Best Loans for Bad Credit in October 2025

Bad credit loan interest rates

• Average APR: 31.42%
• Average credit score: 565
• Average loan amount: $7,552

Averages are for borrowers with FICO scores below 580 who got a personal loan on the Credible marketplace from October 2024 through September 2025.

If you have bad credit (a FICO score below 580) and can get approved for a personal loan, you can expect an APR near or above 30%. With good credit, your APR could be closer to the 15%-20% range. 

Use the calculator below to get a sense of how much your monthly loan payment could be. If you have bad credit, input a rate of 30% or more. If the payment is too high, try extending the loan term to lower it. Just keep in mind that most lenders cap repayment terms at five or seven years. 

Best bad credit loan lenders of 2025

Bad credit rates by loan purpose

What are some common APRs and loan purposes for borrowers with bad credit? Here are the average rates on closed loans on the Credible personal loan marketplace for borrowers with FICO scores of less than 580 from October 2024 through September 2025, along with some of the most common loan purposes: 

• Debt consolidation: 31.02% APR
• Credit card refinancing: 31.63% APR
• Bills or rent: 32.70% APR
• Home improvement: 31.26% APR
• Major purchase: 31.77% APR
• Medical expenses: 30.58% APR
• Special occasion: 28.89% APR
• Car repair: 29.99% APR
• Moving: 30.62% APR
• Vacation: 33.18% APR

Read More: What Are Personal Loans Used For?

How do bad credit loans work?

A bad credit loan is a type of installment loan, which means you pay back the borrowed amount in regular installments, usually monthly. Both the payments and interest rate are typically fixed, which means they stay the same every month.

Cost of borrowing (APR)

Personal loans typically use annual percentage rates (APRs), which account for both interest rates and upfront lender fees, to measure the cost of borrowing. Personal loan APRs can range from 6.49% to 35.99%. 

Bad credit loans tend to have higher APRs, in some cases 30% or more, because lenders view borrowers with bad credit as more of a risk. On the other hand, lenders may consider certain factors that could lower your APR, such as:

• A reliable source of sufficient income
• Collateral (a secured personal loan)
• A joint personal loan with a co-applicant
• A cosigned loan

Repayment terms

You usually have multiple options for repayment terms. Depending on the lender and the loan you choose, terms could vary from around two to seven years, with some lenders offering longer terms for specific loan purposes like home improvement.

Loan amounts

The amount you can borrow with a bad credit loan typically ranges from $1,000 to $50,000. If you have bad credit, some of the factors that could lower your APR (including income, collateral, and co-signed or joint loans) could also increase the amount you can borrow. 

Fees

Many lenders charge origination fees to cover the cost of underwriting personal loans, and these fees tend to be higher for bad credit loans. Origination fees are typically deducted upfront from your loan proceeds and can range as high as 15%. Some lenders also charge fees for late payments, returned checks and insufficient funds (not reflected in the APR).

Funding times

The time it takes to get your loan funds varies from lender to lender. Some lenders can deposit your money the same day you’re approved, while others can take several business days.

Related: How Do Personal Loans Work?

How to compare personal loans for bad credit

Here are some important factors to consider when you're deciding between lenders or multiple loan options from the same lender.

• APR: Compare APRs between loan options. The APR indicates the cost of the loan, and lower means less expensive. 
• Monthly payment: Find a loan with a payment you can afford to make, on-time, for the duration of the loan's term. A personal loan can be an opportunity to improve your credit score, which can help you qualify for financing (and low interest rates) in the future.
• Fees: Reputable lenders are transparent about disclosing upfront fees, such as origination fees, and incidental fees, such as late fees. Look for lenders with limited and low fees. 
• Funding time: Although a few lenders can fund your loan as soon as the same day, the typical wait time is a few business days. If you need the money urgently, prioritize lenders that offer fast emergency loans.
• Discounts: Some lenders offer interest rate discounts. Common examples include discounts for setting up automatic loan payments or, with debt consolidation loans, authorizing direct payment to your creditors.
• Lender reputation: Check customer reviews on Trustpilot, the Better Business Bureau website, and Google Reviews to see what kind of experiences other borrowers have had.

Related: How To Choose the Best Bad Credit Loan Lender

Risks and mistakes to avoid

Unfortunately, there are predatory lenders out there who try to take advantage of people with bad credit.

To avoid a bad credit loan scam, look out for lenders that:

• Request a fee in advance: A lender that asks for a processing fee or application fee before you apply or are approved is a scam. This is different from an origination fee, which is taken from the amount you borrow, not from your bank account.
• Ask for payment using methods that can’t be traced: Never agree to make loan payments in cash or by wire, as those methods have no paper trail that can be traced. The same goes for requests to send payment via courier. 
• Guarantee you’ll be approved no matter what: A lender that promises to loan money to you is not reputable.
• Promise “insurance” on a loan: Loans don’t require insurance, though they may be an option for some types of loans. If a lender requires money for insurance on a loan, that’s a sign of a scam.
• Ask for your bank login information: A lender doesn’t need login credentials for your bank account. That’s a sign a criminal is about to clear out your savings.

Learn More: 8 Signs of a Personal Loan Scam

How to increase your odds of being approved

If you're not confident you have the qualifications to get a personal loan, or you've tried before and been denied, you can take steps to put yourself in a better position. Here's a list of some things you can do to improve your credit:

1. Check your credit report for errors and dispute any you find

Unlike your credit score, your credit report is a complete history of how you've used credit and managed your finances. Unfortunately, credit reports sometimes have incorrect or outdated information that could make you seem more risky to a lender.

