Hanneh Bareham specializes in everything related to student loans and helping you finance your next educational endeavor. She aims to help others reach their collegiate and financial goals through making student loans easier to understand.
Aylea Wilkins is an editor specializing in personal and home equity loans. She has previously worked for Bankrate editing content about auto, home and life insurance. She has been editing professionally for nearly a decade in a variety of fields with a primary focus on helping people make financial and purchasing decisions with confidence by providing clear and unbiased information.
Our list of the best bad credit personal loan lenders takes into account flexibility of eligibility requirements, interest rates and fees, terms and features. We also cover how to decide if a personal loan is right for you, how to apply and how to spot scams so you can stay safe while securing financing.
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What To Know First
Personal loans often require good credit — typically a FICO credit score of 670 or higher — but this is not always the case. Bad credit personal loans allow borrowers with subprime credit to access funding.
When trying to find the best bad credit personal loan, consider a few key factors:
Minimum credit score: The absolute lowest credit score you can have and still be eligible. Note that meeting this minimum doesn't guarantee approval.
APR: Interest rates plus fees. The APR for a bad credit loan is going to be higher than it would be for a good credit one.
Term: How long you'll have to pay back the loan. Shorter terms mean less interest paid overall, but longer terms mean a lower monthly payment.
Loan amount: How much you can borrow. The better your credit and income are, the more money you'll be able to potentially borrow.
Just qualifying for a bad credit personal loan isn't enough for it to be a good deal. Getting an APR that's low enough and the right term is what's going to set you up for future financial success. Payment history accounts for 35% of your FICO credit score, so being able to comfortably afford your payments and making them on time can help you improve your credit score as you pay down your loan. On the other hand, it can hurt you if you borrow above your ability and end up missing payments.
To select the top bad credit personal loan lenders, Bankrate considers 15 primary factors, with extra weight given to flexibility of eligibility criteria. Since bad credit personal loans can be tied up with extremely high fees, we also give more weight to the APR ranges offered and fees.
Overall, Bankrate reviewed 33 lenders and pulled the top eight. Each of the eight have a Bankrate rating that is broken down into three buckets: availability, affordability and customer experience. The categories are scored based on several data points adding up to a potential total of 300 points.
Availability: Eligibility requirements, online application availability and turnaround time are considered under this category.
Affordability: This encapsulates the fees, penalties and minimum and maximum interest rates charged by the lender.
Customer experience: This covers customer service hours, online access and mobile apps.
Consider both the Bankrate ratings and the best-for category for each lender when evaluating which might best fit your needs.
At Bankrate, our mission is to empower you to make smarter financial decisions. We’ve been comparing and surveying financial institutions for more than 40 years to help you find the right products for your situation.
Our diverse team of loan experts aims to help readers make financial decisions with confidence. To do that, we work hard to provide accurate, up-to-date information on lender information and explain information in plain language to demystify the loans process. Our award-winning editorial team follows strict guidelines to ensure the content is not influenced by advertisers.
We focus on the aspects of loans that people care most about: term lengths, APRs, lender requirements and tools lenders offer to help borrowers strengthen their financial position. All lenders discussed on Bankrate are vetted based on what value they provide to consumers in these areas, and our articles are fact-checked thoroughly to prioritize accuracy so we can be here for your every next.
The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where and in what order products appear. This table does not include all companies or all available products. Bankrate does not endorse or recommend any companies.
Check Your Personal Loan Rates
Answer a few questions in two minutes or less to see which personal loans you pre-qualify for. It's free and will not impact your credit score.
Bankrate’s scores for personal loan lenders evaluate 11 data points related to loan costs and terms, as well as customer experience.
The annual percentage rate (APR) includes your interest rate, plus any loan fees. It reflects the total cost of borrowing.
The range of loan amounts that a lender will service. The maximum value is the largest amount a lender will give although this amount may not be available to borrowers who don’t have good or excellent credit. Amount ranges may vary for non-loan products. Term refers to the amount of time you have to repay the loan.
The minimum credit score typically required to qualify for a loan with a given lender. Exact thresholds are not always disclosed by a lender and in certain cases the minimum score is the best estimate based on publicly available information. Credit score refers to FICO 9.0 unless otherwise stated.
