How to get a $5,000 loan with bad credit

Our goal here at Credible Operations, Inc., NMLS Number 1681276, referred to as "Credible" below, is to give you the tools and confidence you need to improve your finances. Although we do promote products from our partner lenders, all opinions are our own.


Getting a personal loan with poor credit can be difficult. Here’s how and where to get a $5,000 bad credit loan (iStock)

If you need to borrow cash to cover home improvement projects, medical bills, debt consolidation, or an unexpected expense, personal loans are a popular choice. Many people look to personal loans when they want to fund a large expense because they typically come with lower interest rates than other financial products, like credit cards.

But if you have a poor credit score or little credit history, obtaining a personal loan can be challenging — even if you’re borrowing a relatively small amount like $5,000. Fortunately, it is possible to find lenders who offer $5,000 bad credit loans.

Where to get a $5,000 personal loan

You can find a $5,000 personal loan at a bank, credit union, or online lender. 

Interest rates, terms, and fees can vary widely depending on where you get a loan, so it’s important to shop around and compare lenders. For example, online lenders are convenient because they often offer quick funding. But if you have an existing relationship with a traditional bank that offers personal loans (not all do), you may be able to get a better deal on your interest rate. 

Comparing lenders is the best way to ensure you’re getting the best rate and loan terms for your situation. 

Lenders to consider for a $5K bad credit loan

The following Credible partner lenders have minimum credit score requirements below 700 or cater specifically to consumers with thinner credit profiles:


  • Loan amounts: $2,000 to $35,000
  • Minimum credit score: 550
  • Good for: People seeking a fast online application process with funds available as soon as the next business day


  • Loan amounts: $2,000 to $36,500
  • Minimum credit score: 580
  • Good for: People with a lower credit score who want the option to pay off their debt early

OneMain Financial

  • Loan amounts: $1,500 to $20,000
  • Minimum credit score: None
  • Good for: People with little or no credit history

Universal Credit

  • Loan amounts: $1,000 to $50,000
  • Minimum credit score: 560
  • Good for: People looking to build credit who want fast funding


  • Loan amounts: $1,000 to $50,000
  • Minimum credit score: 560
  • Good for: People who need a fast credit decision


  • Loan amounts: $1,000 to $50,000
  • Minimum credit score: 580
  • Good for: People with thin credit but stellar employment history

How much will a $5,000 loan cost?

How much a $5,000 loan costs depends on the interest rate and repayment terms. The following two examples illustrate what a $5,000 loan could potentially cost over a 10-year term.


 You may look at the example above and think, "An extra $6 a month for a higher interest rate? So what?" But it’s really about the amount of interest you pay over the entire life of the loan (10 years, in this example). Lender B offers a slightly higher rate of 11% on the same amount for the same loan term, but over 10 years you’ll pay $664 more than with Lender A. 

And this is where savvy money decisions are made. While $6 may not be a lot month over month, $664 could be an extra car payment. Or you could boost your 401(k) or IRA contributions by that amount and watch your investment grow over time. This is why if you have the budget for a higher monthly payment, choosing a shorter repayment term can save you on interest costs.

You can see that even an interest rate difference of 1% or 2% can make your loan more expensive. When it only takes a few minutes to rate shop online, it makes sense to see what different lenders can offer. You can also use a personal loan calculator to get a sense of what your monthly payments on a $5,000 loan might be.

How can I qualify for a $5,000 loan?

You’ll need to take several steps to qualify for a $5,000 bad credit loan:

  • Provide proof of steady income/employment, such as a tax return, W-2 forms, or pay stubs
  • Show proof of identification, like a driver’s license or passport
  • Submit bank account statements
  • Agree to a credit check from the lender (note that this can temporarily lower your credit score by a few points)
  • Meet the lender’s minimum credit score requirement
  • Meet the lender’s minimum debt-to-income ratio requirement

Additionally, when evaluating lenders, keep in mind:  

  • Some online lenders may not be authorized to loan money in your state, so it’s important to check their eligibility requirements before completing an application.
  • Eligibility requirements vary by lender. Lenders may ask for different documents depending on what they need for loan underwriting, so keep copies of the above information in one easy-to-access place.

