How To Get a Loan With a 600 Credit Score

Your credit score is one of the primary factors that lenders use to judge the likelihood that you'll repay a personal loan responsibly. Lenders tend to issue loans to excellent-credit borrowers with confidence, while viewing people with fair credit or bad credit as a higher risk. That can make it challenging to get a personal loan with a 600 credit score, which is in the FICO fair-credit range but only 20 points above bad credit. 

However, you can take steps to increase your odds of qualifying and lower your rate. We’ll cover tips for qualifying and comparing your personal loan options, what rates to expect with a 600 credit score, and how to improve your credit. 

Compare rates for FICO scores of 620 or below

How to get a loan with a 600 credit score

1. Confirm your credit score

Before applying for a loan, take stock of your credit situation. Check your credit score for free using Credible's free credit-monitoring tool. You can also check to see if your bank or credit card company offers free access to one or more of your credit scores.

Because there are multiple credit scoring models that lenders use, you have multiple credit scores. However, an estimated 90% of top lenders use the FICO scoring model. 

It's important to remember that your credit score is different from your credit report. You can get free credit reports from all three credit bureaus (Experian, Equifax, and TransUnion) at AnnualCreditReport.com. If you find a mistake, file a dispute with the bureau providing the information. It could help you improve your credit score.

2. Determine how much you need to borrow

You should never borrow more than you need, so calculate how much you’ll need. For example, if your plan is to consolidate credit card debt, add up all your credit card balances. If you’re covering a car repair, match the loan amount to your shop’s quote and subtract any savings you plan to use. 

3. Identify your target monthly payment

Determine your target monthly payment based on your budget. Add up your net income after taxes and subtract your known expenses, such as debt payments, housing payments, and utilities. Determine your typical monthly spending on categories like groceries and personal care items, and calculate how much you have left for personal loan repayment each month. 

Choose a payment amount you can comfortably afford. If you stretch yourself too thin, you could fall behind on your payments and further damage your credit. 

4. Gather important documents

Most personal loan lenders require minimal paperwork, but it helps to have a few key documents on hand before you apply. Depending on the lender, you might need to provide documentation such as:

• Your driver’s license or another form of identification
• Proof of income, such as pay stubs, W2s, bank statements, or benefits letters
• Employment information, such as a job offer or employment contract
• Proof of address, such as a recent utility bill
• Current credit account information if you’re taking out a debt consolidation loan

5. Research lenders

Look into personal loan lenders you might qualify for, such as:

• Online lenders and banks that offer personal loans for fair credit
• Credit unions, which tend to have more lenient qualification criteria than banks
• Lenders that allow you to apply for a personal loan with a cosigner or a joint personal loan with a co-borrower

Compare lenders based on factors such as:

• Available loan amounts
• Ease of application process 
• Funding time
• Range of repayment term lengths
• Permissible loan uses
• Customer reviews and ratings

6. Get prequalified

Most banks, credit unions, and online lenders allow you to prequalify with only a soft credit check. The process is quick, doesn’t impact your credit score, and provides an estimate of the APR and loan amount you might qualify for. Keep in mind, though, that a prequalified quote isn't an offer of credit. The rates and terms of a loan offer you receive after applying may differ from prequalification estimates.

7. Compare quotes

It’s wise to prequalify with a few different lenders so you can compare APRs and repayment terms. The APR (annual percentage rate) is the annual cost of the loan as a percentage of the loan amount, accounting for both the interest rate and upfront lender fees (like origination fees). 

But pay attention to the repayment term as well, since the term length affects how much interest accrues over time. The repayment term also determines the monthly payment, which needs to be affordable. You can use a personal loan calculator to figure out the monthly payment and total interest for each loan estimate.

Example comparison of personal loan quotes

• Target loan amount: $5,000
• Target monthly payment amount: $200
• Maximum monthly payment limit: $225

In this scenario, Quote 1 has the lowest overall cost and APR but doesn't provide a large enough loan amount. Quote 3 has the lowest monthly payment, but the overall cost is significantly higher than the other options. 

Quote 2 looks to be the best option. While the monthly payment is a bit over the target, it's under the maximum limit and provides the desired loan amount with a competitive overall cost.