Get a personal loan up to $50,000 with a fixed APR from 5.99% to 35.99%,Get money in as little as one business day, upon approval and verification,Join more than 450,000 customers at a trusted company with an A+ BBB rating,Use it for almost anything: consolidate debt or other unexpected expenses
DISCLOSURE UPDATE AS OF 07.2021
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Best Egg personal loans, including the Best Egg Secured Loan, are made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender or Blue Ridge Bank, a Nationally Chartered Bank, Member FDIC, Equal Housing Lender. "Best Egg" is a trademark of Marlette Holdings, Inc., a Delaware corporation. All uses of "Best Egg" refer to "the Best Egg personal loan", "the Best Egg Secured Loan", and/or "Best Egg on behalf of Cross River Bank or Blue Ridge Bank, as originator of the Best Egg personal loan," as applicable.
The term, amount, and APR of any loan we offer to you will depend on your credit score, income, debt payment obligations, loan amount, credit history and other factors. Your loan agreement will contain specific terms and conditions. About half of our customers get their money the next day. After successful verification, your money can be deposited in your bank account within 1-3 business days. The timing of available funds upon loan approval may vary depending upon your bank's policies. Loan amounts range from $2,000 - $50,000. Residents of Massachusetts have a minimum loan amount of $6,500; New Mexico and Ohio, $5,000; and Georgia, $3,000. For a second Best Egg loan, your total existing Best Egg loan balances cannot exceed $50,000. Annual Percentage Rates (APRs) range from 5.99% - 35.99%. The APR is the cost of credit as a yearly rate and reflects both your interest rate and an origination fee of 0.99% - 5.99% of your loan amount, which will be deducted from any loan proceeds you receive. The origination fee on a loan term 4-years or longer will be at least 4.99%. Your loan term will impact your APR, which may be higher than our lowest advertised rate.
You need a minimum 700 FICO® score and a minimum individual annual income of $100,000 to qualify for our lowest APR. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. What this means for you: When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents.
9 out of 10 customers would recommend Prosper to friends or family*
Co-borrower option available. Applying with a co-borrower could help improve your rates
Get your money in as few as 3 business days, your monthly payment stays the same
For example, a three-year $10,000 personal loan would have an interest rate of 11.74% and a 5.00% origination fee for an annual percentage rate (APR) of 15.34% APR. You would receive $9,500 and make 36 scheduled monthly payments of $330.90. A five-year $10,000 personal loan would have an interest rate of 11.99% and a 5.00% origination fee with a 14.27% APR. You would receive $9,500 and make 60 scheduled monthly payments of $222.39. Origination fees vary between 2.41%-5%. Personal loan APRs through Prosper range from 7.95% to 35.99%, with the lowest rates for the most creditworthy borrowers.
Eligibility for personal loans up to $40,000 depends on the information provided by the applicant in the application form. Eligibility for personal loans is not guaranteed, and requires that a sufficient number of investors commit funds to your account and that you meet credit and other conditions. Refer to Borrower Registration Agreement for details and all terms and conditions. All personal loans made by WebBank, Member FDIC.
* Applications submitted on this website may be funded by one of several lenders, including: FinWise bank, a Utah-chartered bank Member FDIC; Coastal Community Bank, Member FDIC; and LendingPoint, a licensed lender in certain states. Loan approval is not guaranteed. Actual loan offers and loan amounts, terms and annual percentage rates ("APR") may vary based upon LendingPoint's proprietary scoring and underwriting system's review of your credit, financial condition, other factors, and supporting documents or information you provide. Origination or other fees from 0% to 6% may apply depending upon your state of residence. Upon final underwriting approval to fund a loan, said funds are often sent via ACH the next non-holiday business day. Loans are offered from $2,000 to $36,500, at rates ranging from 7.99% to 35.99% APR, with terms from 24 to 60 months. Georgia loans have a minimum $3,500 loan amount. For a well-qualified customer, a $10,000 loan for a period of 48 months with an APR of 23.72% and origination fee of 6% will have a payment of $324.48 per month. (Actual terms and rate depend on credit history, income, and other factors.) Customers may have the option to deduct the origination fee from the disbursed loan amount if desired. The total amount due is the total amount of the loan you will have paid after you have made all payments as scheduled.
Personal and auto loans from $1,500-$20,000 (GA minimum $1,500 existing customers for new loans $3100 for others)
A quick decision on your loan request
Clear loan terms with no hidden fees and no prepayment penalties
Apply online, by phone or at your local branch.
Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on your ability to meet our credit standards (including a responsible credit history, sufficient income after monthly expenses, and availability of collateral). Larger loan amounts require a first lien on a motor vehicle no more than ten years old, that meets our value requirements, titled in your name with valid insurance. Maximum annual percentage rate (APR) is 35.99%, subject to state restrictions. APRs are generally higher on loans not secured by a vehicle. Depending on the state where you open your loan, the origination fee may be either a flat amount or a percentage of your loan amount. Flat fee amounts vary by state, ranging from $25 to $300. Percentage-based fees vary by state ranging from 1% to 10% of your loan amount subject to certain state limits on the fee amount. Active duty military, their spouse or dependents covered under the Military Lending Act may not pledge any vehicle as collateral for a loan. OneMain loan proceeds cannot be used for postsecondary educational expenses as defined by the CFPB’s Regulation Z, such as college, university or vocational expenses; for any business or commercial purpose; to purchase securities; or for gambling or illegal purposes.
Borrowers in these states are subject to these minimum loan sizes: Alabama: $2,100. California: $3,000. Georgia: Unless you are a present customer, $3,100 minimum loan amount. Ohio: $2,000. Virginia: $2,600.
Borrowers (other than present customers) in these states are subject to these maximum unsecured loan sizes: North Carolina: $7,500. New York: $20,000. An unsecured loan is a loan which does not require you to provide collateral (such as a motor vehicle) to the lender.
Competitive rates from 9.95% - 35.99% APR and terms from 24 to 60 months
Checking your loan options has no impact to your credit score.
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Funding as soon as next business day
*A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33. Minimum loan amounts may vary by state. If approved, the actual rate and loan amount that a customer qualifies for may vary based on credit determination and other factors. An administration fee of up to 4.75% will be deducted from the loan proceeds. Avant branded credit products are issued by Webbank, member FDIC.
Stilt is a mission-driven fintech company focused on providing credit to international students, immigrants and the underserved. We build products to improve financial inclusion and democratize access to the credit through providing accessible and reasonable personal loans.
Immigrants, international students, other visa
holders and those underserved by the traditional banking system often encounter many struggles while trying to build credit, apply for personal loans and build their financial future. Stilt’s services allow them to take a step forward in their path to financial health by applying for a personal loan with a unique qualifying process like Stilt’s.
Stilt is focused on improving financial inclusion and access to credit at reasonable rates.
Loans from $1,000 to $10,000 (loan amounts, costs & terms vary by state)
No application or prepayment fees
Check your eligibility without affecting your FICO score
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Secure a bad credit loan in 3 easy steps
Answer a few questions
Take just two minutes to answer questions about yourself and the loan you need. This service is free, and it won't affect your credit score.
Compare your offers
Get prequalified and compare loan or other product offers based on the things that matter to you, like APR and monthly payments.
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Choose a lender and visit its website to complete the application process. If you're approved, you could get cash in your account as soon as the next day.
The Bankrate guide to choosing the best personal loan for bad credit
To help you choose the right loan for you, our editorial team has gathered the most important information you need to shop for lenders and make your decision. Bankrate gathered data on loans for individuals with bad credit by comparing lenders and their rates as well as information on how someone with poor credit can get the best possible loan.
The lenders listed here are selected based on factors such as credit requirements, APRs, loan amounts and fees. Bankrate evaluated lenders and options for individuals with bad credit to help people find the best lender and rates for their situation.
What is a bad credit personal loan?
When you apply for a loan, lenders will look at your credit score and credit history to determine how much of a risk it is to them to lend you money. Having bad credit is when you have a low credit score, which can be caused by things like short credit history, late payments or maxed-out credit cards.
If you have bad credit and need a loan, you may need to narrow your search to lenders that offer loans for bad credit. These loans are either secured (backed by collateral like a home or car) or unsecured. Interest rates, fees and terms for these types of loans vary by lender.
Various banks, credit unions and online lenders offer loans to those with poor credit, but the threshold for what’s considered a “creditworthy borrower” varies by institution. Some lenders have stricter requirements than others, which makes it important to shop around for the best option.
It's possible to get a loan even if you have bad credit. While your credit score will keep you from getting a great APR (annual percentage rate), you can still find interest rates that are much lower than with options like credit cards or payday loans. Our recommendations for the best bad credit personal loans have flexible eligibility requirements and relatively low rates for the credit band.
How to choose the best bad credit loan company
There's no single best loan company for everyone. The best bad credit loan company for you depends on a few factors:
Elligibility requirements. Many lenders will list eligibility requirements on their websites, including minimum credit scores, minimum income levels and maximum debt-to-income ratios.
Interest rates and fees. Lenders use different criteria to calculate your interest rate. Get quotes from a few lenders and compare interest rates, origination fees and prepayment penalties to determine which will have the cheapest loan interest for you.
