Best Personal Loans for Bad Credit

You have options to qualify for a personal loan with bad credit

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Personal loans can help you consolidate debt and fund major purchases without using credit cards. While it may be more difficult to get approved for a personal loan with a bad credit score (580 or below), there are multiple online lenders that may be able to help. However, borrowing will be expensive because lenders tend to charge higher rates when your credit scores are low.

We reviewed more than 50 lenders to find the best bad credit loans from lenders that typically offer competitive (although not necessarily low) interest rates and that are also more likely to approve you with bad credit. These lenders might suggest that you apply with a high credit score, but they also say they don't have a hard minimum credit score requirement.

Based on our analysis, here are our picks for the lenders that offer the best personal loans for bad credit:

Best Loans for Bad Credit of October 2020

Lender Why We Picked It APR Minimum Loan Amount Maximum Loan Amount Terms Recommended Credit Score
LendingClub Best Marketplace Experience 10.68%-35.89% $1,000 $40,000 36 or 60 months 580+
OneMain Financial Best for In-Person Customer Service 18.00%-35.99% $1,500 $20,000 24-60 months 580+
Avant Best Online Bank Lender 9.95%-35.99% $2,000 $35,000 24-60 months 600+
Peerform Best for Credit Card Consolidation 5.99%-29.99% $4,000 $25,000 36 or 60 months 600+
LendingPoint Best for Installment Loans 15.49%-35.99% $2,000 $25,000 24-48 months 585+
First Tech Federal Credit Union Best $500 Loan 7.70% to 18.00% $500 $50,000 24 to 84 months 580+

If you have bad credit and are looking for the lowest possible interest rate on your loan, check out your local bank or credit union; it may be your best bet for a decent APR.

LendingClub: Best Marketplace Experience

LendingClub

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—from 10.68% to as much as 35.89% APR. Plus, you may need to pay an origination fee of 2% to 6% of your loan amount. With three- and five-year repayment options, you can keep monthly payments relatively low.

What We Like
  • 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

What We Don't Like
  • Origination fee is deducted from the loan amount you receive

  • Interest rates above 30% make borrowing expensive for some

  • Late fee of 5% or $15, whichever is greater

Unlike credit cards, personal loans with fixed rates typically have the same payment every month, which helps you manage your budget.

LendingClub Personal Loan Details

Loan Amounts $1,000-$40,000
Fixed APR 10.68%-35.89%
Loan Terms 36 or 60 months
Fees Late fee of $15 or 5%, origination fee between 2%-6%
Time to Receive Funds At least four business days
Recommended Credit Score 580+

Read the full review: LightStream Personal Loans

OneMain Financial: Best for In-Person Customer Service

OneMain logo

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 high (18.00%-35.99%) and there's an origination fee ranging from $25 to $400 or 1%-10%, depending on your state. Borrowing minimums and maximums also vary by state but generally range between $1,500 and $20,000. What sets OneMain apart is that the lender has more than 1,500 branches in 44 states, making it a great fit if you value in-person service.

What We Like
  • Several repayment terms to choose from

  • Fixed interest rate prevents payment shocks if rates rise

  • Same-day funding in some cases

  • More than 1,500 branches for in-person visits

What We Don't Like
  • In-person visit may be required for verification before funding your loan

  • Interest rates above 30% make borrowing expensive for some

  • Origination and late-payment fees

OneMain Financial Personal Loan Details

Loan Amounts $1,500-$20,000
Fixed APR 18.00%-35.99%
Loan Terms 24-60 months
Fees Late fee from $5-$30 or 1.5%-15%, origination fee from $25-$400 or 1%-10%
Time to Receive Funds Same day or longer
Recommended Credit Score 600+

Read the full review: OneMain Financial Personal Loans

Avant: Best Online Bank Lender

Avant logo

Avant is an online lender that promises quick funding for personal loans. Most of Avant's customers have credit scores between 600 and 700. While the minimum credit score requirement may be higher than other lenders, Avant's repayment terms are relatively flexible and its administration/origination fee (up to 4.75%) is lower than some lenders'. Loan APRs are 9.95%-35.99%. 

