If you have made poor financial decisions in the past and your credit score shows it, you may still qualify for a loan. That’s good news if you need to borrow money for any reason, whether a loan is needed to consolidate debt, pay overdue medical bills, or upgrade the car you need to get to work.
Now, onto the bad news. The problem with loans for people with bad credit is that, by and large, they tend to come with higher interest rates and fees. This means you’ll need to compare several loan options to find the best deal for your personal situation. This shouldn’t be a deal-breaker by any means, but you should plan to spend some time on your search.
Fortunately, we did most of the work for you when we created this list of the best loans for people with bad credit. If your credit is less than perfect but you still need to borrow money, consider this list of lenders and what they have to offer.
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Before 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.
OneMain specializes in personal loans, but what makes them great for borrowers with poor credit is that they offer secured and unsecured loans. Generally, if your credit falls within the poor or bad range, you’ll need to either decrease the loan amount or look for a secured loan. Getting a secured loan means putting something up for collateral, such as a car, boat, truck, motorcycle, or more.
While loans for bad credit can range from $1,500 to $10,000, those with better credit could be eligible for loans as high as $30,000. APR also ranges from 16.05% – 35.99% and typical term lengths can be 24, 36, 38, or even 60 months. You can also visit one of their 1,600 branches in person or handle the entire application process online.
For anyone whose credit score isn’t good, but not severe, PeerForm is a peer-to-peer lender that you may want to consider. As part of their process, any application with a credit score below 600 is declined (so if you have some time, it may be worth working to raise your credit score). Because of their credit score restrictions, they’re able to offer loans ranging from $4,000 to $25,000 to potential borrowers with APRs from 5.99% to 29.99%.
One of the downsides to using Peerform, though, is that it can take up to two weeks to receive funding. So, if you need cash fast, this may not be the best platform for you. Additionally, there are fees associated with the loans, such as a 1-5% origination fee, and loans are only available to residents of 42 states.
Avant focuses on loans for “in between” borrowers — most customers who receive loans have a credit score between 600 and 700. Unlike many online loan startups, it is not a peer-to-peer lender that relies on individual investors to fund loans, instead Avant offers access to loans through its lending platform. That’s good news if you need your funds quickly — you may even have your loan the next business day after you apply.
Loans can range from $2,000 to $35,000 with APRs between 9.95% and 35.99%. Furthermore, the loan terms offered can range from 24 to 60 months. You should also be aware of an administration fee that can range from 1.50% to 4.75%.
They accept applications with credit scores as low as 550
Loans range from $1,000 to $10,000
APRs start around 34% and get as high as 155%
The good thing about NetCredit is they look beyond just your credit score (sometimes accepting applications with scores as low as 550); however, that does come with a cost. Their loans range from $1,000 to $10,000 with APRs starting around 34% — and in some cases ranging as high as 155%. If your offer comes with an extremely high APR, look into other options, such as a secured loan or using a cosigner.
Refers you to multiple lenders after just one application
Loans can top out at $35,000
Competitive APRs with several loan types
PersonalLoans.com allows multiple lenders to solicit your business after you fill out just one application. APRs are competitive and there are several types of loans, which top out at a generous $35,000. Of course, this is a referral site, so your terms, fees, and APRs will vary depending on the lenders who contact you. This kind of information can be easier to determine with a direct lender.
Bad Credit Loans: Minimum FICO Scores
Getting a loan isn’t easy when you have bad credit. Fortunately, a number of lenders offer bad credit loans to borrowers with FICO scores of 600 or lower. The Simple Dollar’s best loans for bad credit include the following lenders:
If you have bad credit, it’s important to remember that it’s possible to improve it over time. Bad credit is not a life sentence, but instead, a temporary situation that can be improved if you put in the work. Before you resign yourself to a lifetime of bad credit, consider taking these steps to turn your situation around:
Get to know your credit report. If you haven’t already done so, pull a free credit report. This will also let you verify that there aren’t any errors or fraudulent activity keeping your credit in the dumps.
Make more payments, and do it on time. Making smaller payments more frequently can help your credit score because it can show you’re using less of your available credit — a good thing for your credit score.
Don’t use most of your available credit, even if you pay it off on time. Your credit utilization ratio — your outstanding balance vs. your total credit limit — should be no more than 30%, but 10% or less is ideal, experts say.
Resist the urge to close accounts. Having credit that you actually don’t use is good for your score. Keep the account active by using it to pay a small bill from time to time. Having the same account open for several years also lengthens your credit history.
Take advantage of credit-building tools: Secured credit cards, for example, provide a safe way to make monthly payments. If you need to take out a loan, ask someone with good credit that you trust to become a cosigner.