Repayment terms. Personal loan lenders may offer repayment terms of anywhere from one year to 12. A shorter repayment period means that you'll be out of debt sooner and will pay less overall in interest. A longer repayment period, on the other hand, will reduce your monthly bill.
Type of lender. You can find personal loans from banks, credit unions and online lenders. Online lenders often have the lowest rates, but you won't have the in-person service of a bank. Additionally, a local credit union that you already do business with may be more willing to extend you a bad credit loan based on your existing relationship.
Overview: The APR on personal loans from the Bad Credit Loans network of lenders and financial service providers ranges from 5.99 percent to 35.99 percent, with loan amounts of up to $10,000. Applying for a loan is free.
Why Bad Credit Loans is the best for poor credit scores: As a loan aggregator, Bad Credit Loans refers applicants to reputable lenders that are willing to provide unsecured loans to those who have poor credit. The company says that it designs its application process to allow nearly anyone to qualify, even those who would not necessarily be approved elsewhere.
No fees to use the site
Easy to qualify for a loan
Low minimum borrowing amounts
Lenders you match with will have their own terms and fees
Lenders in their network have APR ranges up to 35.99 percent
Limited information before matching with a lender
Impact on bad credit borrowers: Applicants may have a better chance of being approved for loans through the company’s lender network.
Who Bad Credit Loans is best for: People who may not qualify for loans elsewhere because of past financial missteps should still be able to find a loan through Bad Credit Loans.
Time to receive funds: Money will be available as soon as the next business day after approval.
Fees: The website is free, but it is hard to plan for fees because individual lenders will have their own.
Additional requirements: Applicants must be at least 18 years old, have proof of citizenship, a regular income, a checking account, valid telephone number and email address. Other requirements will vary by lender.
Overview:Upstart developed a reputation for offering fast and fair unsecured personal loans. APRs for Upstart loans vary by state and range from 5.35 percent to 35.99 percent. Loan amounts range from $1,000 to $50,000, and you can choose a repayment term of either three or five years.
Why Upstart is the best for limited credit history: While many loan applications are based primarily on a borrower’s credit score and years of credit, Upstart applications also factor in an individual’s education, job history and area of study.
No minimum credit score requirement
Quick next day funding
Offers direct payment to creditors
Origination fee of up to 8 percent of the approved loan amount
Potentially high APR with the maximum set at 35.99 percent
Loans only available for three- or five-year terms
Impact on bad credit borrowers: Because Upstart’s approval decisions aren’t based solely on credit history, applicants may fare better than they would with other lenders.
Who Upstart is best for: Upstart is especially good for young people such as recent college graduates who need loans but haven't had time to establish a strong financial history.
Time to receive funds: Upstart claims that 90% of borrowers receive funds one business day after the loan is accepted. Some loans may take longer, including those used for education reasons.
Fees: Upstart charges an origination fee of 0% to 8% as well as a late fee of 5% of the amount due or $15, whichever is greater. There is also a returned check fee of $15 and a one-time paper copies fee of $10.
Additional requirements: Applicants must have a US residential address unless they are active-duty military, a personal bank account with a U.S. routing number, an email address, and a full-time job or full-time job offer starting within six months, or a part-time job combined with some other income.
Overview:OneMain Financial offers both unsecured loans and secured loans, which require providing collateral, such as a motor vehicle. Loan amounts range from $1,500 to $20,000. APRs can run anywhere from 18.00 percent to 35.99 percent, and term lengths are 24, 36, 48 or 60 months.
Why OneMain Financial is the best for a secured loan: Many lenders only offer unsecured loans. Borrowers who can’t get approved elsewhere may have a better chance of getting a secured loan with OneMain Financial.
Secured options available
Over 1,500 branches offices for those who prefer in-person service
A variety of loan term length options ranging from 2 to 5 years
Origination fees vary by state
High minimum APR of 18.00 percent
Business purposes are not allowed
Impact on bad credit borrowers: With the option of secured loans, bad credit borrowers may be able to avoid costlier forms of financing, such as payday loans.
Who OneMain Financial is best for: People who are homeowners or otherwise have an asset that can be used as collateral may find this lender preferable.
Time to receive funds: Money will be available in as soon as one business day after approval. If you sign the loan agreement at a physical location, you may be able to get the funds immediately.
Fees: OneMain charges an origination fee of $25 to $500 or 1% to 10%, a late payment fee of $5 to $30 or 1.5% to 15% of the monthly payment or delinquent portion, as well as insufficient funds fee of $10 to $50.
Additional requirements: Select states have different minimum loan amounts. OneMain does not go into detail about how to qualify, so additional requirements may vary.
