If you’ve got poor credit, you’re not alone, 14.2% of consumers in the United States have poor credit ratings, according to Experian. Overdue payments, high revolving credit, accounts in collections, charge-offs, bankruptcy, and more can all contribute to these poor scores making it difficult to qualify for financing.
Approval for financing is never guaranteed, but even if you find yourself in this position it may still be possible to qualify for a loan, depending on several factors beyond your credit score.
In this guide, we’ll explain:
- What lenders really evaluate
- How approval works when you have credit challenges
- Ways to improve your approval odds
- The types of loans that may be available
You’ll also learn how some platforms use advanced underwriting models to look at more than just a three-digit score when assessing overall financial health.
What does “poor credit history” actually mean?
Before we cover how to qualify for a loan with poor credit, we should make sure we’re on the same page about what is actually considered “poor credit” by lenders.
Credit score ranges explained
Any time you apply for a loan, the lender will look at your credit score. If you’ve got a strong credit score, it can indicate that you’re more likely to repay the loan.
Credit scores range from 300 to 850, and how they’re weighed can vary from lender to lender. Here’s a general breakdown:
| Credit score range | Category |
| 580 or less | Poor |
| 580 to 669 | Fair |
| 670 to 739 | Good |
| 740 to 799 | Very good |
| 800 and higher | Excellent |
If your score falls below 630, many lenders may categorize you as higher risk. But that doesn’t automatically mean you’ll be declined. Your entire credit history can be factored in by potential lenders.
What makes up a credit history?
Your credit history includes more than your score.
Lenders review your:
- Payment history
- Credit utilization ratio
- Length of credit history
- Credit mix
- Recent credit inquiries
- Public records like bankruptcies
Whether or not lenders will approve you for financing will depend significantly on the above factors in addition to your credit score and more.
How the application process works with poor credit
The general application process is the same for applicants with poor credit. Understanding this process is key to learning how to improve your chances of getting approved for financing with poor credit history.
Many lending platforms outline minimum requirements and eligibility criteria upfront. Note that these minimum credit scores vary from lender to lender.
The application process can vary from lender to lender. At a high-level it usually follows a similar process.
The steps to expect to go through are the following:
Step 1: Prequalification (soft inquiry)
Many lenders allow you to prequalify by checking your rate without impacting your credit score. If you choose to submit an application, it may trigger a hard pull of your credit score.
Step 2: Application review
If you start a loan application, Lenders will assess your credit history, income, employment, debt-to-income (DTI) ratio, and other risk indicators.
Step 3:Underwriting decision
Based on the lender’s model, your application may be approved, denied, or approved with conditions. Some lending platforms, including Upstart, use advanced underwriting models designed to evaluate more than just traditional credit data.
Step 4: Final offer and funding
Once your application is submitted and approved, you’ll receive the details of your loan offer. Be sure to closely review the terms and rates before you accept the funding.
Can you get approved with a poor credit history?
It may be possible to get approved for a loan with a poor credit history — depending on income, debt levels, and your overall risk profile.
Approval often depends on:
- Proof of stable income
- Manageable existing debt
- Recent improvement in financial history
- Past credit issues
Some lending platforms like Upstart use advanced AI-powered underwriting models that consider additional variables beyond just your credit score. This broader review may help certain borrowers qualify even if their score isn’t perfect.
These expanded reviews do not guarantee approval, but it does mean your application may be evaluated using a more comprehensive assessment of risk.
What lenders look at besides your credit score
Many borrowers assume their credit score is the only factor in whether they get approved for a loan. In reality, lenders often look at multiple elements when underwriting a loan application with poor credit.
These may include:
1. Income stability
Consistent employment and reliable income reduce risk in the eyes of lenders.
2. Debt-to-income ratio (DTI)
If your monthly debt payments consume too much of your income, it may be harder to qualify because you could be considered a higher-risk borrower.
3. Recent financial behavior
Any recent delinquencies, any debts paid down, or any other new accounts might affect your approval chances.
4. Education and employment data
Some lending platforms, including the Upstart marketplace, use AI-powered underwriting models that consider more than just a traditional credit score and may review factors such as education2 background, employment history, and other indicators of financial stability.
6 Ways to improve your chances before applying
If you want to improve your chances of loan approval with poor credit, consider these steps:
1. Check your credit report
Review your credit report for errors and dispute any inaccuracies. You can review your report online, and you get one free credit report from each of the three credit bureaus each year through AnnualCreditReport.com.
2. Pay down revolving debt
Lowering your credit utilization can improve your credit score quickly.
3. Avoid multiple hard inquiries
Each time you submit a loan application, the lender will typically do a hard pull on your credit which can temporarily lower your credit score. Multiple applications in a short period may hurt your score even further, so try to avoid more than one hard pull if possible.
