Short answer: it is possible, but expect a smaller amount and a higher APR, and compare carefully. Start by checking your credit reports for errors (free every week), work out your debt-to-income ratio, look at a credit union payday alternative loan or a secured loan, and compare every offer by APR before you sign. Never pay a fee up front to "unlock" a loan (FTC).
Why a cosigner matters, and why many people go without
A cosigner promises to repay if you do not. The FTC's required notice to cosigners says they may have to pay up to the full amount of the debt, plus late fees or collection costs, and that a default may become part of their credit record (FTC). That is a big ask, so many borrowers apply alone. Without a cosigner, the lender looks only at your own credit, income and existing debts.
7 steps
- Get your credit reports. You can check your report from each of the three nationwide credit bureaus once a week for free at AnnualCreditReport.com (FTC).
- Dispute errors. Write to the credit bureau and to the business that reported the item; the bureau generally has 30 days to investigate (FTC). Removing a wrong late payment or debt can change what lenders see.
- Work out your debt-to-income ratio (DTI). Add up your monthly debt payments and divide by your gross monthly income. The CFPB's example: $2,000 in monthly debt payments on $6,000 of income is a DTI of 33% (CFPB). Lenders use it to judge whether you can handle one more payment.
- Know which checks affect your score. Checking your own report and prescreened offers are soft inquiries and do not affect your score; a lender's review after you apply is usually a hard inquiry, which can (CFPB).
- Ask a credit union about a payday alternative loan (PAL). Federal credit unions offer PALs of $200 to $1,000 (PAL I) or up to $2,000 (PAL II), with an interest rate capped at 28% and an application fee of no more than $20 (NCUA). You must be a member.
- Consider a secured loan or a credit builder loan. A loan backed by savings or another asset puts less risk on the lender. A credit builder loan holds the money in a locked savings account while you make payments, then releases it; the CFPB found these loans helped borrowers with no existing debt build a score (CFPB).
- Compare every offer by APR and total cost. The APR includes interest and certain fees, so it is the number that lets you compare loans (CFPB). Use our cost calculator to see the monthly payment.
Options without a cosigner, side by side
| Option | Typical size | Cost facts | Good to know |
|---|---|---|---|
| Credit union PAL | $200 to $2,000 | Interest capped at 28%, fee up to $20 (NCUA) | Membership required |
| Secured personal loan | Often up to the value of your savings or collateral | Set by the lender; compare APRs | You can lose the collateral if you do not pay |
| Credit builder loan | Often $300 to $1,000 (CFPB) | Set by the lender | You get the money at the end, so it does not cover an emergency today |
| Online installment loan | Varies by lender | Set by the lender; shown as an APR before you sign | Check the lender is licensed in your state |
| Payday loan | $500 or less (CFPB) | $15 per $100 is common, about 400% APR for two weeks (CFPB) | Due in one payment; see our cost comparison |
Red flags when your credit is bad
Scammers target people with bad credit. "Bad credit? No problem" style promises and any fee before you get the money are warning signs (FTC). Read our guide to advance-fee loan scams and our 8 checks for loan matching services.
Our free form lets you send one loan request. Participating lenders may be able to provide bad credit loans and personal loans of up to $15,000, and up to $5,000 for installment loans. Not all lenders can provide these amounts, and approval is not guaranteed.
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Disclosure: Modern Lending Solutions is not a lender, loan broker or agent for any lender or loan broker, and does not make credit decisions. Any compensation we receive is paid by participating lenders, only for advertising services. This guide is general information, not financial or legal advice.
Sources
- FTC: What To Know About Advance-Fee Loans
- FTC: Cosigning a Loan FAQs
- FTC: You now have permanent access to free weekly credit reports (October 2023)
- FTC: Disputing Errors on Your Credit Reports
- CFPB: What is a debt-to-income ratio?
- CFPB: What is a credit inquiry?
- MyCreditUnion.gov (NCUA): Payday Alternative Loans
- CFPB: Targeting credit builder loans (report, July 2020)
- CFPB: What is the difference between a loan interest rate and the APR?
- CFPB: What is a payday loan?
- CFPB: What are the costs and fees for a payday loan?