Overview:TD Bank's TD Fit unsecured personal loan offers borrowers anywhere from $2,000 to $50,000 and comes with few fees. Its loans are also funded in as little as one business day.
Why TD Bank is the best for low rate caps: While TD Bank doesn't offer the absolute lowest rates, the cap on its personal loan rates is relatively low at 18.99 percent APR. This could make it particularly appealing for borrowers with poor credit who might otherwise be subject to rates above 30 percent.
Soft credit check in prequalification
Flexible loan amount range
Option to change your payment date
Only available in certain states
Cannot be used for business or education expenses
No autopay discount
Impact on bad credit borrowers: The maximum APR for TD Bank’s personal loans is roughly 14 percentage points lower than what many other lenders offer, which could save borrowers thousands in interest.
Who TD Bank is best for: People who live in the states TD Bank services and would otherwise have loans above 22 percent APR.
Time to receive funds: Money can be available as soon as one business day after approval.
Fees: TD Bank only charges a late fee of 5% of the minimum payment or $10, whichever is less.
Additional requirements: Loans can’t be used for business or education expenses. You must be at least 18-years-old and provide your Social Security Number.
Overview:Avant offers unsecured loans of between $2,000 and $35,000 with APRs from 9.95 percent to 35.99 percent.
Why Avant is best for a range of repayment options: Avant’s loans offer repayment terms of 24 to 60 months, and with no prepayment penalty, borrowers can save money on interest by paying their loans off early.
Income of other household members can help qualify
No prepayment penalty
Low minimum credit score requirements
High upfront administration fee
High minimum APR of 9.95 percent
No co-signers or co-borrowers
Impact on bad credit borrowers: Avant’s minimum FICO credit score is 580 — the lowest among the four lenders on this page that disclose their credit score requirements.
Who Avant is best for: Avant may be preferable for individuals with a low credit score but think they are likely to be able to pay off the loan early.
Time to receive funds: Money may be available as soon as one business day after approval.
Fees: Avant charges an administration fee of up to 4.75 percent, a late fee of $25, and a dishonored payment fee of $15.
Additional requirements: You must have a $500 monthly free cash flow and 70% debt-to-income ratio, including rent or mortgage payments. Avant generally requires a minimum income of $20,000.
Overview: LendingPoint operates in 48 states and Washington, D.C., and is known to offer unsecured loans for those with credit scores as low as 600. Loan amounts range from $2,000 to $36,500, and APRs start at 7.99 percent and go as high as 35.99 percent. The repayment terms offered by LendingPoint vary from 24 to 60 months.
Why LendingPoint is the best for small loans: Some lenders with tighter credit requirements have a $5,000 minimum for personal loans, but LendingPoint lets bad credit borrowers take out as little as $2,000.
Approval based on a variety of factors
Available in most states
Low minimum borrowing amount
High origination fee for some
Loans limited to $45,000
High minimum APR of 9.99 percent
Impact on bad credit borrowers: LendingPoint offers broad availability, with personal loans available to borrowers in all but two states.
Who LendingPoint is best for: LendingPoint is a good option for people who have bad credit and don't need to borrow a lot of money, such as people needing a small loan to cover a college expense or small purchase.
Time to receive funds: Money will be available as soon as one business day after approval.
Fees: LendingPoint charges an origination fee of up to 6 percent. There may also be a late fee of up to $30 and an insufficient funds fee of $20.
Additional requirements: You must have less than a 50 percent debt-to-income ratio, not including your mortgage, to qualify. LendingPoint loans are not available in Nevada or West Virginia.
Overview: Upgrade offers unsecured personal loans that can be used for debt consolidation, credit card refinancing, home improvements or major purchases. APRs available from Upgrade start at 5.94 percent and go as high as 35.97 percent. Loan amounts range from $1,000 to $50,000, and terms are 24 to 84 months.
Why Upgrade is the best for fast funding: Loan funds can be available within just one business day of going through the provider’s verification process.
Allows joint applications
Upgrade sends debt consolidation loan funds directly to creditors
Flexible loan amount range of $1,000 to $50,000
Origination fee of 2.9 percent up to 8 percent
$10 late fee and $10 returned check fee
High APRs compared to some competitors
Impact on bad credit borrowers: Customers looking to consolidate debt can have their loan funds sent directly to their creditors. This could help borrowers stay on track while building their credit.
Who Upgrade is best for: Upgrade may be a good option for people who have a big purchase but not a lot of time to find a lender. It is also good for people who want to have their lender send payments directly to creditors for a debt consolidation loan.
