or guarantee a loan before you apply. At best it is a triple-digit-APR payday product; at worst there is no loan at all and the fee is the product.
What lenders actually look at
Score is the headline, but approval for a bad-credit applicant usually turns on three other numbers:
- Debt-to-income ratio (DTI). Lenders weigh total monthly debt payments against gross monthly income, but each sets its own threshold and none is published or standardised for personal loans. A borrower with a 590 score and 20% DTI often beats one with a 650 score and 55% DTI.
- Income stability. Two years at the same employer, or consistent self-employment deposits, matters more than the exact amount.
- Recent derogatory marks. A collection from four years ago is treated very differently from a 60-day late payment last month.
Where approval is realistic
| Lender type | Typical minimum score | Typical APR | Notes |
|---|---|---|---|
| Credit unions | No fixed floor; case-by-case | 18% ceiling (an NCUA temporary rate, currently set through September 2027; the statutory default is 15%). Federal charters only; Payday Alternative Loans may go to 28% | Usually the cheapest option; requires membership |
| Online lenders (income-focused) | Varies; some weigh income over score | Varies widely; often well above prime | Fast funding; watch origination fees |
| Secured personal loans | Lender-set; collateral lowers the bar | Lower than unsecured; set by the lender | Backed by a savings account or vehicle; you risk the collateral |
| Co-signed loans | Based on co-signer | Co-signer rate | Co-signer is fully liable if you default |
| Bank personal loans | Typically prime credit | Lender-set; best rates go to prime borrowers | Difficult below prime, but worth asking if you bank there |
| Payday and title loans | None | 200%–400%+ | Avoid; designed to roll over repeatedly |
Credit unions are worth checking alongside other options. Federal credit unions face an 18% ceiling on most loans, and membership is often based on where you live or work rather than income. Payday Alternative Loans are a separate carve-out: up to 28% APR plus a $20 maximum application fee, for $200 to $1,000 over one to six months (PAL I) or up to $2,000 over one to twelve months (PAL II), with rollovers prohibited by NCUA rule.
Before you apply: three steps that improve your odds
- Pull your reports from all three bureaus at annualcreditreport.com, which is free. An FTC study found one in five consumers had an error on at least one of their three reports, and 5% had errors serious enough to cost them better loan terms. Furnishers must investigate a dispute within 30 days, so correcting a wrong collection is worth doing before you apply.
- Pay down card balances first. Experts advise keeping card balances under 30% of the limit. Issuers report balances on their own cycle, so a paydown can show up on your reports within a month or two.
- Use prequalification. Most online lenders offer a soft-pull prequalification that shows your likely rate without touching your score. Do all your rate shopping there, then submit one hard application.
Reading the real cost
APR is the number that matters, not the monthly payment. A longer term always lowers the payment and raises the total cost.
| Loan | APR | Term | Monthly payment | Total interest |
|---|---|---|---|---|
| $10,000 | 18% | 3 years | $362 | $3,020 |
| $10,000 | 18% | 5 years | $254 | $5,240 |
| $10,000 | 30% | 3 years | $425 | $5,290 |
| $10,000 | 36% | 5 years | $362 | $11,700 |
Also check the origination fee, which is deducted upfront. A $10,000 loan with a 6% origination fee puts $9,400 in your account but charges interest on the full $10,000.
Warning signs of a predatory offer
- “Guaranteed approval” or “no credit check” on an instalment loan. The FTC flags pitches like “Bad credit? No problem” and “guaranteed” as advance-fee scam markers — legitimate lenders will not promise you a loan before you apply.
- Upfront fees before funding. The FTC says any up-front fee demanded before the loan is granted is a cue to walk away, especially if it is called “insurance”, “processing” or just “paperwork”. Report these offers at ReportFraud.ftc.gov.
- Pressure to decide today, or a rate that expires in hours.
- APR above 36%. Under the Military Lending Act, 36% MAPR is a hard legal cap for active-duty servicemembers and their dependents, and it counts credit insurance, add-on products and application fees, not just the quoted APR. It is not a general legal cap for civilians, but it is widely used as the dividing line for high-cost credit.
- Prepayment penalties on a personal loan.
- Unsolicited calls or texts offering approval you never applied for.
Alternatives worth considering first
- Payday Alternative Loans from federal credit unions: $200 to $2,000, capped at 28% APR plus a $20 application fee, with rollovers prohibited by NCUA rule.
- 0% balance transfer card if the goal is consolidating card debt and your score is borderline rather than poor.
- Negotiating directly with creditors, which often produces hardship plans without new borrowing.
- Non-profit credit counselling through an NFCC-member agency, which can set up a debt management plan at reduced interest.
- Employer or community assistance programmes, which many people never think to ask about.
Frequently asked questions
What credit score do I need for a personal loan?
Mainstream lenders generally want 660 or above. Online lenders focused on income often approve from around 560 to 600, and secured or co-signed loans can go lower.
Will applying hurt my score?
Hard enquiries affect your score because scoring models look at how recently and how frequently you apply for credit, and several within a short window compound. Prequalify with soft pulls first, then submit one full application.
How fast can I get the money?
Funding speed varies by lender and by how you are paid out; ask for the expected timeline in writing before you accept an offer.
Can I get a loan while in collections?
It is harder but not impossible, especially with a secured loan or a co-signer. Resolving or settling the collection first usually produces a better rate.
Last updated September 2026. Rates, terms and lender criteria vary and change; figures here are typical ranges, not offers. This is general information, not financial advice.
Sources
CFPB — Rights under the Military Lending Act (the 36% MAPR cap and who it covers), NCUA — Payday Alternative Loans final rule (28% APR plus a $20 application fee), NCUA — Board extends the loan interest rate ceiling, FTC — What to know about advance-fee loans, FTC study on credit report errors, CFPB — What is a credit inquiry? and CFPB — How do I get and keep a good credit score? No regulator publishes APR, fee or credit-score bands for personal loans, so this article does not quote any as if they were standards.
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