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Our research, news, and assessments are scrutinized using strict editorial integrity. In full transparency, our company may receive compensation from partners listed on our website. Learn more about how we make money here.
Updated: 4/4/2018
If you have bad credit, you're not alone. It turns out that nearly a third of Americans have bad or poor credit scores between 300 and 600, according to 2016 data from the credit bureau Experian. Even worse, 26 million Americans have no credit score at all as their credit files are too thin to justify a score.
But just because your credit is bad, doesn’t mean you’re not like everyone else and sometimes find yourself needing to borrow money. There are a number of reasons why someone who has bad credit might want to take out a personal loan.
For example, if your car breaks down you might need a loan to help you pay for it to be repaired. You might also need a personal loan to pay for a medical procedure, finance a renovation on your home, start a business, or to cover the cost of an emergency expense like a trip to see a loved one who is ill.
No matter the reason why you need a personal loan, this guide will help you figure out how to get one despite having bad credit.
using our pre-qualification tool
Rates (APR)
17.47% - 34.99%
Repayment Terms
24 - 48 months
Pre-Payment Penalties
No
Min. Loan Amount
$3,500
Max. Loan Amount
$20,000
Minimum Credit Score
600
using our pre-qualification tool
Rates (APR)
9.95% - 35.99%
Repayment Terms
Min. 24 Months
Pre-Payment Penalties
No
Min. Loan Amount
$2,000
Max. Loan Amount
$35,000
Minimum Credit Score
580
using our pre-qualification tool
Rates (APR)
Depends on Lender
Repayment Terms
3 - 36 Months
Pre-Payment Penalties
N/A
Min. Loan Amount
$500
Max. Loan Amount
$5,000
Minimum Credit Score
Depends on Lender
using our pre-qualification tool
Rates (APR)
99% - 199%
Repayment Terms
Up to 36 Months
Pre-Payment Penalties
No
Min. Loan Amount
$500
Max. Loan Amount
$5,000
Minimum Credit Score
N/A
at Peerform's secure website
Rates (APR)
5.99% - 29.99%
Repayment Terms
Up to 36 months
Pre-Payment Penalties
No
Min. Loan Amount
$1,000
Max. Loan Amount
$25,000
Minimum Credit Score
600
on One Main's secure website
Rates (APR)
12.99% - 36%
Repayment Terms
36 - 60 months
Pre-Payment Penalties
No
Min. Loan Amount
$1,500
Max. Loan Amount
$25,000
Minimum Credit Score
N/A
LendingPoint is an online personal lender based in Georgia that offers personal loans to those with bad credit. They offer loans that range between $3,500-$20,000 and specialize in making loans to borrowers with credit scores that are between 600 and 680. Their fixed interest rates can range from 17.47% to 34.99% and their term lengths can be anywhere from 24 to 48 months. They have a quick online application and you can get pre-approved within as little as 24 hours. They do a soft pull on your credit in order to pre-approve you for a loan. They primarily decide to lend to borrowers based on their income and their credit score.
The benefits of using LendingPoint are that you can get money in your account as little as 24 hours after you submit your application. That’s much faster than some other companies who provide personal loans for bad credit. They also do a soft credit pull which will not affect your credit if you're just shopping around for a rate and they have no pre-payment penalties. In addition, they offer the option of making two payments per month rather than just one. This can potentially make it easier for you to manage your repayment and could reduce the amount of interest you pay over the life of your loan.
Some downsides of using LendingPoint are that they do not provide loans to those who have credit scores that are below 600. They also charge an origination fee that varies, but can be up to 5% depending on the state you live in. They also have relatively high interest rates compared to some other lenders and that could mean you'll be paying a significant amount of interest on your loans.
using our pre-qualification tool
Avant is an online personal lender based in Chicago that provides loans to borrowers that have poor or bad credit. They have provided 600,000 customers with loans that range in amounts between $2,000 and $35,000. Their turnaround time averages around two days from when you submit an application to when you get the money in your account and they charge interest rates that start at 9.95% and go up to 35.99%. They focus on borrowers who have credit scores that are at least 580 or above, but their average scores range between 600 and 700. In order to qualify for a loan, you have to earn at least $40,000 a year. Their term lengths range from 2 to 5 years.