Time to receive funds: Money will be available as soon as the next business day after verification.
Fees: Upgrade charges an origination fee of 2.9 percent to 8 percent, a late fee of up to $10 and a returned check fee of $10.
Additional requirements: To get the lowest rate, you must enroll in autopay and use some loan proceeds to pay off any existing debt directly. You must also have a minimum of two accounts on credit history and a 75 percent or less debt-to-income ratio.
Overview: If your credit score makes it difficult to get approved for a loan, LendingClub allows you to increase your chances of approval by having a co-borrower. Not every lender offers this option, and it can be a helpful way to qualify for a loan that you wouldn't have gotten otherwise.
Why LendingClub is the best for an online experience: LendingClub has a robust website that features an easy application process and an extensive loans resource center.
15 day grace period for late payments
Low minimum borrowing amount
Origination and late fees
Limited lerm term options
No autopay discount
Impact on bad credit borrowers: Customers can borrow as little as $1,000, which makes it easier to get only the money you need and avoid going into more debt.
Who LendingClub is best for: People who want to have a co-borrower or don't want to borrow a high amount may find what they need with this lender.
Time to receive funds: Money may be available as soon as 48 hours after approval.
Fees: LendingClub charges an origination fee of 3 percent to 6 percent, as well as a late fee of 5 percent or $15, whichever is more.
Additional requirements: The maximum debt-to-income ratio (DTI) is 40 for individual applications and 35 for joint applications.
What to know about your credit score and securing a loan
When lenders give you money, they need you to pay back the money so they make money instead of losing it. Lenders tend to view people with less optimal credit to be riskier, so people with lower credit tend to see higher APRs.
Estimated APR by FICO score range
PERCENTAGE OF PEOPLE IN THIS CATEGORY
What is considered a bad credit score?
There are a few credit-scoring models that you can use to check your credit score, but the FICO credit scoring system is one of the most popular. FICO scores range from 300 to 850, with the scores on the lower end considered poor or fair.
According to FICO, a bad credit score is within the following ranges:
Having a poor or fair credit score can impact your ability to get approved for a loan and can even affect your ability to rent an apartment or purchase a home. If you do get approved for a loan with bad credit, you'll likely be charged the highest interest rates and higher fees. However, there are long-term habits that you can develop to improve your credit score, like paying your bills in full every month and regularly checking your credit report to catch errors.
What makes up a bad credit score?
FICO calculates your credit score using five pieces of information:
If your finances fall short in one or more of these areas, your score will drop. For instance, having a history of late payments will have a huge impact on your score, since payment history contributes the most to your score. Things like bankruptcies, foreclosures and high amounts of debt relative to your income could also result in a bad credit score.
Steps to apply for a bad credit loan
Getting a personal loan with bad credit isn’t impossible, but it requires some research to find the most affordable loan possible. Here are a few steps to get a personal loan if you don’t have strong credit:
Check your credit score. You are entitled to one free credit report every year from each of the credit reporting agencies, though you can currently access weekly reports through April 20, 2022, from AnnualCreditReport.com. Your credit report doesn’t include your credit score, though. You can purchase that from a credit bureau or get it for free from some financial institutions.
Compare bad credit personal loans. If your accounts with your existing bank or credit union are in good standing, it may have a personal loan option for you. You can also research personal loans for people with bad credit online, but read the fine print and independent reviews about the lender.
Take advantage of prequalification. Before you apply for a loan, many online lenders allow you to prequalify, or check whether you’ll qualify without doing a hard credit check.
Look into secured loans. Some lenders offer secured personal loans, which are often easier to get if you have below-average credit. These loans must be backed by an asset like your home or car, but they typically have lower APRs.
Add a co-signer if necessary. Co-signers take on partial responsibility for the loan and may be required to repay it if you fall behind on payments. Adding a co-signer who has good credit could help you qualify and may net you lower interest rates. However, not all lenders allow co-signers, so you will need to research to find one that does.
Be prepared for a hard credit check. While you can get prequalified with many lenders without a hard credit check, the actual application will result in a credit inquiry, which can temporarily damage your credit.
One of the most important things you can do to protect your financial health is to do your research before you apply for a personal loan, especially if you have bad credit.
“I can’t stress enough the importance of educating yourself as a consumer and shopping around for the right financial product to assist you with your goals,” says Leslie Tayne, a debt resolution attorney. “A low credit score does mean you have limited options, but it doesn’t mean you don’t have many options. There are products that assist borrowers with low or bad credit.”
Where can I get a personal loan with bad credit?