Getting a $5,000 loan with fair or bad credit

An individual’s credit score is a numerical value lenders use to assess an applicant’s credit risk. The lower the score, statistically the more likely a borrower is to default (be unable to repay back) any money a creditor loans them. The higher the score, statistically the more likely a borrower is to repay debts. 

The average credit score is 716, according to FICO. Many lenders use the FICO scoring model when making lending decisions. Here’s how FICO rates its credit scores: 

  • 800 to 850: Exceptional
  • 740 to  799: Very good
  • 670 to 739: Good
  • 580 to 669: Fair
  • 300 to 579: Poor

Several factors determine your credit score, and each is weighted differently. Here are the factors that make up your FICO score and the percentage of your score they represent:  

  • Payment history: 35%
  • Amounts owed: 30%
  • Length of credit history: 15%
  • New credit inquiries: 10%
  • Credit mix: 10%

Lower credit scores are commonly associated with high balances, little-to-no credit history, and poor payment history.  

How a personal loan can help improve credit

A $5,000 bad credit loan may help you improve your credit in several ways:

  • Consolidating multiple higher-interest debts into a single, lower-interest payment may reduce total interest costs. Applying with a cosigner who has very good or excellent credit may help you qualify for a lower interest rate.
  • Consolidating multiple debts into a single payment may make it easier to keep track of monthly payments and ensure you make them on time.
  • If you can get a lower interest rate on your personal loan, you may be able to get out of debt faster.
  • Consistently paying your personal loan on time, as agreed with the lender, can help raise your credit score.

What to know about personal loans 

A personal loan is a fixed-rate installment loan offered by banks, credit unions, and online lenders. Many personal loans are unsecured, meaning you don’t have to put down an asset as collateral in order to receive the loan. You repay whatever amount you borrow, plus interest, in fixed amounts over a set period of time (typically 12 to 48 months). 

When you’re evaluating personal loans, it’s helpful to know a few important terms:

Monthly payment

Each personal loan has a predetermined monthly payment amount, which depends on how much you borrow, the interest rate, and the length of your repayment term. 


Many loans come with fees. Some common fees you’ll see when taking out a personal loan include an origination fee for disbursing the loan, late fees, and a prepayment penalty fee for paying off your loan early. 

Repayment terms 

Depending on your individual financial situation, you’ll want to look at repayment terms closely. For example, a shorter loan term, like a three-year term, would have a lower interest rate but higher monthly payment. If you wanted a lower monthly payment in order to keep your budget more flexible, you could opt for a lengthier loan term, like seven years. Typically, the longer the loan term, the higher the interest rate.

Total principal

The principal is the total loan amount you take out, but this isn’t the total amount you pay on the loan because it doesn’t include interest. 

Total interest

The total interest is the total amount of interest you’ll pay to the lender for borrowing money. This is different from the annual percentage rate, which is the total cost of borrowing money, including both interest and fees. When comparing lenders, look at the APR to get a more accurate picture of how much a loan will cost.  

Alternatives to a $5,000 bad credit personal loan

If a personal loan isn’t right for you, or you’re having trouble qualifying for one, consider these alternatives: 

  • 0% interest credit card — Some credit cards offer a 0% introductory APR, where you can make interest-free purchases for a set period of time. But it’s important to pay the balance in full before the promotional period ends, otherwise you’ll begin to accrue interest at the card’s regular rate, which is likely higher than a personal loan interest rate.
  • Loan from a family member or friend — Consider asking a family member or close friend if they’ll lend you money. If you go this route, create a loan agreement so that you’re on the same page and minimize any potential strain on the relationship.
  • Home equity line of credit — If you own a home, a HELOC allows you to tap your home equity for cash. This option often comes with much lower interest rates than credit cards, but be careful: You’ll secure the loan with your home, and if you default on your payments, you could lose your house.