One of the benefits of Avant is their quick turnaround. If you need money quickly, Avant might be the right lender for you. They also have a lower credit score cut-off than other lenders that provide personal loans for bad credit – so more borrowers will be able to qualify. Another benefit is that they have something called a late fee forgiveness policy where, if you are late on your payment by more than 10 days, but you pay on time for the next three payments then the $25 late fee they will have charged you will be refunded. Finally, a big benefit is that you have a lot more flexibility on how much you can borrow with both a smaller minimum borrowing amount and a higher maximum borrowing amount than other lenders.
Some downsides of Avant are that their term lengths are relatively short. That means that your monthly payments are likely to be much higher, but since the loans are shorter, you might pay less interest over the life of your loan. Some downsides of borrowing via Avant are that their interest rates are relatively high and that they charge an origination fee of between 1.50% and 4.75% depending on your state.
using our pre-qualification tool
BadCreditLoans.com is a company that's been around since 1998 and since then they have tried to help those who have bad credit access loans. They are not a direct lender, but they are a loan broker or loan marketplace that connects borrowers who have bad credit with lenders who provide loans to those who have bad credit.
They specify that they target those with poor credit since many of those who have very bad credit scores do not qualify for loans over $1,000 from their lenders. BadCreditLoans.com’s lenders offer loans between $500 and $5,000 for terms between 3 and 36 months. The amount that you'll pay in interest depends on which lender you choose to go with and BadCreditLoans.com does not share the credit range that you might pay.
Some benefits of using BadCreditLoans.com are that you can get a number of different quotes from lenders who specifically provide funding to those who have poor or bad credit by filling out just one application. This makes the process of applying for a loan if you have bad credit much quicker. Another benefit is that when you fill out an application they do not perform a hard credit check - which means that your credit score won’t be affected.
Some downsides of using BadCreditLoans.com are that the do not provide loans to those who have credit scores that are very low and that you’re likely to pay high interest rates. You also might have to pay an origination fee with some of their lenders. While they make comparing competing offers from lenders easier, make sure that you still read the fine print of any loan offers since any additional fees could greatly impact the cost of your loan.
using our pre-qualification tool
OppLoans is an online lender that provides personal loans for people who have subprime or poor credit. The company is an alternative to predatory lenders who offer payday loans and cash advances at outrageously high interest rates and on very short terms.
Compared to these lenders, OppLoans offers significantly lower interest rates, the ability to borrow more money, and longer term lengths. While OppLoans’ interest rates are higher than traditional bank loans, that's because they're lending to a very different type of borrower – one who is likely to be rejected for a loan from other lenders. OppLoans’ application process is quick and you can often get a response without minutes. OppLoans is based in Chicago, Illinois.
OppLoans allows you to quickly apply for a loan online, potentially get approved within minutes, and get your loan funded within the next business day. Unlike payday lenders, they also report your good credit behaviour to the three credit bureaus in order to help you build your credit score and they offer borrowers a discount if they participate in their credit education courses. OppLoans allows you to borrow anywhere from $500-$5,000 for terms up to 36 months or three years. They charge 99% to 199% in interest, but they have no pre-payment fees.
The amount of interest you’ll pay will depend in part on which state you live in. In four particular states, they do charge an administration fee when you set up your loan which also varies depending on which state you live in. Their loans require no collateral which makes it easier for those with poor credit to qualify. They also don't currently provide loans in all U.S. states, but only in the following states: Alabama, California, Delaware, Georgia, Idaho, Illinois, Kansas, Mississippi, Missouri, New Mexico, Ohio, South Carolina, Tennessee, Texas, Utah, Virginia, and Wisconsin.
In addition to personal loans, they offer lines of credits in Kansas, Tennessee, and Virginia. Lines of credit act more like credit cards than installment loans – you can borrow and pay back money and then borrow it again and you’re required to pay a minimum payment each month representing a percentage of your balance rather than a set payment each month like an installment loan. They offer lines of credit worth $500-$5,000.
If you're considering going to a payday lender in order to get money quickly, then you're far better off getting a loan from OppLoans since a payday lender could charge you up to 400% in interest. Payday lenders also have very short terms – usually only a couple of weeks, and they typically focus on smaller loans. By extending your loan repayment up to 36 months by borrowing from OppLoans, that makes your loan easier to pay off, but it could increase the amount you pay in interest over the life of your loan.
