Bad-Credit Loans: Compare Online Options

Bad credit often stems from a history of not paying your debts on time. In most cases, it isn’t the result of a single incident but builds up over several years. Bad credit is a FICO score of 579 or less or a VantageScore of 499 or less.

Bad credit can hold you back from many financial opportunities, such as getting a credit card, taking out an auto loan, or applying for a mortgage to buy a home. But if you have bad credit, you may have options. We’ll break down the best bad-credit loans available and other options for those with less-than-stellar credit.

Best personal loans for bad credit 

Bad credit tells lenders it’s risky to loan you money. If lenders approve you for a loan with bad credit, you can expect an interest rate at the higher end of the lender’s threshold. 

A high APR means paying more in interest than someone with good or excellent credit. Specific lenders approve borrowers who don’t meet traditional lenders’ credit requirements, but you might pay more or higher additional fees, such as origination and late fees.

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Tip

Many banks, credit unions, and credit card issuers let you check your credit score for free. You can also use free sites such as Mint and CreditKarma to monitor your credit score. Knowing your credit score can show you what lending options are available if you have bad credit.

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You can click the lender’s name in the table below to jump to our review of its bad-credit loan, or keep reading to get the details on all three.

Lender	Best for	Min. credit score	Rates (APR)
Upstart	Thin (little to no) credit	300	7.80% – 35.99%
Upgrade	Bad credit	560	8.49% – 35.99%
LendingPoint	Changing payment date	None	7.99% – 35.99%

Best for thin credit: Upstart

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LendEDU rating: 4.8 out of 5

• Uses artificial intelligence to provide competitive rates based on unique creditworthiness
• Checking your rate won’t affect your credit score
• Loan amounts: $1,000 – $50,000

Upstart offers loans for borrowers who don’t have a substantial credit history. “Thin credit” is a term for little or no credit. It might mean you’re just getting started on your credit journey and have never borrowed money—in the form of a credit card, student loan, or auto loan, for example. You might not have a high score yet because nothing is on your credit report.

Upstart states its minimum FICO score is 300—the lowest possible—to be eligible for a personal loan. Upstart doesn’t offer cosigned or joint loans, so it only evaluates you based on your credit profile, income, and employment history. Keep this in mind as you explore lenders, especially if you plan to use a cosigner to help you qualify for a loan at a lower interest rate.

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Best for bad credit: Upgrade

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LendEDU rating: 4.9 out of 5

• Credit health tool to monitor your credit score and get personalized recommendations
• Loan amounts: $1,000 – $50,000
• 15-day grace period before late fee is assessed

If you’ve made mistakes that affected your credit history, you might have a choice with a loan from Upgrade. The company caters to borrowers with bad credit—scores of 560 and above—which is terrific news for borrowers who have bad credit and still need cash.

The company charges several fees, including origination and late fees. The origination fee is part of your total loan amount, and you’ll pay interest on it. For instance, if you borrow $5,000 with an 8% origination fee, you’ll get $4,600 a deposit in your bank—Upstart subtracts the $400 origination fee from the amount you get—but you’ll pay interest on the full $5,000. 

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Best for changing payment date: LendingPoint

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LendEDU rating: 4.9 out of 5

• Simple application to see payment options with no impact on credit score
• Proprietary smart technology can paint a more complete picture of you for the lender in seconds
• Loan amounts: $2,000 – $36,500

Many lenders evaluate you based on factors besides your credit score, including your payment history, employment status, and income. This is true for LendingPoint, which requires a credit score of 580 or better.

One perk of a LendingPoint loan is that you can change your due date to one that works best for your payment schedule. If you get paid on the 15th of every month, you can schedule your loan payment to come out after you get paid. That way, you won’t face a late fee if you miss a payment or an insufficient funds fee if your loan withdrawal comes before you have enough money in your account. 

Should you get a personal loan if you have bad credit?

Bad credit can hold you back from financial necessities, including borrowing money when needed. 

Getting a personal loan, even with bad credit, might be the right decision if:

• You can’t negotiate a payment plan. If it’s an outstanding payment, contact the creditor or issuer to see whether you can work out a payment plan. Many creditors will work with you to ensure you can repay your debt, but the longer you wait, the harder it will be.
• You can’t pay with a credit card. If you already have a credit card, and the circumstances allow, you may pay the debt that way. You might carry a balance and incur a finance charge—credit card APRs are often higher than personal loan APRs—but you might be able to apply for a personal loan and risk not getting approved with limited options. 
• You don’t have a cosigner. A cosigner can help you qualify for a personal loan. If they have good to excellent credit, they can help you get a lower interest rate. If you can’t get a cosigner, you might have no choice but to get a loan yourself. 

