Yes, individuals with bad credit can obtain loans, but they face higher interest rates and stricter terms. Lenders may require collateral, shorter repayment periods, or alternative credit assessments. For example, secured loans like car title loans or mortgages with down payments are common options. Unsecured loans, such as personal loans from alternative lenders, often come with APRs ranging from 15% to 36%, significantly higher than prime rates. Additionally, credit repair services can help improve scores over time, making future loan approvals easier.

The ability to secure loans with poor credit stems from lenders' risk mitigation strategies. Bad credit scores, typically below 600, indicate higher default risks, prompting lenders to charge higher interest to offset potential losses. The Federal Reserve reports that 20.1% of U.S. consumers had credit scores below 600 in 2022, reflecting the prevalence of subprime credit. Alternative lenders, such as peer-to-peer platforms and online financial institutions, fill gaps traditional banks avoid, offering approval without extensive credit checks. For instance, a 2023 FDIC survey found that 35% of Americans used non-bank lenders for loans, often due to rejected bank applications. Secured loans, which require collateral like vehicles or property, approval rates increase to 60-80% compared to 10-20% for unsecured loans, per Experian data. Credit repair services, including dispute resolution and debt management, can raise scores by 50-150 points in 6-12 months, as noted by the CFPB. However, high APRs on bad credit loans can lead to debt cycles; 43% of borrowers with APRs over 30% report struggling to repay, according to a 2023 Pew Research study. Therefore, while loans are accessible, financial literacy and responsible borrowing are critical to avoiding long-term consequences.