Check Out: How To Compare Personal Loans

8. Select a lender and apply

Choose a loan option with a low APR and an affordable monthly payment. Ensure the lender is reputable and licensed in your state. Formally applying for a personal loan typically triggers a hard credit inquiry, which can cause a slight but temporary decline in your credit score. Most people see a drop of less than five points in their FICO score. If you make loan payments on time or use the loan to pay off credit cards, a personal loan could improve your credit score.

9. Submit the necessary documents

Depending on the lender and the information in your application, you may be required to submit additional documents. If you’ve already gathered documents that prove your identity, income, and address, go ahead and upload them online. 

10. Accept the loan and start making payments

Once the lender approves your loan application, you’ll need to e-sign your loan contract to accept the loan and receive the funds. Most lenders can transfer the funds to your bank account within a few business days, but the exact timeline varies depending on the lender and your application. 

Set up your first payment right away to avoid a late or missed payment, which could harm your credit score. Many lenders allow you to set up autopay, and some even offer a rate discount for enrolling. 

What rates can you expect with a 600 credit score?

If you have a FICO score in the 600s, it may be considered “fair” if it’s below 670 or “good” if it’s 670 or greater. People with fair credit can generally expect to pay higher APRs than people with good or excellent credit, but your credit score isn’t the only factor that impacts your interest rate. Lenders may also consider your income, loan amount, repayment term, and other factors.

The table below shows the average interest rate, loan amount, and income for borrowers in different credit tiers on the Credible marketplace. 

The FICO score ranges for fair credit and good credit don't align exactly with a 600 credit score, but you can likely expect a rate in the mid- to high-20% range. The closer your score is to FICO's good credit threshold of 670, the lower your rate might be.

How can you improve approval odds when applying?

If you do qualify for a personal loan with a 600 credit score, you’ll likely pay a higher rate than someone with a higher credit score. “Because of the perceived higher risk, lending money is only worth it to the lender if they can make a higher profit from the loan," says Justin Moran, a former lending executive and the founder of financial wellness app Enough. "Unfortunately, this means the people facing the most financial challenges often get the worst deal.

However, there are a few ways to increase your chances of qualifying for a personal loan and possibly receive a lower rate:

• Check with your existing financial institution: “Consider lenders you already have a relationship with,” Moran says. “If you have your checking and savings account with a bank or credit union, it could be worth checking there first.” Some banks and credit unions even offer rate discounts to existing account holders who meet certain requirements.
• Apply with a cosigner or co-borrower: A cosigner is someone with good credit who guarantees repayment of the loan if you fall behind on payments. A co-borrower shares responsibility for repayment and also has equal access to the funds. In both cases, applying with help from someone with a higher credit score could help you get approved and achieve a lower rate. 
• Offer collateral: Offering a valuable asset as collateral for a personal loan lowers the risk to the lender. If you fail to repay the loan, the lender can seize the asset and sell it to recover the lost funds. Because collateral gives lenders recourse, lenders may be more lenient when considering applications for secured personal loans. OneMain Financial offers vehicle-secured loans. Best Egg, Reprise, and Upgrade offer loans secured by certain fixtures in your home. 

How to improve your credit score 

• Make payments on time: Your payment history accounts for 35% of your FICO score, so it’s essential to always pay your bills on time. Set up autopay so you don't have to worry about forgetting. 
• Pay down debt: Your amounts owed on your accounts make up 30% of your FICO score. One way to positively impact this factor is to pay down credit card debt. “Your credit utilization ratio is one of the easier levers to pull,” Moran says. “If you have credit cards that are close to the limit, making an extra payment toward them will have a fast impact on your score.”
• Request a credit limit increase: If you’ve been making timely credit card payments (especially if you keep a low balance), your credit card company may approve you for a larger credit limit. This is typically as simple as requesting an increase via the card’s app. Like paying down debt, a higher credit limit can reduce your credit utilization, which can quickly raise your score. Just don't use your new credit limit to increase your spending, which would defeat the purpose.
• Get a credit-builder loan or secured credit card: Some loans or credit cards are designed to help you borrow money and build credit. With a credit-builder loan, you don't receive the loan funds until you've made all your loan payments. Secured credit cards are secured by a deposit refunded to you after a certain number of on-time payments. The lender or credit card company reports your on-time payments to the credit bureaus, which helps improve your score. 
• Become an authorized user: “If you know that your parent has excellent credit, you could have them add you to their oldest card as an authorized user,” Moran says. As long as the credit card issuer reports to the credit bureaus and your parent uses credit responsibly, it could boost your credit score, even if you never use the card for purchases. 
• Add bills to your credit report: Experian Boost is one example of a free program that lets you add bills and rent payments to your Experian credit report. You can self-report rent payments for free to all 3 credit bureaus with a service like Self. (For a monthly fee, you can also use Self to report utility and phone bills to TransUnion.) Research these and other rent- and bill-reporting services to find the best for you.

