How to Get a Loan with Bad Credit in 2025: A Step-by-Step Guide

What qualifies as bad credit in 2025?

Credit scoring models have evolved, but FICO and VantageScore remain industry standards. In 2025, a FICO score below 580 or a VantageScore under 600 is generally considered bad credit. These scores indicate to lenders that you’re a high-risk borrower, potentially leading to loan rejections or less favorable terms. However, the definition of “bad credit” can vary among lenders, with some considering scores up to 620 as subprime.

How can you check your credit score for free?

Before applying for a loan, it’s crucial to know where you stand. Fortunately, several options exist for checking your credit score without cost:

1. Annual Credit Report: The official site authorized by federal law offers free reports from all three major bureaus once per year.

2. Credit card issuers: Many now provide free FICO scores as part of their services.

3. Online platforms: Websites like Credit Karma and Credit Sesame offer free VantageScore access.

4. Non-profit credit counseling agencies: These organizations often provide free credit reviews and scores.

Regularly monitoring your credit allows you to spot errors, track improvements, and better understand your financial standing.

What steps can you take to improve your chances of loan approval?

Improving your loan approval odds requires a multi-faceted approach:

1. Review your credit report: Identify and dispute any errors that might be dragging down your score.

2. Pay down existing debts: Reducing your credit utilization ratio can quickly boost your score.

3. Make timely payments: Set up automatic payments to ensure you never miss a due date.

4. Become an authorized user: If possible, ask a family member with good credit to add you to their credit card account.

5. Consider a secured loan or credit-builder loan: These products can help establish a positive payment history.

6. Provide alternative data: Some lenders now consider factors like rent payments or utility bills.

Implementing these strategies can demonstrate to lenders that you’re working to improve your creditworthiness.

Which lenders offer bad credit loans in 2025?

Several lenders specialize in bad credit loans, offering options for those with less-than-perfect credit histories. Here are some top choices in 2025:

1. Upstart: Known for its AI-driven approval process that considers factors beyond credit scores.

2. OneMain Financial: Offers both secured and unsecured loans with flexible terms.

3. Avant: Provides personal loans for credit scores as low as 580.

4. LendingPoint: Specializes in near-prime borrowers with credit scores starting at 600.

5. OppLoans: Focuses on subprime borrowers, offering an alternative to payday loans.

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Lender	Minimum Credit Score	Loan Amount Range	APR Range
Upstart	300	$1,000 - $50,000	5.60% - 35.99%
OneMain Financial	No minimum	$1,500 - $20,000	18.00% - 35.99%
Avant	580	$2,000 - $35,000	9.95% - 35.99%
LendingPoint	600	$2,000 - $36,500	7.99% - 35.99%
OppLoans	No minimum	$500 - $4,000	59% - 160%

Prices, rates, or cost estimates mentioned in this article are based on the latest available information but may change over time. Independent research is advised before making financial decisions.

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What should you avoid when applying for loans with bad credit?

When seeking a loan with bad credit, steer clear of these pitfalls:

1. Payday loans: These short-term, high-interest loans can trap you in a cycle of debt.

2. No-credit-check loans: Often predatory, these loans may come with exorbitant interest rates.

3. Applying to multiple lenders simultaneously: This can further damage your credit score.

4. Accepting the first offer: Always compare terms from multiple lenders before deciding.

5. Ignoring the fine print: Be aware of all fees, prepayment penalties, and other terms.

6. Borrowing more than you need: Only take out what you can realistically repay.

By avoiding these common mistakes, you can protect yourself from unfavorable loan terms and potential financial hardship.

How can you compare loan options with a low credit score?

Comparing loan options with bad credit requires careful consideration:

1. Annual Percentage Rate (APR): This reflects the true cost of borrowing, including interest and fees.

2. Loan terms: Look at the repayment period and how it affects your monthly payments.

3. Fees: Consider origination fees, late payment fees, and prepayment penalties.

4. Secured vs. unsecured: Decide if you’re comfortable putting up collateral for potentially better terms.

5. Prequalification: Use lenders’ prequalification tools to compare offers without impacting your credit score.

6. Customer reviews: Research lenders’ reputations and customer experiences.

Remember, the lowest interest rate isn’t always the best deal. Consider the overall cost and terms of each loan offer.

In conclusion, while obtaining a loan with bad credit in 2025 presents challenges, it’s not an insurmountable task. By understanding your credit situation, taking steps to improve it, and carefully comparing your options, you can find a loan that meets your needs without exacerbating your financial situation. Always borrow responsibly and have a solid repayment plan in place to avoid further credit damage.