9 Easiest loans to get with bad credit

Getting a loan isn’t very easy if you have poor credit, which FICO defines as anything below 580. It’s possible to work toward a perfect credit score, but that can take years, and sometimes you don’t have the option of waiting until you can get the best rates and terms. 

Instead, you might need to look for the easiest loan to get with bad credit. The good news is that there are numerous options for bad credit loans. Even better, if you repay the loan responsibly, it may even help you build your credit score. This guide will cover a range of options. 

Easiest loans to get with bad credit

Lenders generally tighten their purse strings more if you have bad credit. You may be limited to smaller loan amounts, shorter loan terms, higher interest rates, and additional origination fees, for example, if a lender approves your application. Still, it is often possible to get a loan with bad credit, and here are some of the easiest options to qualify for. 

Personal loan

Minimum credit score: 580

Most personal loan lenders require a score in the mid-600s for an unsecured loan, but not all. If you can find a lender who accepts co-signers on the application or collateral such as a vehicle or bank account balance, it may be even easier to get approved. 

Payday Alternative Loan (PAL)

Some credit unions offer PALs, which are affordable small-dollar loans designed to replace harmful payday loans. If you think you might want to use this type of loan, it’s a good idea to join a local credit union that offers PALs in advance because you’ll typically need to be a member for at least a month to qualify. 

Minimum credit score: No minimum required credit score

Home equity loan

Minimum credit score: 680

If you have at least 20% equity in your home, you may be able to borrow money by taking out a second mortgage on your home. You’ll still need a good credit score to qualify for a home equity loan in most cases — but if you have a high amount of equity, low debt amounts, and/or a high and consistent income, it may be easier to qualify with a low credit score. 

Home equity line of credit (HELOC)

Minimum credit score: 680

Similar to a home equity loan, a HELOC allows for greater borrowing and repayment flexibility. You can borrow money and repay it as often as you like during the initial draw period, when you’re only required to make interest-only payments. Access to your credit line stops when you enter the repayment phase, when you repay the full balance of the loan. Thus, HELOCs can cause significant fluctuations in your monthly payment.

Reverse mortgage

Minimum credit score: No minimum required credit score

Senior homeowners aged 62 or older can pull equity out of their homes using a reverse mortgage, either as a lump sum, line of credit, or regular monthly payment. You won’t need to make any monthly payments yourself; instead, the lender secures payment by taking possession of your home after you no longer need it. The terms and conditions can be rather complicated, so homeowners are required to take a counseling session before using this tool. 

Home Equity Investment (HEI)

Minimum credit score: 500

An HEI allows homeowners to access the equity in their home without making any monthly payments. Typically, an HEI is repaid when you sell the home, or after a 30-year term length if selling isn’t in your plans. Instead of monthly payments, homeowners pay a share of their home’s appreciation in value. Home equity investments are also much more accessible to low-credit applicants than most other home equity financing options. 

401(k) loan

Minimum credit score: No minimum required credit score

You may be able to borrow up to $50,000 from your workplace retirement plan at a low interest rate, which you pay back to yourself (because you’re lending yourself your own money, after all). Repayment terms typically last for 60 months. The downside is that if you part ways with your employer, you’ll need to repay it all back at once. You could also miss out on investment gains, resulting in a serious shortfall come retirement.

Property Assessed Clean Energy (PACE) loan

Minimum credit score: No minimum required credit score

Some states allow for PACE loans, which offers an avenue for homeowners to pay for certain energy-efficient home upgrades and repairs in a unique way. Instead of making monthly payments on a loan, the debt is repaid through a special assessment on your property taxes over the course of a five- to 20-year term length. Since the debt is attached to your property and not you as an individual, there isn’t any credit check — but it can complicate home sales because the new buyer will inherit the debt obligation, too. 

Federal student loan

Minimum credit score: No minimum required credit score

If you only need funds to pay for higher education, it’s best to use federal student loans. Most loan programs require no credit check at all, and come with a range of consumer protections that aren’t available in the private student loan marketplace. 

What to watch out for

Unfortunately, needing to borrow money when you have bad credit can put you at risk in more ways than one. Even though you have lots of options for easy loans to get with bad credit, you’re still a lot more limited than if you had excellent credit — and that’s precisely why scammers and predatory lenders may target you. 

In particular, experts caution against these three types of bad credit loans: 

• Payday loans: Payday lenders charge a finance fee that’s equal to triple-digit rates, far higher than the most expensive credit card. Plus, payday loans won’t help you build credit, even for paying off your loan early. 
• Car title loans: Car title loans are similar to payday loans in terms of loan amounts, repayment terms, and costs, but you’ll also put up your car’s title as collateral. If you don’t repay the loan, the lender can repossess your car. This happens to roughly one in five borrowers and can lead to spiraling problems, including homelessness. 
• Buy now, pay later (BNPL) loans: You can see these loans everywhere, even right in your online shopping cart. These online lenders allow you to make a few small payments over the course of a few weeks from your checking account, with no interest. It’s so easy to use these loans that you can end up borrowing too much money. 

Frequently asked questions

How can I get a loan when no one will approve me?

Lenders are required to tell you why you’re not approved, which gives you an action item to work on before applying again. Otherwise, you can look into other loan options, ask someone to serve as a co-signer on a loan for you, or use collateral that you may have available. 

Can I get a personal loan with a 500 credit score?

It’s challenging to get a personal loan with a 500 credit score, but not impossible. You may need to consider a co-signer or using collateral. Some funding options, like home equity investments, allow applicants with credit scores as low as 500. Others, like 401(k) loans, don’t require any credit check.

What loan can I get using collateral with a bad credit score?

Some lenders will approve applicants with bad credit scores for a home equity loan, HELOC, or home equity investment if they have sufficient home equity. You can also use vehicles or savings account balances as collateral for a personal loan with some lenders. 

Final thoughts

If you’re shopping for the easiest loan to get with bad credit, it might be worth looking into credit counseling, too. This service is offered free of charge through nonprofit credit counseling agencies nationwide. You can get one-on-one help in assessing your financial situation and finding solutions to your money challenges, such as building a good credit history or finding products and services to support your financial needs.

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