How Much of Personal Loan Can I Get With Bad Credit?

Credit scores are one of the most important factors in determining whether you qualify for a loan or not. Whether you're buying a house or car or applying for a credit card or personal loan, your chances of approval are significantly higher if you have good or excellent credit.

That doesn't mean it's impossible to get a personal loan with bad credit. In fact, according to a report by the Federal Reserve, nearly 25% of personal loans come from finance companies, which the Fed defines as "institutions that typically lend to nonprime customers."

But just how much of a personal loan can you get with bad credit? We'll dive into this question below.

How lenders determine loan amount

The max amount you can borrow with a personal loan varies by lender. While most personal loans top out at $50,000, some lenders may let you borrow as much as $100,000 — or even $200,000. But just because a lender may offer loans up to $50,000 doesn't mean you'll necessarily qualify for that amount.

Borrowers with bad credit typically cannot borrow up to a lender's maximum loan amount. However, more than just your credit score determines how much you can borrow. Here are some of the biggest factors lenders consider.

Credit profile and score

One of the most important factors a lender uses to determine if you qualify for a personal loan (and how much) is your credit score. A high credit score indicates to lenders that you're a responsible borrower who is likely to make on-time payments without defaulting. That means you're a less risky borrower — and thus you'll typically be offered a lower interest rate and approved for a larger loan amount.

Personal loan credit score requirements vary by lender. It's possible to find personal loans with fair credit (a FICO score of 580 to 669) and bad credit personal loans, but lenders offering these loans often have higher interest rates and fees and lower borrowing amounts.

Debt-to-income ratio

Lenders also consider your debt-to-income ratio (DTI) when determining whether to approve your personal loan application. This is a measure of your monthly debts compared to your monthly income. Those debts typically include:

• Mortgage or rent payment
• Car loans
• Student loans
• Minimum credit card payments
• Other personal loans

Typically, personal loan lenders want to see a DTI of no more than 36%. That means your monthly debt obligations, including the new monthly payment of your personal loan (if approved), should not exceed roughly a third of your monthly take home pay. That said, some lenders may allow a DTI between 40% and 50%.

If your DTI is too high to qualify for a personal loan, you can take a few actions to improve your chances:

• Ask for a raise at work to increase your income.
• Get a part-time job or side hustle to increase your monthly take-home pay.
• Strategically pay down debts with any extra cash you have.

Employment and income

Some lenders may have minimum income requirements to ensure you can make on-time payments each month. To prove your income during your application, you might need to provide:

• W-2s
• Recent paystubs
• 1099s (if you're a freelancer)

If you aren't employed, that doesn't mean you can't get approved for a personal loan. Lenders typically consider other sources of income, such as unemployment benefits, Social Security benefits, alimony or child support, and retirement income. 

Check Out: How To Get a Personal Loan if You’re Unemployed

Loan purpose

The amount of personal loan you're approved for can be influenced by the purpose of the loan, as lenders assess risk (and thereby the loan's APR) based on how you'll use the money. 

Some purposes, like debt consolidation or home improvements, may be viewed as lower risk because they contribute to financial stability or increase the value of assets. On the other hand, loans for expenses deemed discretionary like vacations or luxury purchases may be considered higher risk, leading to lower approval amounts.

Additionally, certain loan purposes may qualify for higher loan amounts. For instance, Navy Federal offers personal loans for home improvement up to $150,000; its personal loans for other purposes are limited to $50,000.

Related: What Can't You Use for a Personal Loan For?

Cosigner or co-borrower

If your credit score is too low to qualify for a traditional personal loan, that doesn't mean you need to turn to higher-risk alternatives, such as payday loans or title loans. 

Consider applying with a co-borrower or cosigner instead. This means the lender performs a hard credit pull on both of you — if approved, they'll be held accountable for repayments as well.

There is a little nuance to cosigners vs. co-borrowers for personal loans: Adding a co-borrower makes it a joint personal loan, meaning the co-applicant also technically has access to the funds. A cosigner does not have access to the funds but simply promises to step in should you fall behind on payments. Co-borrowing is more common than cosigning for personal loans.

Collateral

Another way to improve your odds of approval — and perhaps increase how much you're eligible to borrow — is to provide collateral. This makes it a secured personal loan, meaning if you fall behind on payments, the lender can seize the assets you offered as collateral. This lowers the risk to the lender, making them more likely to approve you (and for more money).