What We Like
  • 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

What We Don't Like
  • Not available in all states

  • Highest APR is among the worst

  • Administrative fee

Avant Personal Loan Details

Loan Amounts $2,000-$35,000
Fixed APR 9.95%-35.99%
Loan Terms 24-60 months
Fees Late fee of $25, returned payment fee of $15, administrative fee up to 4.75%, 
Time to Receive Funds At least 1 business day
Recommended Credit Score 600+

Read the full review: Avant Personal Loans

Peerform: Best for Credit Card Consolidation

peerfrorm

If you’re battling credit card debt, consolidating your loans can help you regain control. Peerform has a minimum FICO score requirement of 600 and you must be free of current delinquencies, recent bankruptcy, tax liens, judgments, and non-medical related collections opened in the past 12 months.

To get a loan, Peerform requires you to have at least one open bank account as well as at least one credit card or store credit card on your credit report.

Peerform’s loans last for three or five years and there are no prepayment penalties if you pay off your debt faster. Three years should be a decent time frame to provide breathing room for repayment without dragging things out for too long.

Loan amounts range from $4,000 to $25,000, and Peerform charges an origination fee it takes out of the loan once it is credited to your account. Interest rates are fixed and range from 5.99% to 29.99% APR for three-year loans, and from 5.99% to 25.05% for five-year loans.

What We Like
  • Pay off debt within three years

  • No prepayment penalty

What We Don't Like
  • $4,000 loan minimum might be more than you need

  • Strategies like the debt avalanche might work better

  • Loans aren't available in CT, ND, VT, WV or WY

Peerform Personal Loan Details

Loan Amounts $4,000-$25,000
Fixed APR 5.99%-29.99%
Loan Terms 36 or 60 months
Fees Late fee of $15 or 5%, origination fee from 1%-5%
Time to Receive Funds 3 business days or longer
Recommended Credit Score 600+

Read the full review: Peerform Personal Loans

LendingPoint: Best for Installment Loans

Lending point logo

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, biweekly, and every-28-days installment payments, depending on your needs.

LendingPoint does not offer loans in West Virginia.

Loan amounts range from $2,000 to $25,000, with interest rates ranging from 15.49% to 35.99% APR. The only catch might be that LendingPoint prefers borrowers with a credit score of 585 and above.

What We Like
  • Payments by check don’t cause additional fees

  • No prepayment penalty

  • Funding as soon as the next business day

What We Don't Like
  • May be hard to qualify for the people with the lowest credit scores

  • Minimum loan amount of $2,000

LendingPoint Personal Loan Details

Loan Amounts $2,000-$25,000
Fixed APR 15.49%-35.99%
Loan Terms 24-48 months
Fees No late fees specified, origination fee from 0%-6%
Time to Receive Funds At least one business day
Recommended Credit Score 585+

Read the full review: Lending Point Personal Loans

First Tech Federal Credit Union: Best $500 Loan

First Tech Federal Credit Union

Credit unions are often a good choice for borrowing, especially with bad credit. While the lenders above require somewhat substantial loans, First Tech Federal Credit Union allows you to borrow as little as $500 at a reasonable rate.

To get a loan, you need to first join the credit union. That's relatively easy: Anybody nationwide becomes eligible for membership after joining the Computer History Museum or the Financial Fitness Association. You can complete that task as you fill out your application and membership fees for those organizations are $8 to $15. 

Unlike some of the lenders above, First Tech FCU does a "hard" credit pull when you apply, which can hurt your credit. Because of that, it's smart to inquire with this lender after you check your rate with the competition. Better yet, discuss your financial history with a loan officer before you apply—you might find out if First Tech FCU is the wrong fit and avoid adding inquiries to your credit reports.

