Best Personal Loans for Bad Credit in 2025

Hey there! If you’re reading this, chances are you’re navigating the tricky world of personal loans with a less-than-stellar credit score. Don’t worry—you’re not alone, and there are options out there for you. In 2025, the lending landscape will have evolved, with more lenders offering solutions tailored to people with bad credit. But finding the best personal loans for bad credit in 2025 isn’t just about grabbing the first offer you see. It’s about understanding your options, comparing terms, and making a choice that won’t leave you drowning in high interest rates or sneaky fees. So, let’s dive into everything you need to know to borrow smart, even if your credit score is in the rough.

What Does “Bad Credit” Really Mean in 2025?

First things first: what counts as “bad credit”? In the world of FICO scores (the most common credit scoring model), anything below 580 is considered “poor” or bad credit. If your score is hovering between 580 and 669, you’re in the “fair” range, which still makes borrowing a bit tricky. Bad credit often stems from late payments, high debt levels, or a thin credit file (meaning you don’t have much credit history). But here’s the good news: in 2025, lenders are getting smarter. They’re looking beyond just your credit score, using AI and alternative data like your job history or education to decide if you’re a good bet.

Why does this matter? Because the best personal loans for bad credit in 2025 come from lenders who see you as more than a number. They’re willing to work with you, even if your credit report has a few dings. That said, bad credit loans often come with higher interest rates and fees, so you’ll need to shop carefully to avoid getting stuck with a deal that’s more trouble than it’s worth.

Why Consider a Personal Loan with Bad Credit?

You might be wondering, “Why bother with a personal loan if my credit’s not great?” Well, personal loans can be a lifeline for all sorts of situations. Maybe you’re dealing with unexpected medical bills, need to consolidate high-interest credit card debt, or want to cover a big purchase without maxing out your cards. Unlike payday loans (which can charge triple-digit APRs and trap you in a debt cycle), the best personal loans for bad credit in 2025 offer fixed rates, predictable payments, and terms that won’t make your head spin.

Plus, paying off a personal loan on time can actually help your credit score. Each on-time payment gets reported to the credit bureaus, boosting your payment history (which makes up 35% of your FICO score). So, if you’re strategic, a personal loan can be a tool to rebuild your credit while addressing your immediate financial needs.

Top Lenders Offering the Best Personal Loans for Bad Credit in 2025

Now, let’s get to the good stuff: who’s offering the best personal loans for bad credit in 2025? I’ve rounded up some of the top lenders based on their rates, terms, and borrower-friendly features. Keep in mind that terms vary depending on your credit score, income, and state, so always prequalify (it’s usually a soft credit check that won’t hurt your score) to see what you’re eligible for.

1. Upstart: Best for Thin Credit Files

Upstart is a game-changer for borrowers with bad credit or no credit history at all. This AI-driven lending platform looks at factors like your education, job history, and even your college major to gauge your ability to repay. In 2025, Upstart’s minimum credit score requirement is a super-low 300, making it one of the most accessible options out there.

• Loan Amounts: $1,000 to $50,000
• APR Range: 6.99% to 35.99%
• Repayment Terms: 3 or 5 years
• Why It’s Great: Fast funding (often within one business day) and no strict credit score cutoff.
• Heads-Up: Upstart can charge origination fees up to 12%, which gets deducted from your loan upfront. Make sure to factor that into your borrowing needs.

If you’re just starting out or your credit score is barely registering, Upstart could be your ticket to one of the best personal loans for bad credit in 2025.

2. Upgrade: Best for Flexible Terms

Upgrade is another solid pick for bad credit borrowers, especially if you want options. With a minimum credit score requirement of 560, Upgrade is more forgiving than traditional banks. What sets it apart is its flexibility—you can choose loan terms from 2 to 7 years, and they even offer secured loans (backed by your car) or joint applications to boost your approval odds.

• Loan Amounts: $1,000 to $50,000
• APR Range: 8.49% to 35.99%
• Repayment Terms: 2 to 7 years
• Why It’s Great: Free credit monitoring tools and a rate discount for autopay.
• Heads-Up: Origination fees can range from 1.85% to 9.99%, so compare the total cost before signing.

Upgrade’s versatility makes it a standout for the best personal loans for bad credit in 2025, especially if you’re consolidating debt or need a longer repayment period to keep monthly payments manageable.

3. Best Egg: Best for Secured Loans

Best Egg offers a unique twist: secured personal loans that let you use your home’s permanent fixtures (like built-in appliances) as collateral. This can increase your approval chances and potentially lower your interest rate. Even without collateral, Best Egg’s unsecured loans are accessible to borrowers with credit scores as low as 600.