Our expert’s advice: Most important factors to consider if you have bad credit and want a personal loan

Andrew Steger

CFP®

When considering a personal loan, potential borrowers should first consider what size of a monthly payment will fit their budget and monthly cash flow.  Second, the interest rate, term, and what, if anything, needs to be put up for collateral are important considerations.  Finally, what fees are associated with the loan that may be rolled into the loan and potentially increase the monthly payment or lengthen the duration?

How much does a bad-credit personal loan cost?

The difference between bad credit and good credit can be significant. 

If you think having a bad credit score won’t make a big difference for your loan, take a look at the different types of credit for a $10,000 loan repaid over five years:

Credit type	APR	Estimated monthly payment	Total interest paid
Good credit	10%	$212	$2,748.23
Bad credit	30%	$324	$9,412.04

In this example, the difference between good and bad credit means you could pay more than three times the interest someone with good credit would pay. Improving your credit score credit score could save you thousands.

Can I add a cosigner or co-borrower for a better rate on a loan?

If the lenders you’re exploring allow cosigners or co-borrowers on your loan, and you know someone with good or excellent credit who’s willing to sign, you can add them to your loan for a better rate.

None of the lenders we mentioned above allow cosigners for personal loans. (Check out our resource on the best personal loans with a cosigner if this might be an option for you.)

The difference between a cosigner and a co-borrower could determine which lender you choose. A cosigner backs you in good faith that you’ll repay your loan, and if you don’t make payments, they’re responsible for your loan. They don’t have access to the loan funds or assets and don’t need to repay it unless the borrower fails to make payments.

A co-borrower has the same level of responsibility for the loan as the other borrower and has joint access to the funds and assets. They share a debt liability and joint ownership of the money. 

Our expert advises: Ways to improve your approval odds

Andrew Steger

CFP®

Having a cosigner or co-borrower can definitely help with loan approval. When that is not an option, having consistent cash flow and a good payment history will increase approval chances.  Longer term, simple factors—such as consistent internet and cell phone bill payments or responsible credit card usage—will improve and build credit history. 

How to choose a bad-credit loan

Even with fewer options, you might be able to find the right personal loan. These factors can help you find the right bad-credit loan:

• Eligibility. This lets you know whether you’re eligible without a complete application. Most lenders put these details on their websites, and you can complete a prequalification if the lender offers it. 
• Cost. With bad credit, you could pay the lender’s highest APR. See which lender charges the lowest maximum, and consider which fees and how much each lender charges.
• Repayment terms. Ensure monthly payments are reasonable. A short payment term could mean high payments and a long term could mean low payments but more interest.

With bad-credit loans, you might qualify for loans that charge origination fees, which are often included in the total APRs. Keep this in mind when shopping around. The rate you pay may be higher than the advertised rates.

How to apply for a bad-credit personal loan

Bad credit can hold you back from several lending options for personal loans. But you may have more choices than you think. 

Take the following five steps to apply for a loan.

1. Check your credit. Not all lenders state the credit score you need to be eligible, but some outline the credit score or range you need, which can help you determine whether you qualify for a personal loan. 
2. Make sure you’re eligible. Aside from your credit score, check your eligibility with the lender, and read through its requirements. For instance, many lenders have employment and income requirements. Ensure the lender does business in your state.
3. Compare lenders. Bad credit can mean an APR on the higher end of what the lender offers. Some lenders cap their APRs lower than others. The industry standard is, at most, 36%. See which lenders charge the fewest fees and have the lowest barriers to qualify for a personal loan.
4. Get prequalified. Prequalifying doesn’t hurt your credit. By entering your credit details, you can see whether you’re eligible for a loan from a specific lender. This helps you determine whether the lender is likely to approve you. But remember: It isn’t a complete application or guaranteed approval.
5. Complete an application. Completing a personal loan application triggers a hard credit pull, which can cause your score to dip. Only apply if you’re sure it’s the right lender and terms. Keep in mind: Even if you’re approved, you aren’t obligated to accept a lender, especially if you find a better offer.

Alternatives to personal loans for bad credit

If you don’t qualify for a personal loan because of your credit or want to explore other options, you have several choices.

Alternative	APR*	Best for
Credit card	15.24% – 30.74%	Building credit
Home equity loan or HELOC	6.64% – 15.85%	Home improvements
Retirement plan	Prime rate + 1% – 2%	Low APR

Credit card

If you have a credit card, you have two options: Pay off your debt with your credit card and make payments on your credit card until you pay off your balance, or take a credit card cash advance. 