A personal installment loan from OppLoans is cheaper, safer, and more flexible than payday lenders, there are potentially better options for those with poor or bad credit in personal loans from other online lenders. Even taking a short-term payday loan from a predatory lender or using a credit card will likely cost you less than taking 3 years to repay a loan at such a high interest rate.
While not all online lenders are willing to provide financing for people with poor or bad credit, there are some that do and have much lower interest rates. OppLoans’ interest rates of 99% to 199% are quite high and would make repaying a loan from them incredibly difficult. Ultimately, despite the fact that OppLoans offers more options than payday lenders or cash advances, a loan from OppLoans is still going to be quite costly to repay.
OppLoans has extremely high customer satisfactions ratings which typically comment on the ease of application, quickness of funding and the amazing customer experience.
using our pre-qualification tool
One Main Financial is an online lending company that was bought by Springleaf, a bank that has been around for over 100 years (Springleaf later changed it’s name to One Main Financial). They have a long track record and have offered personal loans to over 10 million customers in 44 states. They are one of the few lenders who will provide personal loans to those who have credit scores below 600. One Main Financial’s loans start at $1,500 and go up to $25,000, and their fixed interest rates range from 12.99% to 36%. They offer both secured and unsecured personal loans. Their loan terms range from 36 to 60 months and they don’t have pre-payment penalties.
Some benefits of borrowing from One Main Financial include that you're more likely to be approved since they will consider people with lower credit scores. One Main is also one of the few lenders who allow you to submit a joint application for credit. Getting pre-approved for a loan doesn’t require a hard credit check, although they will do one when you accept the loan offer. Another key benefit is that they don’t have a minimum cut-off when it comes to your credit score like some other lenders so you might be more likely to get a loan from One Main than other lenders – although if you’ve filed for bankruptcy they will likely not give you a loan.
But while there is an easy online application, actually getting your loan is more difficult. You have to go into a physical branch in order to get your loan funded. With over 1,500 branches across the U.S., One Main Financial claims that 5 in 6 Americans live close to a branch, but if you don’t then you won’t be able to get a One Main Financial loan. Also, while One Main Financial gives out loans in most states, it excludes Alaska, Arkansas, Connecticut, Massachusetts, Nevada, Rhode Island, Vermont, and Washington, DC.
*See OneMain Financial Disclosures
Peerform isn’t a lender, but a lending platform that connects borrowers with bad credit with investors who want to fund loans. They have a minimum credit score of 600, but their borrowers have an average score of 665 and an average income of $85,000 with a debt-to-income ratio around 19.3%. They offer loans up to $25,000 and their fixed interest rates are quite competitive from 5.99% APR to 29.99% APR.
Their maximum debt-income-ratio is 40% and their minimum loan is $1,000. The term lengths on their loans can go up to three years. They have an easy online application and funding can come anywhere from three business days to two weeks – depending on how quickly you submit your documents and how long it takes to find an investor who wants to fund your loan.
Some benefits of Peerform are that they have relatively low interest rates for those who have poor credit. It's also relatively easy to apply for a loan from them using their online application. Another benefit is that they perform a soft credit check rather than a hard credit check when pre-approving you for a loan. They only do a hard credit check once your loan is approved and you’ve decided you want to accept it.
Unfortunately, there are also some downsides to Peerform. For example, they charge origination fee of between 1% to 5% of your loan amount. In addition, you don’t just need to be approved by the company as a borrower, but you also need to wait for an investor who is willing to invest in your loan. Another downside is that they do not offer loans to those whose credit score is under 600, which means that many people who have bad credit will not qualify for Peerform loans.
Unfortunately, it is more difficult to qualify for a personal loan if you have bad credit. That's because lenders will be wary of lending to you since your low credit score will make them uncertain of whether or not you'll be able to pay them back.
Whether you have bad credit because you have a very thin credit file or you've done something in the past that has caused your credit to go down such as being delinquent on other credit accounts or filing for bankruptcy, many lenders will be unwilling to take a risk and lend to you. In fact, most banks and credit unions do not lend to people who have bad credit. In addition, many online lenders refuse to give personal loans for bad credit.
