Personal loans can help you consolidate debt and fund major purchases without using credit cards. Plus, unsecured loans don’t require that you risk your home or car as collateral the way some other types of loans do. But it’s hard to get approved for a personal loan with bad credit, and you may have already faced challenges when applying for loans.
The good news is that you may be able to qualify, even with a limited credit history or problems in your credit reports. Unfortunately, you have fewer choices with bad credit, and borrowing will be more expensive.
Whenever possible, it’s best to minimize borrowing until your credit improves—but that’s not always an option. If you need to apply for a personal loan, start with the resources below. This list is designed to help you find lenders that:
- Are most likely to approve you with bad credit
- Typically offer competitive (although not necessarily low) interest rates on personal loans
Based on that criteria, here are our picks for the lenders that offer the best personal loans for people with bad credit.
Best Loans for Bad Credit
LendingClub is a well-established online lender that makes a large volume of loans. It does not publicly share any minimum credit score requirement, but interest rates for the least creditworthy borrowers can be quite high—as much as 35.89% APR. Plus, you may need to pay an origination fee of 1% to 6% of your loan amount. With three- and five-year repayment options, you can keep monthly payments relatively low.
Relatively long history of lending online
Two reasonable repayment periods keep it simple and should result in a payment that works
Fixed interest rate prevents surprises
Borrow as little as $1,000
Origination fees that reduce your loan proceeds can leave you with less than you need
Interest rates above 30% make borrowing expensive
Unlike credit cards, personal loans with fixed rates typically have the same payment every month, which helps you manage your budget.
OneMain Financial offers a variety of loans, including unsecured personal loans, to borrowers with bad credit. There is no minimum credit score required to apply. Interest rates here are also as high as 35.99%, and there's an origination fee ranging from $25-$300 or 1%-10%, depending on your state. Borrowing minimums and maximums also vary by state but generally range between $1,500 and $20,000.
Several repayment terms to choose from
Fixed interest rate prevents payment shocks if rates rise
Same-day funding in some cases
Offers an in-person lending experience
In-person visit may be required for verification before funding your loan
Interest rates above 30% make borrowing expensive
Avant is an online lender that promises quick funding for personal loans. An Avant representative says that there is no minimum credit score requirement and everybody is welcome to apply. However, those with credit scores above 600 are more likely to get approved and may qualify for lower interest rates. Avant may charge an administration fee of 4.75%, and the highest APR is currently 35.99%.
Fixed-rate loans for predictable repayment
Customer service available seven days a week by phone, email, and chat
Repayment terms of two to five years
Loans as small as $2,000
Not available in all states
At the highest rates, it may be best to avoid borrowing
If you’re battling credit card debt, consolidating your loans can help you regain control. Peerform has no minimum credit score requirement, but you must be free of delinquent payments in the past 12 months. Peerform’s loans last for three years, and there are no prepayment penalties if you pay off your debt faster. Three years should be a decent timeframe to provide breathing room without dragging things out for too long.
Loan amounts range from $4,000 to $25,000, and origination fees are taken out of the loan once it is credited to your account. Interest rates are fixed and may range from 5.99% to 29.99% APR.
Pay off debt within three years
No prepayment penalty
$4,000 loan minimum might be more than you need
Strategies like the debt avalanche might work better
All of the lenders shown here offer installment loans, but LendingPoint provides a high degree of flexibility when it comes to your installment payments. You can choose from loan terms ranging from 24 to 48 months, and you view those options as soon as you check your rate. You can also choose between monthly and biweekly installment payments, depending on your needs. Loan amounts range from $2,000 to $25,000, with interest rates ranging from 9.99% to 35.99% APR. The only catch might be that LendingPoint prefers borrowers with a credit score above 585.
Payments by check don’t cause additional fees
No prepayment penalty
Funding as soon as the next business day
May be hard to qualify for the people with the lowest credit scores
Minimum loan amount of $2,000
Local Banks and Credit Unions: Best for Low Interest Rates
In a world of online banking and peer-to-peer (P2P) lending, brick-and-mortar institutions may seem irrelevant. But they’re still helpful, particularly if you have bad credit. The best offers you see advertised online are only available to borrowers with excellent credit. But your local bank or credit union might be eager to serve the community and work with borrowers who have less-than-perfect credit.
Credit unions, as not-for-profit institutions, might be an especially good bet—but don’t rule out small banks. Credit unions are unique, though, because they may offer Payday Alternative Loans (PALs) in addition to personal loans. Depending on your credit rating, those small, short-term loans might be better than anything else available.
Secured loans: If you can’t get approved for an unsecured loan, ask your bank or credit union about secured loans. Products like auto title loans are notoriously expensive, but if you get one from a financial institution, you might get reasonable terms. For example, the credit union might allow you to borrow at the same low interest rate as somebody getting a car purchase loan.
Why Go Local?
If you have your checking account with a local institution and you receive regular pay into that account, you might have a better chance of getting approved because lenders can view your transaction history. Plus, while speaking with a loan officer, you might discover additional options you weren’t aware of.
In-person discussions can provide tips on how to improve your application
Loan officer review might result in approval where an automated system would deny you
Can provide guidance on avoiding predatory lenders
Takes time to visit in person
Application process might be more cumbersome than you’d experience with online lenders
May require credit union membership
What it Means to Have Bad Credit
When we say “bad credit,” here, we’re referring to your FICO score. The FICO 8 scoring model classifies scores of 579 and lower as bad credit. If you have slightly better credit, consider looking at personal loans for fair credit—you might have more options and qualify for more favorable terms.
