A low credit score doesn't mean nobody will lend to you - safer options and lenders to consider
If your credit is poor, or you've never built any, it can feel like the only lenders who will say yes are the payday and title shops that charge the most. That isn't the whole picture. Credit unions, nonprofit programs, and a number of online lenders will lend to people with low or no credit, usually at a small fraction of what a payday lender charges.
The offers you get will cost more than they would with strong credit, so two things make a real difference: knowing which lenders actually work with low credit, and comparing their offers carefully instead of taking the first approval you find. This page covers where to borrow, how to compare what you're offered and hold the cost down, and the lenders to stay away from.
- WARNING: Watch out for fake "bad credit loan" companies. People with lower credit scores are targeted by scammers more than almost anyone else. Be suspicious of any lender that promises "guaranteed approval," asks you to pay an upfront fee before you receive the loan, requests payment with gift cards, cryptocurrency, or wire transfers, or pressures you to act immediately. A legitimate lender may deny your application, but it should never require money upfront just to approve or release a loan.
What lenders look at besides your score
It helps to know going in that your three-digit credit score is only one of the things a lender weighs. Many also look at how much you earn and whether that income is steady, how long you've banked with them, the size of the loan compared to your income, and whether you can offer collateral or a co-signer. A credit union where you already have an account, for instance, can see your deposit and payment history and may approve you on the strength of that even when your score is low.
A weak score does narrow your options and raise the rate you'll be quoted, but it rarely prevents you from getting a loan. And it's something you can rebuild, which the last two sections get into.
Where to borrow with poor or no credit
Credit unions are the first place to look. Since their members are also their owners, they tend to weigh an application on the full financial picture of the applicant rather than a single score, and they'll often approve someone a bank turned down. For a small emergency, many credit unions make a capped, low-cost loan designed as a direct substitute for a payday loan, and most will offer it to a member with weak or no credit; how it works is laid out on the page about credit union payday alternative loans. For a larger or longer-term loan, and for how to join a credit union if you don't already belong to one, see borrowing from a credit union.
Another option built for this situation is a community development lender. Oportun, for example, makes small personal loans without requiring any credit history, caps its rate well below what payday and high-cost lenders charge, and reports your payments to the credit bureaus so paying on time builds your credit. It isn't available in every state, but where it operates it's a far safer choice than a payday loan; the page on Oportun loans and financial education covers how it works.
Community Action agencies and other local nonprofits may run small-loan and emergency-fund programs built for low-income households, and many skip the credit check entirely. The loan usually comes with free budgeting or financial counseling attached, because the point is to get you back on stable ground rather than to make money off you. You can find the office that serves your area through the page on Community Action agencies and the help they offer.
There are also lenders outside the traditional bank system worth knowing about, from online platforms to community lending circles, covered on the page about marketplace and peer-to-peer lending. If the amount you need is small, check first for an interest-free loan - so no interest — some nonprofits, churches, and even employers offer them, and nothing is cheaper than borrowing at zero percent.
Compare offers before you choose one
Wherever you borrow, it you should line up more than one offer, because rates for low-credit borrowers vary widely from one lender to the next and the first offer is almost never the best. Applying to lenders one at a time also often leaves a hard inquiry on your credit report each time, which lowers your score down, so it's better to compare first and apply once.
A handful of well-known comparison sites make that easier, and most let you see potential offers from several lenders at once using a soft credit inquiry that doesn't touch your score.
Whichever you use, the number that tells you which offer is actually cheaper is the APR, not the monthly payment — a lower monthly payment often just means a longer loan and more interest by the end. A personal loan calculator (see https://www.bankrate.com/loans/personal-loans/personal-loan-calculator/) shows the monthly payment and the total you'll repay, so you can put two offers side by side honestly. The NHPB guide to loan-comparison sites for borrowers with low income or credit goes deeper on how to use one and what to watch for.
Well-known loan marketplaces and comparison websites such as NerdWallet (website: https://www.nerdwallet.com/), Bankrate, LendingTree (website: https://www.lendingtree.com/) and their consumer loan tool, Experian's marketplace, and Credit Karma can make that easier. Many let you see potential offers from several lenders at once using a soft credit inquiry that doesn't affect your score, so you can compare interest rates, fees, and repayment terms before you fill out a full application. For more on how to use one and what to watch for, see the NHPB guide to loan-comparison sites for borrowers with low income or credit.
Comparing this way matters more for you than for most borrowers, because rates for low-credit applicants swing widely from one lender to the next, and the first offer is almost never the cheapest.
