Personal Loan Options for Bad Credit: 450 Credit Score or Worse

Unfortunately, getting a loan from a direct lender can be difficult when you have a credit score of 450. or below You might be able to find a lender that will provide you with a loan, but the terms can be risky and will likely include high interest rates and fees.

Here’s what you need to know if you have poor credit and want to apply for a loan.

What Does a 450 Credit Score Mean?

A 450 or below credit score is considered a bad score. Credit scores run from 300 to 850, with those closer to 300 considered poor and 850 considered exceptional. The Consumer Financial Protection Bureau (CFPB) puts scores into ranges that categorize you according to where your score falls:

However, each credit reporting agency has its own categorization. As such, the ranges tend to be a little different for each institution. FICO uses the following categories for its scores:

While these ranges are usually slightly different for scores based on other models, 450 is still typically considered poor (or some other similar term).

When you have a 450 credit score or below, lenders will take that as a sign that you’ve had problems with debt in the past. It could indicate that you’ve missed payments or defaulted on loans, or even that you’ve declared bankruptcy or been through a foreclosure.

Personal Loans for Bad Credit

Even though some direct lenders will provide you with personal loans when you have bad credit, it can be difficult to find one that will lend to you if you have a credit score of 450 or lower.

In some cases, though, you might be able to find a loan with a lender that doesn’t rely on credit scores to provide funding. For example, some companies that might provide you with a loan without a hard credit inquiry include:

• Upstart: The minimum credit score is 300, and Upstart might use other factors like employment and education to determine your creditworthiness.
• Fig Loans: Instead of using a credit score, Fig Loans offers up to $500 based on your bank information. They have repayment terms of up to six months, but because of their low loan amount, these might be better for bad credit emergency loans.

You may have other options available to you, but many unsecured bad-credit personal loans require a credit score of at least 500 or 550 to qualify, which means that a 450 credit score would likely disqualify you in those cases.

What to Know Before Getting a Personal Loan with a 450 or Worse Credit Score

Before you get a personal loan from a direct lender with a credit score of 450 or worse, it’s important to understand that you could be subject to risky terms. Here are some things to keep in mind about loans when you have poor credit:

• Higher APRs: Personal loans for bad credit often come with much higher rates. Depending on the state you’re in, you might see triple-digit annual percentage rates (APRs), which include fees as well as your interest rate.
• Origination fees: Many direct lenders that offer personal loans for borrowers with a 450 credit score also charge hefty origination fees. You might need to pay a fee of 8% or more when you get your loan. This fee might be added to your overall loan balance, or it might reduce the total amount you receive in your bank account.
• Shorter repayment periods: Bad-credit personal loans often have repayment terms that might be less than a year. Sometimes, they require weekly payments instead of monthly payments.
• Less availability: Finding a good lender can be difficult when you have a credit score of 450, because fewer lenders are willing to provide loans to those with poor credit scores.

Other Borrowing Options for Bad Credit

You might need to consider other borrowing options if you have poor credit. Depending on what you’re trying to accomplish with your loan, the following alternatives might also meet your needs.

• Secured credit card: You can typically get a secured credit card even if you have a credit score of 450 or lower. You usually need to provide collateral in the form of a security deposit. If you don’t make payments, your security deposit will be forfeited. After a few months, though, you might be able to switch to an unsecured credit card.
• Secured personal loan: Some lenders allow you to get secured personal loans if you have a low credit score. You might have to use something valuable, such as your car, home, or other asset, as collateral. If you default, the lender can take possession of your valuable item.
• Co-signed loan: If the lender allows a co-signer, you might be able to get qualified by having someone with good credit and a high income agree to take responsibility for your debt if you fail to make payments.
• Buy now, pay later (BNPL): If you’re trying to make purchases, this type of financing allows you to get very short-term loans and repay them over the course of a few weeks or months. You can apply for them during an online checkout or download an app that allows you to pay at the cash register.
• Payday advance: Depending on your employment situation, you might be able to access payday advance loans. These are commonly made through apps like Dave or Earnin that allow you to take out an emergency advance based on when you’re paid and your bank activity.
  

However, these alternatives might not provide you with the amounts you’re looking for, and they can still come with high rates and fees.

Improving Your Credit Score

You need to improve your credit score to access more borrowing options. A secured credit card can help you boost your score, as long as the credit card issuer reports to the credit bureaus. Look for secured cards or loans, as well as other types of bad-credit loans that report to bureaus and can potentially help you improve your score.

Beyond that, you can improve your score by paying down your debt and making sure your other payments are made on time. Create a plan to tackle your debts, and you can start seeing your score improve in a few months.

How Do People Use Personal Loans?

Investopedia commissioned a national survey of 962 U.S. adults between Aug. 14, 2023, to Sept. 15, 2023, who had taken out a personal loan to learn how they used their loan proceeds and how they might use future personal loans. Debt consolidation was the most common reason people borrowed money, followed by home improvement and other large expenditures.

The Bottom Line

Even though some lending options are available for those with credit scores of 450 and lower, they are hard to find. They can also be risky and costly.

If possible, it might make more sense to look for other ways to fund your needs and work toward improving your credit score so you’ll be able to access the best personal loan options.