Can You Get a Loan With Bad Credit?
The process of applying for a loan is similar whether you have bad credit or excellent credit. Select at least three lenders, and compare the offers with the interest rate, origination fees, and other features in mind. If it makes sense to move forward, apply for a loan. It may take some extra work to find the right lender, but the list above should help you narrow things down.
Depending on the lender, you might apply entirely online or complete your application on paper. Plan to provide details about yourself (your Social Security Number and address, for example) as well as information about your income.
Get quotes from a mixture of online and local lenders, compare offers from at least three of them, and pick the best deal. But only do that for lenders who say they do a “soft pull” or “soft inquiry” of your credit report or that checking offers won’t hurt your credit score.
Lenders review your application after you submit it, and they may ask for additional information to help with the approval decision. Provide any information needed promptly to keep things moving forward, and ask for clarification if you’re not sure what to give them. In some cases, the process moves fast, and you might get an answer on the same day.
Once your loan is approved, your lender completes funding. In many cases, the lender transfers money directly to your bank account electronically.
What Are Bad Credit Loans?
Loans for people with poor credit scores have higher interest rates than people who apply for loans with a good credit score. Loans made to people with bad credit also sometimes have higher fees or come in lower amounts than what someone with a good credit score can qualify for.
How Can You Get a Loan With Bad Credit?
Check your credit: Get your free credit reports and verify that there are no errors that can drag down your credit scores. Checking your credit should not affect your credit scores if you use AnnualCreditReport.com.
Pay down debt: If you’re carrying credit card debt, pay down your balances to 30% or less of your available credit limit. Doing so could help your credit scores as well as your debt-to-income ratio.
Consider a co-borrower: If you can’t get approved on your own, applying with somebody else could help. Lenders may find that the co-borrower’s credit score and additional income are sufficient to help you qualify.
When you have bad credit, it’s smart to do everything you can to improve your application.
How Much Can You Borrow if You Have Bad Credit?
With bad credit, lenders might not be willing to take large risks. That doesn’t mean you can’t borrow, but your ability may be limited. Several popular online lenders listed here work with individuals who have bad credit, and loan amounts start at $1,000 to $2,000. That’s a significant amount, and it may be possible to borrow more.
Where Can You Get a Loan When You Have Bad Credit?
Some of the best places to borrow include online lenders, as well as banks or credit unions. Those lenders are most likely to have competitive rates and reasonable fees. However, with bad credit, expect to pay high rates to borrow.
Be careful about borrowing from lenders who guarantee that everybody gets approved. Those outfits may be running scams, and you’ll end up in a worse place than you are today. Also, payday loan shops tend to lend money at extremely high rates, so it’s best to stick to the types of lenders highlighted above.
How Do You Fix Bad Credit so You Can Get a Better Loan?
Bad credit does not need to be a permanent condition. Your credit can improve over time, especially if you borrow money and make your payments on time.
To improve your credit, borrow money only when you need it, and always pay your bills on time. If you’re having a hard time getting approved, start with small secured loans and credit cards, and build up from there. The longer you borrow (and keep up with payments), the more your credit scores should improve.
As you continue using credit, borrow wisely. You don’t need to keep a balance on your credit cards to improve your credit. In fact, it’s best to keep your balances below 30% of your credit card limit.
Best Approach for a Credit Score Under 550
Several of the lenders on this page will approve a loan with a low credit score, but it’s critical to borrow wisely. Instead of focusing on how you can get approved right now, it’s best to prioritize affordable loans that don’t make things worse. That’s easier said than done when you need cash immediately. Still, a long-term strategy might help prevent this situation from repeating. Here’s a roadmap for getting the best possible results when your credit score is below 550:
- Ask a local bank or credit union for guidance on loan options available to you.
- Determine if you can get a co-signer to help you qualify for a better loan. If your co-signer has good credit, consider mainstream lenders with the best loan offerings.
- Request quotes from at least two online lenders and one local bank or credit union. If you can't get quotes without actually applying for the loan, be aware that the hard inquiries on your credit report could temporarily hurt your score further.
- Compare interest rates, origination fees, and other loan details carefully.
- Select the best loan offer from your list.
- Sleep on it. Evaluate whether or not it makes sense to borrow before you move forward.
Unfortunately, borrowing with bad credit might make things worse. It’s worth exploring alternatives, like selling things you own or taking on extra work, assuming those solutions are available to you. That’s easy for someone to suggest when they’re not in your situation, and you might already be doing everything you can. Still, it’s worth looking at ways to drum up cash without taking on debt at high interest rates.
It’s certainly possible to get a personal loan with a low credit score, but expect to pay relatively high rates. As a result, you end up paying a lot more for whatever you buy with your loan proceeds, so take a moment to learn how those interest costs add up. Compare offers from at least three lenders (as long as those lenders don’t do a hard pull of your credit report), and consider both traditional and online options as you shop among lenders.
Lending Club. "Personal Loan Rates and Fees," Accessed Feb. 6, 2020.
OneMain Financial, "Loan Fees." Accessed Feb. 6, 2020.
Avant. "Personal Loans," Accessed Feb. 6, 2020.
Peerform. "Rates & Fees for Your Personal Loan." Accessed Feb. 6, 2020
LendingPoint. "Your Questions About Our Personal Loans." Accessed Feb. 6, 2020.
Lending Club. "Qualifying for a Personal Loan." Accessed Jan. 22, 2020.
Federal Trade Commission. "Advance-Fee Loans." Accessed Jan. 22, 2020.