How to compare offers and keep the cost down
Once you have a couple of offers in hand, the number that tells you which one is actually cheaper is the APR, not the monthly payment. A lower monthly payment usually just means a longer loan, which can cost you far more in interest by the time it's paid off. Run the numbers before you commit: a Bankrate personal loan calculator at https://www.bankrate.com/loans/personal-loans/personal-loan-calculator lets you enter the amount, the interest rate, and the term, and shows you both the monthly payment and the total you'll repay — so you can put two offers side by side and see which one really costs less.
A few steps to take to hold the cost down no matter which lender you choose. Borrow the smallest amount that solves the problem in front of you. Take the shortest term you can manage the payments on. And confirm that the lender reports your payments to the credit bureaus, because a loan that reports turns every on-time payment into a slightly better score, while one that doesn't leaves your credit exactly where it started.
If a loan is needed for a purchase rather than cash
When the thing you need is a specific purchase rather than cash in hand, buy now, pay later can split the cost into smaller installments, often with no interest if you keep to the schedule, and it usually doesn't hinge on your credit score. The catch is that missed-payment fees add up and it's easy to take on more of these than you can track; the page on buy now, pay later financing.
Building your credit so the next loan costs less
The lower your score, the more every loan costs you, so it's worth working the score upward even while you handle the immediate need. The most dependable tool for that is a credit-builder or secured loan, where small, on-time payments build a positive track record at very little risk to the lender — which is exactly why these get approved for people the mainstream turns away. The Consumer Financial Protection Bureau studied these loans (website: https://www.consumerfinance.gov/data-research/research-reports/targeting-credit-builder-loans/) and found they helped people with no credit history at all get a score for the first time.
It also costs nothing to pull your three credit reports at https://www.annualcreditreport.com/index.action and dispute errors on them. Clearing a late payment that was reported by mistake, or an account that isn't yours, can raise your score on its own.
The lenders to stay away from
A handful of lenders advertise straight at people with bad credit, and those are the ones to be careful with. The phrases to notice are "guaranteed approval" and "no credit check." A lender that doesn't care about your credit is usually a payday lender, a car title lender, or a high-cost installment lender, and it can afford not to care because the price or the collateral covers it no matter what happens to you. A car title loan is the most dangerous of the three, because falling behind on it can cost you the vehicle you need to get to work.
Be just as wary of anyone who asks for money before the loan comes through. A real lender takes its fees out of the loan itself; it never asks you to pay a fee, buy a gift card, or wire money to "release" or "guarantee" approval. That request, on its own, is the scam — close the page and move on.
Rent-to-own stores and similar weekly-payment plans may be worth a second look too. The payments feel small week to week, but added up over the full term they can come to several times what the item would cost if you bought it outright.
If you're considering one of these because a payday lender feels like the only option left, see the guide on cheaper alternatives to a payday loan first. There's almost always a better option than what these lenders charge.
Watch out for scams and lead-generation sites
People with bad credit are the exact target of loan scams, so a few warnings are worth keeping in mind.
The clearest red flag is being asked to pay money before the loan comes through. A real lender takes its fees out of the loan itself; it never asks you to pay an upfront "processing," "insurance," or "approval" fee, and never wants payment by gift card, wire transfer, or cryptocurrency. Phrases like "guaranteed approval" and "bad credit, no problem" are bait, because no legitimate lender promises a loan before checking whether you can repay it. The Federal Trade Commission lays out the warning signs and where to report them at https://consumer.ftc.gov/articles/what-know-about-advance-fee-loans.
It's also worth being careful with a certain kind of comparison site. The reputable marketplaces above show you real offers; others exist mainly to collect your information and sell it to a string of lenders and marketers, which leaves you fielding calls and emails for weeks. Sites like BadCreditLoans.com, PersonalLoans.com, CashUSA, and MoneyMutual fall into this lead-generation category and have weaker reputations, so it's better to stick with the established names or go straight to a credit union.
Moderated community discussion
Have questions or want to hear from other people who have borrowed with lower credit? Visit the Need Help Paying Bills moderated community forum topic on loan options for people with questionable credit, where people discuss their experiences with credit unions, online lenders, loan denials, rebuilding credit, and alternatives to payday loans. While every financial situation is different, reading about real experiences can give you ideas and help you avoid common mistakes before you borrow.
This page is general information about potential options for people with lower credit scores. IT is not financial or legal advice. Loan rates, fees, and approval rules vary by lender and change over time, so confirm the current terms with any lender before you borrow.
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