Common collateral for personal loans includes:

• Money in a savings or investment account
• Your car
• Your house
• Appraised valuables, such as jewelry, antiques, or artwork

Learn More: What Can Be Used As Collateral for a Personal Loan?

Where can I get a loan with bad credit?

If you have bad credit but need money — to consolidate debt, cover emergency expenses, pay for moving costs, renovate your home, or something else — you have options:

Friends and family

First and foremost, ask loved ones if they'd be willing to lend you money. The conversation may be uncomfortable, but a loan from a friend or relative will likely have laxer repayment terms and, depending on your relationship and the loan amount, low interest and no fees.

Be sure to formally write up the agreement, laying out the repayment schedule, monthly payment amounts, late fees, and interest rate. And if borrowing more than $10,000 from a friend or family member, be aware of IRS rules on charging interest.

"Start by looking at friends or family, but don't beg or pressure them," advises R.J. Weiss, Certified Financial Planner and founder of The Ways to Wealth. "If they're willing to help, that's great — just be clear about repayment terms to avoid misunderstandings. If not, move on."

Online lenders

While you can get personal loans from big banks and your neighborhood financial institutions, online lenders are more likely to have personal loans for borrowers with bad credit. You can use online loan marketplaces to compare lenders in one spot and see which ones you'll likely qualify for with your credit score.

Compare bad credit personal loans

Credit unions

Credit unions are a good place to shop for a loan if you have poor credit, assuming you're a member. Some credit unions may offer a payday alternative loan (PAL) product, which has many of the benefits of payday loans — fast funding and often no credit check — without the major risks.

Payday loans can have annual percentage rates (APRs) in the triple digits; some states, such as Texas and Delaware, have average payday loan APRs over 600%. PALs from credit unions, on the other hand, are regulated by the National Credit Union Administration and have several protections in place, such as:

• A max APR of 28%
• Repayment terms up to 12 months
• Application fees of no more than $20
• Borrowing amounts up to $2,000

While credit score requirements may vary by credit union, they're generally much laxer than those for traditional personal loans.

Cash and BNPL

Smartphone technology has led not only to a rise in online banking but also to an abundance of fintech companies. Some of these new entrants in the market offer loan options without a hard credit check, including cash advance apps and buy now, pay later (BNPL) apps:

• Cash advance apps: These apps allow you to access a portion of your earnings ahead of payday. Amounts are often available up to $500 or more, depending on the app. The amount is paid back out of your next paycheck. Be aware that fast funding fees and optional tips can make some cash advance apps as expensive as payday loans.
• Buy now, pay later apps: BNPL apps allow you to split the cost of a product or service into multiple (usually four) smaller payments, without interest or fees. The fee structure varies by lender and by repayment term. Some merchants may offer their own form of BNPL financing at the register.

Compare: Payday Loans vs. Cash Advance

What are the easiest types of loans to get with bad credit?

Personal loans and payday alternative loans might be the best types of loans for borrowers with bad credit, but they're somewhat harder to qualify for than some other types of financing. Among the easiest types of loans to get with bad credit are:

• Cash advances: You may be able to get a cash advance through an app, but you can also get a "traditional" cash advance with your credit card; just note that cash advance APRs are typically higher than your card's standard rate, interest generally starts accruing immediately (no grace period), and you'll likely be charged a cash advance fee.
• BNPL: BNPL apps and programs are generally easy to qualify for, but they also make it tempting to increase discretionary spending. Limit this and other types of loans to needs, not wants.
• Payday loans and title loans: While both payday loans and title loans are easy to get, they are extremely high risk. We recommend avoiding these loan types if possible.
• PALs: Payday alternative loans are a great choice if you're a member of a credit union that offers them (or eligible for membership). APRs are capped at 28%, making this one of the most affordable options for bad credit borrowers.
• Credit-builder loans: Credit-builder loans are a popular and low-risk way of improving your credit score. You won't get access to the funds upfront like other loan types, but they can be a great way to save up for a future expense while improving your credit at the same time.

Read More:

• What Is a Bad Credit Personal Loan?
• Types of Bad Credit Loans
• Pros and Cons of Bad Credit Loans
• Where Can I Get a Bad Credit Loan?
• How To Get a Personal Loan With a 550 Credit Score
• How To Get a Personal Loan With a 550 Credit Score
• Best Personal Loans for Bad Credit
• Best Personal Loans for Fair Credit

Disclosure: Some lending partners that participate in Credible's comparison marketplace offer loans to borrowers with scores as low as 550. Borrowers with low scores will have fewer lending options than borrowers with higher credit scores.