Images by GettyImages; Illustration by Jessa Lizama/Bankrate
Key takeaways
- Lower credit scores signal higher risk of default to lenders, so lenders will limit loan amounts.
- Bad-credit borrowers of unsecured loans get approved for an average amount of under $2,000, according to TransUnion data.
- Adding a cosigner or co-borrower with better credit can help you qualify for a larger loan amount, as can having a healthy debt-to-income ratio.
If you have bad credit, certain personal loan lenders will still work with you, but they typically limit how much you can borrow. According to the Q1 2025 TransUnion Report, borrowers with FICO scores below 600 typically are approved for around $1,700, while those with scores between 601 and 660 average about $3,900.
You may face higher rates with a bad credit loan, making your monthly payments costly even at smaller loan amounts. This makes it important to shop around and find the best bad credit loan rates available.
Factors that affect loan amount
The lower your credit score, the less likely you are to qualify for a lender’s highest advertised loan amount. Lenders also consider your credit history, current debts and income to determine how much you can borrow.
Credit score and history
Your credit score is among the most important factors to lenders when applying for a loan. Most lenders categorize a bad credit score as a FICO score below 580 or a Vantage score below 601.
When you apply, lenders conduct a hard credit check to review your repayment history, including missed payments, open accounts and your debt-to-income ratio (DTI). Higher credit scores usually mean you can get approved for larger loan amounts, because lenders are more confident you won’t fail to repay.
Here’s the average personal loan amount borrowers received in early 2025:
| Risk tier by credit score | Average origination loan amount |
| 781+ | $16,000 |
| 721-780 | $14,300 |
| 661-720 | $8,800 |
| 601-660 | $3,900 |
| 300-600 | $1,700 |
If you increase your credit score with a personal loan or by carefully managing your existing credit, you could qualify for a larger amount next time you apply.
Debt-to-income ratio
Your debt-to-income (DTI) ratio is the percentage of how much you owe versus your income. To calculate your DTI, add your monthly debt payments — such as student loans, auto loans, mortgage payments and credit card balances — and divide them by your gross monthly income. You can also use a debt-to-income ratio calculator if you don’t want to do the math by hand.
Most lenders prefer DTIs under 36 percent, but some will accept ratios as high as 50 percent. The lower your DTI, the more confidence a lender will have in your ability to take on more debt.
If your DTI is well over 50 percent, consider dedicating time to paying down your existing debt before taking out another loan. If you need the cash immediately, look for lenders that don’t have a DTI specification or accept high ratios.
Income and other factors
Lenders that accept borrowers with bad credit typically use nontraditional aspects of your finances to determine how much you can borrow. This may take the form of a monthly or annual income requirement.
Upstart, for example, doesn’t have a credit score requirement, but it does have a minimum income requirement of $12,000. In addition, Upstart — and some other lenders — considers your education history alongside your credit profile.
Cosigner or co-borrower
Adding a cosigner with strong credit may improve your chances of securing a higher loan amount. A cosigner shares legal responsibility for repaying the loan with you but doesn’t access the loan funds, whereas a co-borrower shares both repayment responsibility and access.
When you have a cosigner, the lender knows that if you miss a payment, it still has an alternate way to get the money that is due. If you want to use a cosigner or co-borrower, check on the lender’s website or with its customer service before applying.
How can I get a small loan with bad credit?
If you need a small loan and have bad credit, consider these strategies:
- Apply with lenders specializing in bad-credit loans: Companies like Avant and LendingPoint often approve smaller loan amounts even if you have poor credit.
- Apply at credit unions: Credit unions typically offer small-dollar loans at lower rates compared to payday or no-credit-check loans.
- Improve your approval odds: Provide thorough documentation of your income and employment stability to reassure lenders you can repay the loan.
Should you take out a personal loan if you have bad credit?
Some types of bad credit loans are more risky than others, and a bad credit personal loan may be the least risky of your options. They have long repayment periods, and the APR maxes out at 35.99 percent. By comparison, you only have two weeks to repay a payday loan and APRs may exceed 650 percent.
Bottom line
While bad credit limits borrowing potential, it’s still possible to obtain a loan. Understanding factors lenders care about — like your credit history, debt-to-income ratio, income stability and cosigner — can help you secure better loan amounts and terms. Always shop around, compare lenders and consider strategies to strengthen your credit to access higher amounts and lower interest rates over time.
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