When not to get a personal loan

In some situations, it’s not a good idea to take out a personal loan, even if you need the cash. You should avoid getting a personal loan and seek alternatives if:

• You already have more debt than you can manage: If you have so much debt that you have difficulty making the minimum payments, a debt consolidation loan probably isn’t the right solution. Consider a debt management plan via a credit counselor or other avenues, like bankruptcy.
• You expect a reduction in income: Taking out a personal loan to prepare for a layoff or seasonal reduction in business income or working hours typically isn’t wise. If your budget is getting smaller, taking on more debt won’t help the situation, and you could fall behind on payments. 
• The expense isn’t urgent or essential: If you have time to save instead or you can avoid the expense entirely, don’t take out a personal loan. 
• Another loan type is better: Sometimes a personal loan isn’t the best way to borrow money — depending on what you’re borrowing for and your financial profile. Compare the alternatives below to a personal loan before applying.

Personal loan alternatives

If you can’t qualify for a personal loan, don’t want another loan on your credit report, or just want to explore other options, consider the following.

• Credit counseling/DMP: If your goal is to eliminate debt, consider working with a credit counseling agency to develop a debt management plan. “Meet with a nonprofit credit counselor who can help you put together a do-it-yourself debt reduction plan,” says Todd Christensen, accredited financial counselor at MoneyFit. “If that doesn’t work, talk to them about their debt management plan.”
• Payday alternative (PAL) loans: Some federal credit unions offer their members PAL I and PAL II loans up to $2,000. You repay the loan in monthly installments for up to 12 months, and interest rates are capped at 28%. 
• Cash advance apps: Several loan apps offer early access to your earned wages for a nominal fee or voluntary tip. You repay the advance from your next paycheck. There’s typically no credit check, and you qualify based on your direct deposits. Some apps don’t charge interest, but research their fees. 
• BNPL: A buy now, pay later loan allows you to make a purchase at an online or brick-and-mortar retailer and pay it off in installments. Most BNPL providers offer an interest-free repayment plan that requires four bi-weekly payments. Longer-term options can be expensive, especially if you have fair credit, so read the terms before signing. Examples include Klarna and Affirm. 
• Small bank loan: If you need $1,000 or less, see if your current bank offers small, low-cost loans to existing customers. For instance, both Bank of America and U.S. Bank offer small loans with 3-month repayment terms at low rates with relatively easy qualification requirements.
• 0% APR balance transfer offer: Check the offers on your existing credit cards — sometimes you might see a 0% APR offer pop up for 12 or more months, especially if you've been good on payments and have a reasonable amount of credit available. With fair credit, it's unlikely you'll qualify for a new 0% APR credit card, so this is a nice option if available, and you need to consolidate high-interest debt.
• 401(k) loans: Taking out a 401(k) loan typically doesn’t require a credit check or impact your credit score. As long as you repay the loan according to the terms, you can avoid a tax penalty and pay the interest to your retirement savings rather than a lender. But avoid this loan type if you plan to change jobs or if your employment isn’t secure. 
• Family loan: With a 600 credit score, even if you can get approved, the rate you pay will likely be high. It could make more sense to keep that money in the family. Plus, your family may be willing to “approve” you at a lower rate. However, it’s crucial to formalize the loan’s term, interest rate, fees, payment amounts, and due dates. This can go a long way toward minimizing confusion, protecting family relationships, and avoiding IRS gift tax penalties. (The IRS typically only cares about family loans over $10,000.)