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Best bad credit loans in February 2023

Feb 02, 2023
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Bankrate assesses the top personal loans for bad credit, considering interest rates, terms and features offered by each lender. We also outline different types of bad credit loans, how to spot loan scams and other important information about bad credit loans.
 
Bad credit loans are personal loans from lenders that work with bad credit borrowers. These can be secured (backed by collateral) or unsecured loans. 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.
 
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.
 
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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.

4.7

Bankrate Score
APR from

7.96- 35.97%

with AutoPay
Loan Amount

$1k- $50k

Term: 2-7 yr
Min. Credit

560

Check rate with Bankrate

4.7

Bankrate Score
APR from

8.99- 35.99%

Loan Amount

$2k- $50k

Term: 3-5 yr
Min. Credit

600

Check rate with Bankrate

4.6

Bankrate Score
APR from

8.99- 29.99%

Loan Amount

$5k- $40k

Term: 2-5 yr
Min. Credit

640

Check rate with Bankrate

4.1

Bankrate Score
APR from

8.05- 36.00%

Loan Amount

$1k- $40k

Term: 3-6 yr
Min. Credit

Not disclosed

Check rate with Bankrate

4.5

Bankrate Score
APR from

9.95- 35.95%

Loan Amount

$2k- $35k

Term: 1-5 yr
Min. Credit

Not disclosed

Check rate with Bankrate

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 collected 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. Bad — or low — credit is a score that falls between 300 and 579 and is caused by factors like thin credit history, multiple late payments and maxed-out credit cards. 

If you have bad credit, it can be difficult to get approved for a loan. You'll likely need to turn to lenders that offer loans for bad credit. These loans are either secured (backed by collateral, like a home or car) or unsecured and often come with higher interest rates than other personal loans. 

Before signing on the dotted line, be completely sure you need a bad credit loan, as the higher rates and potentially unfavorable terms could put you in more debt down the road. 

How to get a loan with bad credit 

If you decide that a bad credit loan is your best financing option, the approval process will depend on the lender you work with. However, you can potentially increase your chances of getting approved as you compare bad credit loan lenders. 

After calculating how much you need to borrow, you'll need to start comparing your options. Many lenders offer a prequalification tool that allows you to see your eligibility odds and the predicted rate without impacting your credit score. Prequalify for as many lenders as possible to make sure you get the most competitive offer for your credit situation.

Compare bad credit loan rates in February 2023

LENDER BEST FOR MIN. CREDIT SCORE EST. APR MIN LOAN AMOUNT MAX. LOAN AMOUNT
Upstart Limited credit history No requirement 6.50%-35.99% $1,000 $50,000
OneMain Financial Secured loans Not specified 18.00%-35.99% $1,500 $20,000
TD Bank Low rate caps 700+ 6.99%-21.99% $2,000 $50,000
Avant A range of repayment options 580 9.95%-35.95% $2,000 $35,000
LendingPoint Small loans 600 7.99%-35.99% $2,000 $36,500
Upgrade Fast funding 560 7.96%-35.97% $1,000 $50,000
LendingClub Online experience Not specified 8.05%-36.00% $1,000 $40,000

Best loan for limited credit history

Min. credit score:
Not disclosed
Fixed APR From:
6.50% –35.99%
Loan amount:
$1,000– $50,000
Term lengths:
3 to 5 years
Min. annual income:
$12,000

Overview: Upstart developed a reputation for offering fast and fair unsecured personal loans. APRs for Upstart loans vary by state and range from 6.50 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.

Best secured loan

Min. credit score:
Not disclosed
Fixed APR From:
18.00% –35.99%
Loan amount:
$1,500– $20,000
Term lengths:
2 to 5 years
Min. annual income:
$7,200

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.

Best loan for low rate caps

Min. credit score:
Not disclosed
Fixed APR From:
6.99% –21.99%
Loan amount:
$2,000– $50,000
Term lengths:
1 to 5 years
Min. annual income:
Not disclosed

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.

Best loan for a range of repayment options

Min. credit score:
Not disclosed
Fixed APR From:
9.95% –35.95%
Loan amount:
$2,000– $35,000
Term lengths:
1 to 5 years
Min. annual income:
$14,400

Overview: Avant offers unsecured loans of between $2,000 and $35,000 with APRs from 9.95 percent to 35.95 percent.

