A bad credit score, one that’s below 630, doesn’t have to keep you from getting a personal loan. Some online lenders cater specifically to people with bad credit. These companies take into account your credit scores and history when deciding whether to loan you money, but they also have more flexible requirements than banks do.
While personal loans from reputable online lenders can be good options for many borrowers, NerdWallet recommends you first visit your local credit union when shopping for loans. Most credit unions offer flexible loan terms and lower interest rates than online lenders, especially for people with bad credit. The maximum annual percentage rate at a federal credit union is 18%.
If you can’t get a loan through your local credit union, NerdWallet recommends you compare offers from multiple lenders before signing any loan agreement. Rates for bad credit borrowers can vary depending on the lender’s underwriting requirements. The easiest way to compare actual rates is to pre-qualify. Learn about the pre-qualification process.
efore you dive into our research, it’s important to remember that bad credit means different things to different lenders. In some cases, a lender won’t consider an application from a borrower with a credit score below a certain number. For the purpose of this piece, I’m focusing on lenders who will make loans to customers with credit scores under 640. While this is considered “average” in some circles, lending criteria tightens below this mark.
When it comes to getting a loan with really, really bad credit, your options are limited. The loans that do exist are often of the “payday” variety: low-dollar, short-term, and high-interest loans. While a payday loan can provide much-needed cash in an emergency, high interest and fees can make it difficult to repay the loan in the short time period typically provided.
BadCreditLoans.com is not a lender itself, and instead attempts to connect borrowers with poor credit to a network of willing lenders. To apply online, you must be 18 years old, have a valid phone number and email address, provide proof of citizenship or legal residency, hold a checking account in your name, and have a regular income, whether from full-time or self employment, disability, or Social Security.
After putting in a request, you’ll wait to receive offers from their network of lenders. Keep in mind, though, that depending on your financial situation, you may not receive any offers. If you do, typical loan amounts range from $500 to $5,000 with an APR of anywhere from 5.99% to 35.99%, according to their website. The repayment terms generally range from 3 to 36 months. So, for instance, if you were to take out a $3,000 loan with a 35.99% interest rate and 24-month term, you can expect to pay $177 a month. Your principal would be around $3,173 with another $1,252 in interest — which isn’t ideal, but if you need cash fast with poor credit it is an option.
So, we’ll reiterate: Before accepting an unsavory loan offer, be sure that you have no other options, and that you can definitely pay back the entire loan when it’s due.