What We Like
  • Borrow as little as $500

  • Relatively low rates for bad credit borrowers

What We Don't Like
  • Hard credit pull affects your credit

  • Small application fee if you're not already eligible for membership

Loan Amounts $500 to $50,000
Fixed APR 7.70% to 18.00%
Loan Terms 24 to 84 months
Loan Fees No origination fee, no prepayment penalty
Membership Fee $8 to $15, if you need to join an organization
Time to Receive Funds Up to 3 business days
Recommended Credit Score 580+

Read the full review: First Tech Federal Credit Union Personal Loans

Local Banks and Credit Unions: Best for Low Interest Rates

In a world of online banking and peer-to-peer (P2P) lending, bricks-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.

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.

What We Like
  • 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

What We Don't Like
  • Takes time to visit in person

  • Application process might be more cumbersome than you’d experience with online lenders

  • May require credit union membership

  • "Hard" credit inquiries might hurt your credit scores

What It Means to Have Bad Credit

When we say “bad credit” here, we’re referring to your FICO score, which 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.

Your credit score (and bad credit scores) result primarily from information that lenders provide to credit reporting agencies. If you miss payments or default on loans, your credit scores typically fall. Public records like bankruptcy and judgments may also affect your scores.

How Do You Know What Credit Score Range You Are In?

There are a few different credit scoring agencies that offer you a credit score. FICO credit scores are popular and are often available for free via your credit card company or bank. FICO credit score ranges are as follows:

  • Excellent: 800 and up
  • Very good: 740-799
  • Good: 670-739
  • Fair: 580-669
  • Poor: 579 and lower

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.

As of Sept. 28, the average interest rate advertised by lenders that offer bad credit loans is 19.30% across the 31 lenders we track.

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.

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 (DTI) 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.

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, expect to pay high rates because of your bad credit.

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.

Best Approach for a Bad Credit Score

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 580:

  1. Ask a local bank or credit union for guidance on loan options available to you.
  2. 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.
  3. 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.
  4. Compare interest rates, origination fees, and other loan details carefully.
  5. Select the best loan offer from your list.
  6. Take some time to evaluate whether it makes sense to borrow before you move forward.

How We Chose the Best Personal Loans for Bad Credit

Our writers spent hours researching loan options from more than 50 different lenders. Recommendations are based on personal loan companies offering a combination of good interest rates, loan terms, low fees, loan amounts, speed of funding, and more.

These loan recommendations take into account that all borrowers have different needs and financial situations that may require loans that meet various priorities. Not every recommendation is right for every borrower, so consider all of your options before applying.

Compare Personal Loan Rates With Our Partners at Fiona.com

Article Sources

The Balance requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy .
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  3. OneMain Financial. "Branch Locations Near You." Accessed Sept. 28, 2020.

  4. Avant."What Is the Typical Credit Score of an Avant Customer?" Accessed Sept. 28, 2020.

  5. Avant. "Personal Loans." Accessed Sept. 28, 2020.

  6. Peerform Lending. "Assessing Risk and Setting Interest Rates." Accessed Sept. 28, 2020.

  7. Peerform. "Rates & Fees for Your Personal Loan." Accessed Sept. 28, 2020.

  8. LendingPoints. "Your Questions About Our Personal Loans." Accessed Sept. 28, 2020.

  9. LendingPoint. "List of State Licenses." Accessed Sept. 28, 2020.

  10. LendingPoint. "Personal Loans for Fair Credit Customers." Accessed Sept. 28, 2020.

  11. First Tech. "Frequently Asked Questions About First Tech Loans." Accessed Sept. 28, 2020.

  12. CHM. "Join & Give." Accessed Sept. 28, 2020.

  13. Financial Fitness Association. "Join Now: 1-Year Membership Only $8." Accessed Sept. 28, 2020.

  14. myFICO. "What Is a FICO Score?" Accessed Sept. 28, 2020.

  15. LendingClub. "Qualifying for a Personal Loan." Accessed Sept. 28, 2020.

  16. Federal Trade Commission. "Advance-Fee Loans." Accessed Sept. 28, 2020.