Looking for a quick answer? For little to no credit, our top pick to get started is Upstart.
|Lender||Best for||Minimum credit score|
|Top Pick: Upstart||Thin credit||300|
|LendingPoint||Changing payment date||N/A|
Bad credit can hold you back from many financial opportunities, such as getting a credit card, taking out an auto loan for a car, or applying for a mortgage to buy a home. Bad credit is a FICO score of 579 or less (or a VantageScore of 499 or less).
You might be able to check your credit score free of charge through your bank, credit card issuer, or another lender. We recommend checking with your local trusted bank or credit union to see whether checking your credit score is an option or service it provides. 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, especially if you have bad credit.
In this guide:
- Best personal loans for bad credit
- Should you get a personal loan if you have bad credit?
- How to choose a bad-credit loan
- How to apply for a bad-credit personal loan
- Alternatives to personal loans for bad credit
- What about payday loans?
Best personal loans for bad credit
Bad credit tells lenders you’re irresponsible when you borrow money. If lenders approve you for a loan with bad credit, you’ll likely get a loan with the highest interest rate the lender charges.
A high APR means paying more in interest than someone with good or excellent credit. Specific lenders approve bad-credit borrowers, but you might pay more or higher additional fees, such as origination and late fees.
Keep reading to find out the details on our top three bad-credit lenders.
Best for thin credit: Upstart
Editorial 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 long 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 an Upstart 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’re exploring lenders, especially if you plan to use a cosigner to help you qualify for a loan at the lowest interest rate.
- Credit score category: Bad
- Minimum credit score: 300
- Soft credit pull to check rates? Yes
- Deposit time: By the next day
- Origination fee: 0% – 10%
- Late fee: $15 or 5% of the loan amount, whichever is greater
- Rates (APR): 6.70% – 35.99%
- Discounts: N/A
- Repayment terms: 3 or 5 years
Best for bad credit: Upgrade
Editorial 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—560 and above—which is terrific news for borrowers who have bad credit and still need cash.
Keep in mind the company charges several fees, including origination and late fees. Your 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, but you’ll pay interest on the full $5,000.
- Credit score category: Bad to fair
- Minimum credit score: 560
- Soft credit pull to check rates? Yes
- Deposit time: Within a day
- Origination fee: 1.85% – 9.99%
- Late fee: Up to $10
- Rates (APR): 8.49% – 35.97%
- Discounts: 0.50%
- Repayment terms: 2 – 7 years
Best for changing payment date: LendingPoint
Editorial 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 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.
- Credit score category: Fair
- Minimum credit score: N/A
- Soft credit pull to check rates? Yes
- Deposit time: By the next business day
- Origination fee: 0% – 8%
- Late fee: N/A
- Rates (APR): 7.99% – 35.99%
- Discounts: N/A
- Repayment terms: 2 – 6 years
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’ll 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 excellent credit, they can get you the lowest interest rate offered. If you can’t get a cosigner, you might have no choice but to get a loan yourself.
How to choose a bad-credit loan
Even with fewer options, you might be able to find the right personal loan. One of the main factors in finding a personal loan is eligibility. Most lenders put these details on their websites, and you can complete a prequalification if the lender offers it. This lets you know whether you’re eligible without a complete application.
Another factor is the additional cost. With bad credit, you could face the highest APR a lender charges. See which lender charges the lowest maximum, and consider which fees and how much each lender charges. For bad credit, you might qualify for loans that charge origination fees, which are often included in the total APR.
Look into repayment terms to ensure you can make reasonable payments every month. If repayment terms are too short, high monthly payments might not be realistic. If terms are long, they might be affordable, but you could pay more in interest over the life of your loan than with shorter terms.
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.
- 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’d qualify for a personal loan.
- 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. Also, ensure the lender does business in your state.
- Compare lenders. Bad credit will likely 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.
- Get prequalified. Getting prequalified doesn’t hurt your credit. By inputting 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.
- 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 bad credit or want to explore other options, you have a few choices.
If you have a credit card, you have two options. One is paying off your debt with your credit card and then making payments on your credit card until you pay off your balance.
In most cases, the lender will add a finance charge to your balance. The longer you carry a balance, the longer you’ll pay finance charges. Credit card APRs average around 16%. The best practice is to pay off the credit card balance in full each statement cycle, when possible, to avoid excessive interest charges.
Another option is a credit card cash advance. APRs for this are often higher and might come with additional fees and requirements. However, many credit card issuers will apply all payments to balances first, then cash advances. If you don’t repay the balance in full, the cash advance amount could remain and rack up significant interest charges. You might also be limited to how much you can borrow. This 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 can take out a home equity loan or a home equity line of credit (HELOC). These options let you use your home’s equity, so 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 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.
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 based on agreed-upon terms.
Remember: You can’t get that 401(k) money back. Even when you start to make payments, you don’t have that money growing in your account, which will reduce your retirement fund through a loss of compounding investment activity.
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. Do not take out a payday loan, and instead consider alternatives.
How does credit score affect the terms of a loan?
Your credit score is the calculation made by credit bureaus that determines 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 much does a bad-credit personal loan cost?
The difference between bad credit and good credit can be costly.
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|
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.
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 in this article allow cosigners for personal loans.
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’ll be 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.
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 that also means 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. If a lender says you’ll get your loan through a prepaid gift card, that’s a problem. Along with that, you should make payments through your bank to the lender’s bank, not Venmo, Cash App, or alternative forms of payment.
- Unsecured website. If the company’s website isn’t secure or encrypted, you could be dealing with a spammer. Check whether the company is registered to do the business it claims to be doing. Check it out 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. Search out the company beyond its website. Call the number that comes up for the company to see who answers and what they say. You could be dealing with a spammer if it’s not a company you recognize or the number doesn’t go anywhere. See what comes up when you search for the address. A home address—not a business in a building—could mean shady practices.