There’s poor credit – and then there are credit scores that make it close, if not impossible, to borrow at all.
If you need a personal loan, a credit score that’s 550 or less makes it difficult to qualify. But it’s still possible to get low credit score personal loans.
What is a bad credit score for personal loans?
If you’re looking for a personal loan with a credit score of 550, you likely have a good idea of what your credit score is. Unfortunately, you probably also know that you have bad credit.
A FICO credit score under 580 is considered to be poor credit. If your score is below that, it’ll be hard to qualify for a personal loan – and for a good reason. Over 60 percent of consumers with poor credit scores become delinquent on an account, according to MyFICO.com. To lenders, your credit score is an indicator of whether you’ll repay your loan.
Most personal lenders won’t even consider an applicant with a credit score under 600. But other types of personal loans or lenders might still be an option, even with a 550 credit score.
Looking for a low-interest personal loan? Do you have less-than-perfect credit and are struggling to find a lender? That’s where LendingTree’s personal loan shopping tool can help. LendingTree, our parent company, works with dozens of personal loan lenders to offer loans. Just enter your information once, and you can get multiple offers from different lenders within just a few minutes — all without damaging your credit score in the process. Depending on your credit score and income, you could even qualify for a loan with an interest rate under 6%.
Tips to get a personal loan with a credit score of 550 or less
When you’re shopping for low-credit-score personal loans, you probably won’t have an abundance of options. And you should expect to make some tradeoffs, like paying high interest rates or even offering collateral.
But there are some strategies you can try to get a personal loan with poor credit.
1. Start rebuilding your credit
If you have a credit score of 550, you’re just 30 points from a “fair” credit score. It might be worth it to take some time improving your credit. It will still be below average, and you’re likely to pay higher interest rates. But your chances for approval will also be much higher, and you’ll get access to a much wider range of lenders.
If you want to rebuild credit, start today. You’ll want to understand how your credit score is calculated. A secured credit card is an accessible form of credit you can use to raise your credit score.
Check your credit reports for errors that could be hurting your score. And make sure you’re making every payment on time.
2. Get quotes from bad credit lenders
If you can’t wait to improve your credit, you can try reaching out to lenders that offer finance for bad credit. For these personal loans, a credit score of 550 or under might not be an obstacle to qualifying. You can apply for a pre-approval to find out if you qualify without having to fill out an application or undergo a hard credit check.
A trusted lender we recommend is OppLoans. Customers with a FICO score under 600 still have a shot at approval for an OppLoans personal loan depending on the loan amount requested and minimum income requirements. The lender offers loan amounts ranging from $500 to $4,000 and loan terms up to 24 months.
You must get your paychecks through direct deposit and live in a state where OppLoans operates. This includes Alabama, Alaska, Arizona, California, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin, Wyoming.
3. Enlist a cosigner
If you can’t rely on your own credit score to get a personal loan, try borrowing someone else’s good credit with a cosigner. A cosigner is a third party (usually a close family member or friend) who has agreed to repay your loan if you should default on it.
Choose a lender that accepts cosigners for personal loans, like Earnest or Citizens Bank. You’ll need to ask someone with good credit to act as your personal loan co-applicant. Their positive history will help offset your poor credit score, increasing your chances of approval.
If a lender does not accept cosigners for whatever reason and you’re having a hard time meeting minimum income requirements, see if the lender will consider spousal income. OppLoans is a lender that allows applicants to report spousal income on their personal loan applications for approval.
4. Ask friends or family members for a loan
Getting a personal loan from an individual usually doesn’t include a credit check. So for these personal loans, credit scores of 550 or under aren’t a big deal. You can ask a family member or friend who has the cash to lend it to you.
Before you borrow this way, fully outline and agree on the terms ahead of time. And keep up on payments to ensure the loan doesn’t hurt the relationship.
5. Get a secured loan
An unsecured personal loan might be a long shot with a credit score under 580. But you might be able to borrow against an asset to get a secured loan, including:
- Home equity with a HELOC
- A car with a car equity loan
- Savings or CDs with a savings-secured personal loan
- Retirement account with a 401k or IRA loan
Check with your bank for these types of loans. Credit unions also commonly offer savings- or CD-secured loans to help members rebuild credit.
6. Ask the lender to reconsider
If you apply for a personal loan and get rejected, you can always follow-up with the lender and ask them to reconsider, according to Debt.org.
First, you’ll want to make sure you have some good reasons why they should approve your for a loan – despite your bad credit. What other financial factors show you’re a safe bet? What additional information can you give that proves you’re a responsible borrower?
Maybe you have a high income and could easily afford the new debt. Or you have a good explanation for a past delinquency. If your credit file is thin, you could try to provide proof of positive payment history toward other bills, like your rent.
This is a bit of a long shot, but it can be worth trying. Chances of success will be higher the more proof of financial stability and security you can give. It might also help to try a credit union, which might be more flexible in their underwriting.
7. Watch for predatory lending
Last but not least – don’t sign up for a predatory loan just because you really need cash now. This includes payday loans, car title loans or advance-fee loans; they’re among the most expensive ways to borrow.
You’ll get stuck with costs you can’t afford that will only worsen your situation and could even hurt your credit. Protect yourself and watch out for predatory lenders. Take your time, research options and don’t borrow money you can’t afford to.