To obtain a loan with a low credit score, start by securing a cosigner with good credit to boost your application. Consider applying for secured loans, which require collateral like savings accounts or vehicles. Credit-builder loans, offered by credit unions or online lenders, help rebuild credit by reporting timely payments to credit bureaus. Alternatively, explore peer-to-peer lending platforms or alternative credit data lenders, which consider factors beyond traditional credit scores. Always verify your credit report for errors and dispute inaccuracies through the Fair Credit Reporting Act.

Low credit scores (below 600) can limit access to conventional loans due to higher default risks, but alternative options exist. The Federal Reserve reports that 20% of U.S. consumers had credit scores below 580 in 2022, yet 60% of these individuals successfully obtained loans through non-traditional methods. Secured loans account for 15% of all consumer loans, per the Consumer Financial Protection Bureau (CFPB), as they mitigate lender risk with collateral. Cosigned loans approval rates for scores under 600 average 35%, compared to 18% for unsecured applications, according to Experian. Credit-builder loans, though small in size (median $2,500), improve scores by 50-100 points within 12 months, as shown in a 2023 National Foundation for Credit Counseling study. These strategies leverage collateral, third-party guarantees, or alternative data to bypass strict credit criteria, enabling access to credit while gradually enhancing financial health.