When searching for a personal loan with low or bad credit, it is important to consider all of your options before committing to a lender. While bad credit can lead to limitations in the borrowing process, there are still ways to find lenders willing to work with you. Borrowers with bad credit can apply for both online personal loans and loans from direct lenders.
Online personal loans for bad credit
Applying to online lenders can be a good option for borrowers with bad credit, especially if you submit an application through an online lending network. These online networks often allow you to submit a single initial application and then compare offers from responding lenders. Online lending networks make it easier to find the lenders willing to work with you and decide which one will work best for you.
Direct lenders also can offer online personal loans. In this case, you would go directly to a lender you would like to work with that offers online options to apply. In this case, you will want to research beforehand to find lenders that offer bad credit loans.
In-person lenders for bad credit personal loans
If you prefer to get started in person, applying directly with individual lenders is a good option. You can look for local banks and credit unions, especially ones you may already have a working relationship with. As always when applying directly to specific lenders, it is important to figure out which lenders are willing to work with borrowers who have bad credit. Our list of lenders may help you find one that also offers in-person services.
Types of bad credit loans and their uses
There are two main options when it comes to getting a personal loan if you have bad credit: secured and unsecured, but there are many other varieties.
Secured personal loans
Secured loans are those that require collateral, like a home or car. Generally, these loans offer more favorable rates and terms and higher loan limits because you have a greater incentive to pay your loan back. If you have bad credit, it may be easier to get a secured loan than an unsecured one.
Who it's best for: People who feel confident that they will pay back the loan without any problems and will have trouble otherwise qualifying for a loan with a favorable APR.
When to get started: When you have considered all of your loan options and are having trouble finding an option that you can afford, you may want to consider getting a secured loan for a better rate.
How to get started: Consider what items you have that could qualify for collateral and look for lenders that will accept collateral of that type.
Takeaway: Secured personal loans can help someone with bad credit get a loan with a better APR, but it does put whatever is used as collateral at some risk.
Unsecured personal loans
Unsecured loans don’t require any collateral, and the rate you receive is based on your creditworthiness — meaning they may be harder to qualify for if you have below-average credit.
Who it's best for: Generally, this type of personal loan is the best option for most people.
What to watch out for: Because these loans are not secured by an asset, they typically come with a higher interest rate and lower loan limits. APRs may be far above what you're able to pay, and you may not qualify at all.
When to get started: When you need a loan for a bigger purchase or debt consolidation.
How to get started: Shop around for loans, getting prequalified if possible, to identify the best overall loan for you.
Takeaway: Unsecured loans are the most common type of personal loans, but they can be hard to qualify for or get favorable APRs with if you have bad credit.
Payday loans are short-term loans, typically for $500 or less. They charge incredibly high fees in exchange for fast cash, and repayment is typically due by your next paycheck.
Who it's best for: Generally, it is best to avoid these loans unless there are no other possible options.
What to watch out for: The overall cost of borrowing is high — sometimes up to 400 percent in interest — so it's important to weigh your other options first. Payday lenders can also be predatory, so thoroughly research companies before signing up.
When to get started: Start only after you have considered all other options.
How to get started: Research loan companies to ensure you don't use a predatory lender, and have a plan to make sure you can pay back the loan by the due date so you don't get in more severe debt very quickly.
Takeaway: Payday loans have the potential to put you in more debt due to extremely high interest rates. They can also be predatory, and it's best to start your search for a personal loan with more reputable lenders.
A cash advance is similar to a short-term loan and is offered by your credit card issuer. The sum you receive is disbursed in cash and is borrowed from the available balance on your credit card.
Who it's best for: Cash advances are one of the fastest ways to get money, so they may be worth looking into if you have urgent needs.
What to watch out for: If you have an unsecured credit card, your cash advance interest rate will likely be higher than your card’s standard purchase APR and higher than interest rates on personal loans.
When to get started: If you need money quickly and don't have time to wait a few days for money.
How to get started: Contact your credit card company or look up their policies on how to get a cash advance without talking to a representative.
Depending on your bank’s policy, it may approve you for a short-term loan or minimal overdraft agreement. This is, of course, dependent on your banking history and ability to keep your account open. For more information, contact your bank and ask about your options.
Who it's best for: People who have a good relationship with their bank and need to access a small amount of cash as a short-term solution.
What to watch out for: Because bank agreements are not official policies, they are not reliable ways to borrow money.
When to get started: When you have looked at your loan options and find that a bank agreement may be the right decision for you.
How to get started: Contact your bank.