• Loan Amounts: $2,000 to $50,000
• APR Range: 6.99% to 35.99%
• Repayment Terms: 3 to 5 years
• Why It’s Great: Fast funding (as soon as 1-3 business days) and the option to skip up to two payments over the loan’s life.
• Heads-Up: Secured loans carry the risk of losing your collateral if you default, so weigh that carefully.

For borrowers who own their homes and want a secured option, Best Egg is among the best personal loans for bad credit in 2025.

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4. LendingClub: Best for Co-Borrowers

LendingClub is a peer-to-peer lending platform that’s great for bad credit borrowers, especially if you can team up with a co-borrower who has better credit. Their minimum credit score is 600, and they offer joint loans, which can help you qualify for lower rates. LendingClub also shines for debt consolidation, as they can pay your creditors directly.

• Loan Amounts: $1,000 to $40,000
• APR Range: 8.98% to 35.99%
• Repayment Terms: 3 to 5 years
• Why It’s Great: Direct creditor payoff for debt consolidation and a user-friendly online platform.
• Heads-Up: Origination fees range from 3% to 8%, and there’s no autopay discount.

If you’ve got a trusted friend or family member to co-apply, LendingClub could deliver one of the best personal loans for bad credit in 2025.

5. Happy Money: Best for Credit Card Debt Consolidation

Happy Money specializes in helping borrowers pay off high-interest credit card debt. Their loans are designed for debt consolidation, with a maximum APR of 17.48%, lower than many competitors. The catch? You’ll need a minimum credit score of 640, which is on the higher end for bad credit loans.

• Loan Amounts: $5,000 to $40,000
• APR Range: 5.99% to 17.48%
• Repayment Terms: 2 to 5 years
• Why It’s Great: Lower APR cap and a focus on helping you save on interest.
• Heads-Up: Funding can take 3-6 business days, which is slower than some lenders.

If credit card debt is your main issue, Happy Money’s tailored approach makes it one of the best personal loans for bad credit in 2025.

How to Find the Best Personal Loans for Bad Credit in 2025

Okay, so you’ve got a list of great lenders, but how do you actually choose the right loan? Here are some practical tips to help you snag the best personal loans for bad credit in 2025 without falling into a financial trap.

1. Prequalify with Multiple Lenders

Prequalification is your best friend. Most lenders offer a soft credit check that lets you see your estimated rates and terms without dinging your credit score. In 2025, platforms like LendingTree and Credible make it easy to compare offers from multiple lenders in minutes. Prequalify with at least three to five lenders to find the lowest APR and fees.

2. Compare APRs, Not Just Interest Rates

The annual percentage rate (APR) includes both the interest rate and any fees, giving you the true cost of the loan. For bad credit loans, APRs typically range from 6.99% to 35.99%. Aim for the lowest APR you can get, but make sure the monthly payments fit your budget.

3. Watch Out for Fees

Bad credit loans often come with origination fees (1% to 10% of the loan amount), late fees, or prepayment penalties. The best personal loans for bad credit in 2025 minimise these costs. For example, SoFi offers no-fee loans, but you’ll need decent credit to qualify. Always read the fine print to avoid surprises.

4. Consider Secured Loans or Co-Borrowers

If you’re struggling to qualify, adding collateral (like a car or home fixtures) or a co-borrower with better credit can improve your chances and lower your rate. Just be cautious—secured loans put your collateral at risk, and co-borrowers are equally responsible for repayment.

5. Check Funding Speed

Need cash fast? Some lenders, like Upstart and OneMain Financial, can fund loans as soon as the next business day. Others, like Happy Money, might take up to a week. If you’re facing an emergency, prioritize lenders with quick turnaround times.

Alternatives to Personal Loans for Bad Credit

Sometimes, a personal loan isn’t the best fit. Before you commit, consider these alternatives to the best personal loans for bad credit in 2025:

• Credit Union Loans: Credit unions like First Tech Federal or Florida Credit Union often have lower rates (capped at 18% for federal credit unions) and more flexible eligibility. You may need to join the credit union first, but it’s often worth it.
• Peer-to-Peer (P2P) Lending: Platforms like Prosper connect you with individual investors who might be more lenient than banks. Rates can be competitive, but funding can take longer.
• Buy Now, Pay Later (BNPL): For smaller purchases, BNPL services like Afterpay let you split payments over a few weeks or months, often with no interest.
• Payment Plans: If you’re covering medical bills or utilities, ask the provider about a payment plan. Many will work with you to avoid debt.
• Borrowing from Friends or Family: If you’ve got a trusted loved one, a private loan might be cheaper and more flexible. Just put the terms in writing to avoid misunderstandings.