But that doesn’t mean you can’t get a loan – it just means you have to seek out lenders who specifically lend to borrowers who have bad credit. You also need to realize that you will likely have to pay a higher interest rate in order to get a loan from these lenders since they will be taking on more risk and therefore price that into the cost of your loan.
While personal loan lenders often pay close attention to your credit score when you're applying for a loan, a credit score isn't the only thing that they look at. They also look at how much money you're making. If you’re employed, they will want to see a copy of your paystub and if you’re self-employed they’ll want evidence of your income. They’ll likely ask for anywhere from 2 to 5 years of tax returns depending on the lender.
But your lender will also want to understand your free cash flow, and your debt-to-income ratio. To get a better idea of your cash flow they will look at your expenses or at typical expenses for someone in your income range versus how much money you have free to pay for other things such as loans payments.
Your debt-to-income ratio is also something that they take very seriously. Essentially, a debt-to-income ratio looks at how much money you gross per month compared to how much you are paying on existing debt or loans. For example, if you make $4,000 before taxes and you have a $1,000 mortgage then you will have a debt income ratio of 25%. Lenders will add up the payments on all the debt you have such as mortgages, other personal loans, auto loans, credit card debt and student loans and calculate your debt-to-income ration. Most lenders won't lend to you unless your debt-to-income ratio is between 36% to 43% - although each lender could have a different cut-off.
Another thing that lenders look at are things like derogatory marks on your credit history such as if you have failed to repay a loan, have gone through bankruptcy, experienced foreclosure, had a tax lien against you, or have otherwise been delinquent on your payments or not fulfilled your obligations as a borrower. While some lenders won't lend to you if you have any derogatory marks, others require that you simply have none in the last six months to one year.
Depending on the lender, there might also be other things they look at before deciding whether to give you a loan. Some lenders use alternative underwriting criteria that look at more than just your credit score and income. These alternative criteria could include things like your bank account and your assets to determine your ability to save money and your current resources. They might also include things like what college you went to and your profession.
If you're shopping for a personal loan, you might be seeing advertised rates that can start as low as 2% to 3%. But if you have bad credit, you will likely not be eligible to receive any of those low rates.
In fact, according to NerdWallet’s 2016 Lender Survey, those who have bad credit or scores between 300 and 629 will receive on average an APR of 28.64% and those with the lowest scores in that range will be unlikely to qualify for a loan with most lenders. For those with average credit of 630 to 689, you will likely receive a rate of around 19.84%.
If you’re considering taking out a personal loan, there are a lot of important things that you should consider. The first thing that you should look at is the interest rate that you'll be paying. But you don't just want to know how much they're charging you, you also need to be aware of the type of interest rate it is. When you are borrowing money, you can either get a fixed interest rate on your loan or a variable interest rate on your loan.
A fixed rate loan is one in which the interest rate that you are given when you take out your loan remains the same throughout the entire life of your loan. In contrast, a variable rate loan is one in which the interest rate that you are initially get can change throughout the life of your loan as the prime interest rate goes up and down.
Variable rate loans tend to have lower interest rates to start, but since those rates can potentially go up or down, you could end up paying much more in interest over the life of your loan than if you had chosen a fixed rate loan. Since we are currently experiencing historically low interest rates, if you get a fixed rate loan that rate is likely to go up over the course of your loan term.
Another thing to consider is the term length of your loan – which refers to how long you have to repay your loan. Many lenders offer a variety of different terms from short term loans that can last as little as 12 months to longer term loan that can last as long as 84 months or more. Shorter term lengths will mean that you will pay less over the life of your loan in interest, whereas longer term lengths will mean that you will pay more interest overall.
But short term lengths also mean that you will likely have higher monthly payments versus longer term lengths which will have lower monthly payments because they extend your repayment over a longer time period.
Other things to look for when taking out a loan include what fees the lender charges. Many lenders will charge something called an origination fee on your loan. That means that when you take out your loan, they will charge you anywhere from 1% to 3% or more of your total balance just to give you your loan. This is charged when your loan is disbursed and it's often either added to the balance of the loan or subtracted from the amount that you're given. Obviously, it’s important to know if a lender charges an origination fee because it impacts the cost of your loan considerably and it will help you compare different loan options to discover which is the cheapest.