In most cases, the lender will add a finance charge to your balance if you use your card to pay off your debt. The longer you carry a balance, the longer you’ll pay finance charges. Credit card APRs averaged around 23% in late 2023. The best practice is to pay off the credit card balance in full each statement cycle when possible to avoid excessive interest charges.

Before taking out a cash advance, consider the following:

• Interest rate. APRs are often higher for cash advances and might come with additional fees and requirements.
• Repayment. Many credit card issuers will apply all payments to balances first and then cash advances. If you don’t repay the balance in full, the cash advance amount could remain and rack up significant interest charges.
• Borrowing limits. When taking a cash advance, the amount you can borrow might be limited to less than your credit line.

Cash advances can be an option for small-dollar needs, but if you need to borrow thousands of dollars, consider alternatives.

Home equity loan or HELOC

If you own your home, you might be able to take out a home equity loan or a home equity line of credit (HELOC).  If you’ve been in your home a few months or a couple of years, you may have less home equity available to loan against than someone who’s been in their home for a decade.

A secured loan—which a home equity loan or HELOC is—often means a lower interest rate than an unsecured personal loan. But if you don’t make payments, you could face a lien on your home. The lender still evaluates your credit history for approval but less heavily than unsecured products.

A home equity loan is a lump sum, and a HELOC is a line of credit—similar to a credit card—allowing you to borrow only what you need when you need it. These are still loan products, but you use your home as collateral. 

Retirement plan

If you have an IRA or a 401(k), you can take an early distribution or hardship withdrawal to cover your needs. 

You’ll pay a 10% early distribution fee but won’t pay interest on what you take out as with a loan. These distributions are taxed as regular income, so keep that in mind when you file your tax return.

If you have a 401(k), you might consider a 401(k) loan. Terms vary by lender, but you’re often limited to $50,000 annually. You’ll repay your loan with interest. But 401(k) loans reduce your account balance, meaning you could lose out on potential compounding.

“Be sure to speak with a tax professional or your 401(k) administrator first to ensure you understand all the borrowing and payback terms. When it concerns loans, not all 401(k) plans are the same.”

Andrew Steger

CFP®

What about payday loans?

Payday loans are small-dollar loans—often $500 or less—with high interest and short repayment terms, often by your next payday.

Most payday loan lenders don’t run a credit check, which is enticing for borrowers with bad credit. You’re almost guaranteed approval—with caveats: APRs for payday loans run upward of 400%. That doesn’t include fees you could face if you carry a balance after your due date. 

Payday loans are predatory and unavailable in all states because they target those in need who have bad credit. Treat payday loans as a last resort, and consider alternatives.

FAQ

How does credit score affect the terms of a loan?

Your credit score is the calculation credit bureaus make to determine your creditworthiness. The lower your score, the less proof you’re responsible with credit. A low score means a higher interest rate, and you might not get the total amount you need. 

How does repayment work for bad-credit personal loans?

Like all loans, you must make at least the minimum payment on your loan. Payment history makes up 35% of your FICO score and is your credit score’s most significant calculating factor. So the more on-time payments you make, your credit score increases.

But if you miss even one payment, your credit score plummets. Your payments depend on your terms. So if you have shorter terms, you’ll have higher monthly payments and pay off your loan sooner. If you have longer terms, you’ll have smaller monthly payments but will pay more in interest over the life of your loan.

How can I avoid bad-credit loan scams?

Bad-credit loan scams are real. Some people and companies prey on people in need and could take advantage if you’re in a desperate situation. 

To spot a bad-credit loan scam, look out for the following:

• Upfront fees or costs. If the company requires you to make payments before you complete an application or right after, that’s a red flag. Don’t make payments until you get the funds. For most reputable loans, fees are included in the total loan you borrow.
• Unrealistic borrowing amounts. If a company says you can get a personal loan for more than most lenders offer—e.g., $250,000—take a pause. You also shouldn’t get approved without a credit check. 
• Disbursement method. You should get your funds wired to your account from another account, not a prepaid gift card. Make payments through your bank to the lender’s bank, not Venmo, Cash App, or alternative forms of payment.
• Unsecured website. This could be a sign of a scammer. Check with the Better Business Bureau, the Federal Trade Commission, and the Consumer Financial Protection Bureau to see whether it’s legitimate.
• No business contact information. You could be dealing with a scammer if it’s not a company you recognize or the number doesn’t go anywhere. Try calling the company’s number and searching for the address. A home address—not a business in a building—could mean untrustworthy practices.