Risks of Bad Credit Loans (and How to Avoid Them)

Let’s be real: bad credit loans aren’t all sunshine and rainbows. They come with risks, and you need to know what you’re signing up for. Here’s what to watch out for and how to stay safe:

• High Interest Rates: APRs for bad credit loans can hit 35.99%, making your loan way more expensive over time. To minimize this, borrow only what you need and pay it off as fast as you can.
• Predatory Lenders: Some lenders target bad credit borrowers with shady terms, like hidden fees or balloon payments. Stick to reputable lenders like those listed above, and always check reviews on sites like Trustpilot or the Consumer Financial Protection Bureau.
• Debt Traps: If you can’t afford the monthly payments, you risk defaulting, which tanks your credit even further. Use a loan calculator (Credit Karma has a good one) to ensure the payments fit your budget.
• Origination Fees: These upfront fees reduce the amount you actually receive. For example, a $10,000 loan with a 5% origination fee means you get $9,500 but still owe $10,000. Factor this into your planning.

To avoid these pitfalls, only borrow what you can afford to repay, compare multiple offers, and steer clear of lenders who promise “guaranteed approval” or ask for upfront payments.

How to Improve Your Chances of Getting Approved

Want to boost your odds of landing one of the best personal loans for bad credit in 2025? Try these strategies:

• Check Your Credit Report: Pull your free credit report from AnnualCreditReport.com and dispute any errors (like a late payment that wasn’t yours). Even small fixes can bump up your score.
• Lower Your Debt-to-Income (DTI) Ratio: Lenders want your DTI (your monthly debt payments divided by your income) to be below 50%. Pay down small debts or increase your income to improve this.
• Add Extra Income: Include non-employment income like Social Security, alimony, or side hustle earnings on your application. More income = better approval odds.
• Apply with a Co-Borrower: A co-borrower with good credit can make you look less risky to lenders, potentially unlocking lower rates.
• Start Small: If you’re new to borrowing, ask for a smaller loan amount. Lenders are more likely to approve modest loans for bad credit borrowers.

The Bigger Picture: Rebuilding Your Credit

Taking out one of the best personal loans for bad credit in 2025 isn’t just about solving a short-term problem—it’s a chance to build a stronger financial future. Here’s how to use your loan to improve your credit over time:

• Make On-Time Payments: Payment history is the biggest factor in your credit score. Set up autopay to avoid missing due dates.
• Keep Credit Card Balances Low: If you’re consolidating debt, resist the urge to rack up new charges on your cards. Aim to use less than 30% of your available credit.
• Avoid New Hard Enquiries: Each loan application can ding your score by a few points. Stick to prequalification until you’re ready to commit.
• Monitor Your Progress: Use free tools like Credit Karma or Experian to track your score. Seeing it climb is super motivating!

Over time, these habits can push your score into the “fair” or even “good” range, opening the door to better loan terms in the future.

What’s the Outlook for Bad Credit Loans in 2025?

As we move through 2025, the lending market is shifting. The Federal Reserve cut rates by a percentage point in 2024 but has been cautious in 2025, holding rates steady at 4.25%-4.50% as of March. This means personal loan rates aren’t dropping dramatically, and bad credit borrowers will still face higher APRs than those with good credit. However, competition among online lenders is heating up, which is good news for you. More lenders are using alternative underwriting models (like Upstart’s AI approach), making it easier to qualify for the best personal loans for bad credit in 2025.

That said, economic uncertainty, like potential tariffs or recession risks, could tighten lending standards later in the year. If you’re thinking about borrowing, it’s smart to act sooner rather than later and lock in a fixed-rate loan before rates climb.

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Conclusion: Borrowing Wisely in 2025

Finding the best personal loans for bad credit in 2025 is all about doing your homework and picking a lender that fits your needs. Whether you go with Upstart’s low credit threshold, Upgrade’s flexible terms, or Best Egg’s secured options, the key is to compare APRs, watch for fees, and borrow only what you can repay. Bad credit doesn’t have to hold you back—it’s just a starting point. By choosing a reputable lender, making on-time payments, and managing your finances wisely, you can tackle your immediate needs and build a brighter financial future. So, take a deep breath, shop around, and make 2025 the year you take control of your money!