There are also other fees that you should watch out for such as application fees or pre-payment fees, which make you pay a penalty if you decide to repay your loan faster than agreed upon.
When you're shopping for personal loans, you might hear about the option of getting either a secured or unsecured personal loan. Secured personal loans are those that have collateral connected to the loans. That can be some type of asset that you own such as a house, a car, or something like a boat. That asset is tied to your loan so that if you are not able to repay your loan, the lender can seize that asset in order to repay the loan by selling it. In contrast, an unsecured loan has no collateral or asset attached to it so, if you were unable to repay your loan, the lender can't seize your assets.
For those with bad credit, it can be easier to qualify for a secured personal loan. That's because many lenders will be unwilling to lend to you since they will see you as a lending risk. By providing security on your loan, the lender is more likely to take a chance on you.
You might also be able to get a lower interest rate if you get a secured personal loan since there is less risk to the lender. You’ll need to decide what's right for you and whether you want to put your car or home at risk in order to get a loan or a better interest rate.
If you have bad credit, it's not the end of the world. You can still qualify for loans from some lenders, but you might decide to wait and improve your credit if you are rejected for a loan or want better interest rates. There are a lot of ways that you can improve your credit, but not all of them are quick fixes. The best way to improve your credit is to borrow responsibly and repay your debt over time. But if you need money now and want to quickly improve your credit, I share some tips below.
One relatively quick way to improve your credit is to check your credit utilization. A big part of your credit score is calculated by looking at how much you are borrowing at any time compared to how much available credit you have. This is called your credit utilization and, to get an optimal score, you should keep it between 20% and 30% of your total available credit.
Many people borrow more than that. For example, if they have a $10,000 limit on their credit card they might have $5,000 worth of debt on that card which is a 50% credit utilization ratio. You can potentially change your utilization by paying down the amount until it's under 20% to 30% of your limit or by asking your credit card company to increase the limit on your credit card in order to reduce the amount of your available credit that you're using.
Another way to improve your credit relatively quickly is to ask someone who has a great credit score and a long credit history if they would be willing to let you be an authorized user on one of their oldest credit cards. The length of time you’ve had your credit accounts and your credit history are important factors in calculating your credit score and when you become an authorized user on another account that credit account gets added to your credit history. Your score can get a big boost based on your friend’s or family member’s good credit behavior on that card and you don’t need to actively use that card to take advantage of the credit boost.
Another way to quickly improve your credit score is to check your credit history for mistakes. You can a free copy of your credit history once per year at FreeCreditReports.com. If there are any mistakes that are potentially causing your credit to be lower than it should be, you can write the credit bureaus to report those errors. If they are indeed found to be wrong, those entries will be removed from your credit report and your credit score might improve.
Another way to improve your credit history is to diversify your credit since that is another factor that is used to calculate your credit score. If you currently only have student loans, you might take out a credit card or if you only have regular credit cards you could take out a department store credit card. The more credit diversity you have the better – but just remember that applying for too much credit at the same time can have an impact on your score.
Scammers are most likely to target people who are desperate and that often includes people who have bad credit who are looking to get a loan and having a difficult time finding one. For that reason, it's important that you be careful when you're searching for a bad credit loan and that you know what to look out for in order to avoid getting duped.
Some common scams include things like the advance payment scam where a lender or loan broker will ask you for a fee before you receive the loan. Sometimes this is supposedly for origination fees or for advance payment on a portion of your loan – but it’s almost always a scam since reputable lenders won’t ask for an advance payment for these things.
Another popular scam is the phishing scam where scammers either call or send you an email impersonating a legitimate business and asking you to provide them with personal information like your bank account number and password, your SSN number, your date of birth, and other information. They can either directly steal your assets from your bank account or steal your identity in order to open up credit accounts.
Be wary of any lenders that ask you to wire money to them, or those that put pressure on you to act immediately. Reputable lenders will never ask you to wire money and those that are putting pressure on you to act quickly often are doing so because they don't want you to look too closely into what they're doing.
If you think that a lender that you contacted might not be reputable, it's important that you contact your state’s Attorney General’s office to see if that lender is registered in your state. You can also contact the Better Business Bureau to check their rating.