Why Avant is best for a range of repayment options: Avant’s loans offer repayment terms of 12 to 60 months, and with no prepayment penalty, borrowers can save money on interest by paying their loans off early.

Best for small loans

Min. credit score:
600
Fixed APR From:
7.99% –35.99%
Loan amount:
$2,000– $36,500
Term lengths:
2 to 6 years
Min. annual income:
$30,000

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.

Best loan for fast funding

Min. credit score:
560
Fixed APR From:
7.96% –35.97%
Loan amount:
$1,000– $50,000
Term lengths:
2 to 7 years
Min. annual income:
$30,000

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 7.96 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.

Best loan for online experience

Min. credit score:
Not disclosed
Fixed APR From:
8.05% –36.00%
Loan amount:
$1,000– $40,000
Term lengths:
3 to 6 years
Min. annual income:
Not disclosed

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.

What to know about your credit score and securing a loan

Lender's often base rates off of creditworthiness — a borrower's overall credit health. Borrowers with excellent credit are eligible for the most competitive rates and terms, while those with a thin credit history or a less-than-ideal score are more likely to be offered higher interest rates. 

Here's a rundown of the estimated APR you could receive based on your credit score.

Estimated APR by FICO score range

CATEGORY CREDIT SCORE PERCENTAGE OF PEOPLE IN THIS CATEGORY ESTIMATED APR
Excellent 800-850 21% 10.3%-12.5%
Very good 740-799 25% 10.3%-12.5%
Good 670-739 21% 13.5%-15.5%
Fair 580-669 17% 17.8%-19.9%
Very poor 300-579 16% 28.5%-32%

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:
 

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 get approved for a loan with bad credit, you'll likely be charged the highest interest rates and fees. However, there are long-term habits that you can develop to improve your credit score.

If you're in need of a personal loan in the near future and don't have the ability to build your credit before applying, making the monthly payments in full and on time is a surefire way to build your score while paying off your balance.

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.

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 an online lender.

While bad credit can lead to limitations in the borrowing process, there are lenders, banks and credit unions who gear their products specifically toward borrowers in this situation. Plus, it's not uncommon for financial institutions to provide helpful financial resources and member benefits should you borrow from them.

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 that offer the most competitive rates, which makes it easier to sift through the details to find the best fit for you. 

Direct lenders also can offer online personal loans. To make the process easier, do your research beforehand to see if the lender you'd like to work with offers loans to borrowers within your credit range. 

In-person lenders for bad credit personal loans

If you prefer to get started in person, applying directly with individual lenders, banks and credit unions could be a good option. Before turning to new lenders, see if the institution you bank with offers personal loans for your credit range — member discounts or exclusive ebenefits may be available. Compare the rates you're offered at these institutions with new lenders as well.

Types of bad credit loans and their uses

There are two main options for getting a personal loan if you have bad credit: secured and unsecured, but there are many other varieties:
 

Pros and cons of bad credit loans 

While every loan comes with advantages and disadvantages, borrowers with low credit will need to carefully consider the potential drawbacks to avoid getting into high-interest debt down the road.

Pros

  • Checkmark

    Flexible eligibility: Loans for borrowers with credit that's average and below are more likely to base approval on factors other than just credit score. For example, Upstart also factors in education and job history when evaluating an application.

  • Checkmark

    Potential credit boost: A positive repayment history is one of the fastest ways to grow a credit score.

  • Checkmark

    Lower rates than credit cards: While loans of this nature carry higher rates when compared to other personal loans, they generally have lower interest rates than most credit cards.

Cons

  • Possible fees: Before applying, read the fine print in the terms and conditions to look for any hidden fees. Due to the lower credit range of the applicants, many bad credit loans charge high fees that can detract from the overall value of the loan.

  • Collateral requirements: Some lenders only offer secured loans for borrowers who have low credit, which poses a risk to the borrower should they become unable to make the monthly payments.

  • Increased predatory potential: Many predatory lenders will advertise their products similarly to bad credit loans. However, these often come with rates that are near impossible to manage and leave the borrower in years of debt.

Alternatives to bad credit loans

Bad credit loans carry a reputation for high interest rates — which for some could lead to long-term financial damage. Before signing off on a loan you're not positive you can manage, consider the alternatives.

How to spot bad credit loan scams

While shopping for a personal loan, avoid potential scams by being aware of the following red flags.

  • 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

Methodology

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.