Takeaway: If you'd like to set up a bank agreement, the best way to find out your options is to contact your bank directly and ask about its policies.
Home equity loans for poor credit
Home equity loans disburse a lump sum of money upfront, which you pay back in fixed monthly installments. These loans use your home as collateral.
Who it's best for: Someone who needs a lot of money upfront or who wants to use their home equity to make home improvements that increase the home's value or otherwise improve their financial position.
What to watch out for: Because your home is collateral for the loan, if you fail to make the monthly payments on time, you risk losing your home.
When to get started: After you have shopped around for personal loans and determined collateral will be the best option for you.
HELOCs are similar to home equity loans in that they are based on your home equity and secured by your home itself. HELOCs, however, are functionally similar to credit cards in that they allow you to borrow only as much as you need, when you need it, then repay funds with a variable interest rate.
Who it's best for: Homeowners who need to borrow some cash some at a time rather than all at once.
What to watch out for: As with a home equity loan, you use your home as collateral, which puts you at risk if you don't make the payments on time.
When to get started: When you know you'll need small amounts of cash over a period of time and can pay back what you borrow.
Takeaway: A HELOC is a valid loan option for people with bad credit because you'll secure the loan with your home. It's also a good option if you don't need all of your funds upfront.
Student loans for bad credit
While not a type of personal loan, a student loan may meet your needs if you're trying to pay for education costs like tuition, textbooks and room and board. Many personal loan lenders do not allow you to use funds for education, so you'll have to start your search with dedicated student loan lenders for bad credit.
Who it's best for: Students who need money for their education. Student loans are sometimes the only way to get funding if you need to pay for your college tuition or related expenses.
What to watch out for: Student loans are not offered by many personal loan lenders, and if you have bad credit, you'll almost certainly need a co-signer to qualify.
When to get started: When you become a college student and other funding options such as scholarships or family aid aren't enough to cover your costs.
How to get started: Look for student loan lenders that offer loans for people with bad credit or offer co-signer opportunities.
Takeaway: Unlike the other options on this list, student loans can only be used for one purpose, but almost all student loan lenders accept co-signers if you have poor credit.
Guarantees without approval: Reputable lenders generally want to see your credit report, income and other information before extending an offer. If you come across a lender that isn’t interested in your payment history, you might be getting lured into a bad situation.
No registration in your state: The Federal Trade Commission requires that lenders be registered in the state where they do business. Research whether the business is licensed in your state.
Poor advertising methods: Phone calls and door-to-door solicitation are not considered legitimate advertising practices for trustworthy lenders. Similarly, loan offers that pressure you into taking action immediately are designed to get you to accept without due consideration.
Prepayment: While application, origination or appraisal fees are common loan charges, these charges are often deducted from the total amount of your loan. If a lender requires you to provide cash or a prepaid debit card upfront, it's not legitimate.
Unsecured website: A lender's site should be secure, meaning the website address should begin with "https" and feature a padlock symbol on any page where you're asked for personal information.
No physical address: A reputable lender should have a physical address listed on its website.
Frequently asked questions
How much money you can borrow will depend on the lenders you choose, what kind of bad credit loan you choose and if the lender considers other factors beyond credit. However, loans typically range from $2,000 to $35,000.
The best way to get a more favorable APR or be approved by more lenders is to raise your credit score. You can do that by showing you are responsible with credit like by making payments on time and reducing your debt-to-income ratio and credit utilization.
It is possible to get a no-credit-check loan, however many of these options can be predatory or how extremely high interest rates and fees. You will likely find much better loan terms that don't put you at risk of debt you can't get out of if you search for lenders that accept borrowers with bad credit instead.
Like any loan, you will spend more money over the lifetime of the loan than you borrow. With bad credit loans, you will likely have higher interest rates than you would with higher credit. You may find it harder to pay back the loan plus interest or to get out of debt. However, if you manage your loan and other finances well, a bad credit loan may only be as risky as any other type of credit you use.
After you have decided that a bad credit loan is the right option for you, you may want to take the following steps:
Shop for lenders: Consider which lenders have the options and tools you feel are best for you. Consider the features of managing your loan that will help you stay on top of your finances.
Check your possible rates: After you've narrowed your list down to a few lenders, see if you can check rates with those lenders through a soft credit check. That can help you determine which lenders may offer you the best rates.
Apply for the loan: Once you have decided on a lender, apply for the loan.
Make and stick to a plan to pay off the loan: Have a plan in mind to make sure that you can keep up with the payments and pay off the loan on schedule.
By following these steps and researching your options, you are likely to find personal loans for bad credit that will work for you.