4. Increase income (if possible)
If you can decrease your debt-to-income ratio, you may increase your chances of getting approved for a loan. Even part-time or freelance work can improve your DTI, so consider taking on a side hustle or part-time gig if you can.
5. Prequalify first
If you’re heeding our advice to avoid multiple hard inquiries into your credit, you might look to prequalify for loans with just a soft credit inquiry. Many lenders allow rate checks with a soft credit inquiry. If you’re unsure whether the lender will do a hard or soft pull, ask them before checking your rate.
6. Consider timing
If the negative marks on your report are recent, consider waiting for them to resolve while maintaining positive payment activities.
Types of loans that may be available when you have a poor credit history
Not all loans are the same. Options for borrowers with a poor credit history may include:
1. Personal loans
Some online lending marketplaces, like Upstart, may use underwriting models that evaluate more than traditional credit data and may be a good option for those with less-than-perfect credit.
2. Secured loans
Secured loans are backed by collateral (like a vehicle or savings account) and it may be easier to qualify for because they reduce lender risk. For example, you could offer an asset you have, like a car, that the lender could take to repay the loan if you were to default on it.
3. Credit-builder loans
If you have poor credit you might be able to get approved for a loan specifically designed to help you build your credit. These credit-builder loans could help raise your credit if you make timely payments that are reported to credit bureaus.
Warning signs to avoid with loans
If you’re looking for loans you can be approved for with poor credit there’s a higher chance you might come across some higher-risk products. Be sure to always read the fine print, always make sure you understand the terms of the loan, and make sure anywhere you submit your information is secure. On the whole, there are some things to keep an eye out for.
Watch out for:
- Extremely high APRs
- Large upfront fees
- “Guaranteed approval” claims
- Pressure to act immediately
- Unlicensed lenders
Some lenders specifically offer predatory loans that can trap borrowers in cycles of debt. If you take on a loan with poor terms, you might find yourself with a loan that harms your credit or is difficult to repay. Always review loan terms carefully and verify the legitimacy of any lender.
Remember: If you’re researching options like personal loans no credit check, be cautious — legitimate lenders typically review some form of credit data to assess risk.
How AI-powered lending may change the underwriting process
Some lenders and marketplaces, like Upstart, employ AI-powered lending. Machine learning helps them look at a broader range of financial and other factors. For example, Upstart also considers your education2 when considering your loan eligibility.
The goal of using AI for application evaluation is to enable faster3, more accurate decisions. Upstart’s model results in higher approval odds than a traditional model4 based on a more informed understanding of their financial journey.
This approach may benefit borrowers who:
- Have limited credit history
- Experienced past financial hardship but have improved
- Have strong income or education factors
Remember: Even with AI, approval is never guaranteed.
FAQs
Can I get a loan with a 500 credit score?
It may be possible to get a loan with a 500 credit score, but options can be limited. A credit score of 500 is typically considered very poor. Lenders will likely examine your income, debt levels, and recent payment behavior closely.
Will applying hurt my credit?
Prequalification for a loan often involves a soft inquiry that doesn’t impact your score. However, a full application may result in a hard inquiry, which can temporarily lower your score. If you’re unsure whether a lender will do a hard or soft credit pull for prequalification, be sure to ask them.
Do lenders require a minimum credit score?
Many lenders have minimum credit score thresholds. Credit score is one of several elements considered, along with income, debt-to-income ratio, and overall financial profile. Eligibility criteria vary by lender.
Is a secured loan easier to qualify for?
It may be easier to qualify for a secured loan because collateral reduces lender risk. However, you risk losing the asset if you default.
What’s the minimum credit score requirement to get a loan?
The minimum credit score required to get a loan varies by lender. Some may consider applicants below 600, while others require higher scores. Always check specific eligibility guidelines.
What’s the easiest loan to get with poor credit?
There is no universal “easiest” loan to get with poor credit. Approval depends on your full financial profile. Loans with collateral or a co-signer may improve your odds, but terms should be reviewed carefully.
Disclosure:
2 Neither Upstart nor its bank partners have a minimum educational attainment requirement in order to be eligible for a loan.
3 From 12/1/24 to 1/30/25, 50% of funded borrowers had their income and identity automatically verified, without needing to upload supporting documents.
4 The Upstart model approves 43% more applicants in aggregate as compared to the traditional model, and results in APRs that are 33% lower. Disclosure: As of publication in April 2025, and based on a comparison between the Upstart model and a hypothetical traditional model using Upstart data from Jan – Dec 2024. For more information on the methodology behind this study, please see Upstart’s Annual Access to Credit results here
Won't affect your credit score¹