Get free copies of your credit reports from all three major credit bureaus at AnnualCreditReport.com. Check each report for inaccuracies — for example, a debt you've already repaid but is still listed as outstanding. If you see anything that looks incorrect, follow the Consumer Financial Protection Bureau's step-by-step guide on how to dispute information on your credit report.

2. Make credit payments on time

Your payment history is the most important factor in your FICO score. It accounts for 35% of your overall score. If you make payments to credit accounts on time every month, you can gradually improve your credit score. But if your record of making on-time payments is inconsistent, the opposite can happen.

In short, always make payments on time. One way to reduce the risk of late payments is to set up auto-pay on your accounts.

The types of credit accounts considered in your payment history can include:

• Credit cards
• Retail accounts, such as department store credit cards
• Installment loans, such as personal loans and car loans
• Mortgages

Also, FICO has announced that it will incorporate "Buy Now, Pay Later" (BNPL) purchases into its scoring model. Some services, like Affirm, are already reporting new plans to the bureaus. So get in the habit of paying off your BNPL purchases on time.

3. Apply for a secured credit card

Secured credit cards are designed for people with low credit scores or limited credit history. You make a cash security deposit and then use the card as you would use an unsecured credit card (which includes making your payments on time). The deposit is typically refunded when you upgrade to an unsecured card or close the account.

Used responsibly, a secured credit card that reports to one or more of the credit bureaus can help build your credit over time. It can also provide a convenient alternative to paying cash or worrying whether you have enough money in your checking account to cover debit card purchases.

4. Become an authorized user on another person's credit card

If you have a parent, sibling, or close friend who uses their credit card responsibly, you could benefit from their good credit habits by becoming an authorized user on their card. 

You don't have to use the card yourself — and it's probably best that you and the primary cardholder agree that you won't. If the card issuer reports authorized user data to the credit bureaus, the primary user's payment and purchase activity would also show up on your credit report as well.

However, the key is knowing a cardholder you can trust, and vice versa. If you know someone who would be willing to help, ask them about contacting the card issuer to add you as an authorized user.

You can also try other credit-building strategies, including paying down current debt to reduce your credit utilization. Read more tips in How To Build Your Credit: A Step-by-Step Guide.

Alternatives to personal loans for bad credit

If you think you won't qualify for a personal loan, or you've been turned down for a loan already, you have several options to consider. However, each one comes with drawbacks as well as advantages. Alternatives to a bad-credit personal loan include:

Small bank loans

Some banks, including Bank of America, offer small, low-cost loans.

Pros

• No credit check
• Typically charge a small fee instead of interest

Cons

• Loan amounts are typically limited to a few hundred dollars
• You need to be an existing customer to apply

Payday alternative loans (PALs)

Some federal credit unions offer payday alternative loans as alternatives to expensive, predatory payday loans.

Pros

• You may qualify with bad credit
• Interest rates typically capped at 28% APR

Cons

• Maximum loan amount is $2,000
• Credit union membership required

Credit card cash advance

If you have available credit on a credit card, you might be able to borrow against it at an ATM or in person at your bank.

Pros

• No credit check required
• Funds are available quickly

Cons

• Cash advance APRs are typically higher than purchase APRs
• Interest typically begins accruing immediately, with no grace period
• You may have to pay a cash advance fee

BNPL

"Buy now, pay later" services such as Klarna, Affirm, and Afterpay let you split up payments for purchases rather than paying the entire cost upfront.

Pros

• No hard credit check required
• Available for many types of retail purchases
• Short-term payment plans typically don't charge interest

Cons

• Long-term payment plans might charge interest
• Some BNPL services charge financing fees and late fees
• Can lead to overspending 

Loan apps

Cash advance apps such as EarnIt and Dave offer small, short-term loans. But be careful of overusing cash apps, which often carry high fees for fast payments.

Pros

• No credit check required
• Quick funding

Cons

• You may have to pay subscription fees, expedited funding fees, and other charges
• Fees and short repayment terms can equate to triple-digit APRs
• Loan amounts are typically limited to a few hundred dollars

Debt management plan (DMP)

By working with a credit counseling agency, you can develop a debt management plan to negotiate with your creditors and consolidate debt.

Pros

• May be able to negotiate a lower rate to save money on interest
• Streamline and reduce monthly payments

Cons

• Can take up to five years
• DMP providers typically charge fees
• You're required to close all credit cards with balances

You can also try other options, such as borrowing money from a family member or taking out a credit-builder loan. Read more in our guide to personal loan alternatives.

Methodology

Credible's rating system incorporates 1,216 data points across 32 partner and non-partner lenders. We rate lenders based on these weighted categories:

• Rates and fees: 18.75%
• Eligibility and options for bad and no credit: 17.5%
• Availability: 12.5%
• Loan amounts and terms: 10%
• Customer satisfaction: 10%
• Customer service: 10%
• Efficiency and fund delivery: 10%
• Discounts: 7.5%
• Credible proprietary data: 3.75%

Credible's team of experts gathers information from lender websites and directly from our partners. We consider partner lenders' statistics over a 12-month period — including average rates, average funding times, and average credit scores for approved applicants. Each data point is verified by a senior editor to make sure it's accurate at the time of publication. 

Learn more about how Credible rates lenders by exploring our personal loans lender rating methodology.

Where we get our data

Credible is a personal loans marketplace that partners directly with lenders to offer loans for a wide range of credit profiles and loan purposes. Because of these relationships, we have access to the most current interest rates that real borrowers are being approved for, along with average rates by credit score and loan purpose, approval rates overall and by lender, and more. The data we use is primary source data, updated weekly, and does not include any personally identifiable information about borrowers.