Best Personal Loans for Bad Credit

Final Verdict

If you have bad credit and need a personal loan, all of the lenders have something to offer. Some loans have competitive starting interest rates, others have low minimum credit scores, and others have longer repayment terms. Overall, we recommend checking out LendingClub first. The company is a well-known online lender with different types of loans with two different repayment terms to choose from. It also offers fixed rates and low minimum loan amounts of $1,000.

Compare The Best Personal Loans for Bad Credit 

Guide to Choosing the Best Personal Loan for Bad Credit

Are You in Need of a Personal Loan?

To determine if you need a personal loan, you will want to consider things like the purpose for the loans (ex., financing a large purchase, debt consolidation, home repairs) and the timeline that you want the money to arrive. If you’re looking for a personal loan for things like access to emergency funds, medical expenses, or discretionary income, you might want to consider another source of funding. These loans may come with a high interest rate, and you may be able to find better terms and rates elsewhere.

Compare Personal Loan Lenders

Several important factors should be considered when comparing personal loan lenders. Consider the following when comparing lenders:

• Qualifications: Know what is required to get a personal loan. What is the minimum credit score, income requirements, and are there any restrictions on what the loan can be used for? Some lenders may have less stringent requirements or qualifications and may work better for you. Be sure you understand all the criteria before applying for a loan as many lenders perform a hard credit check, which can lower your credit score.
• Funding times: How long will it take you to get approved and how long until you receive the money? How will you receive the money? Will it be deposited in your account? If you need funding more quickly, you might want to consider an online lender or one with a shorter approval process. 
• Loan options: Check out different loan options to see which one is the best fit and which one can be used for the purpose you’re seeking. Some lenders have restrictions on what the loan can be used for so make sure to be aware of them before choosing a loan. 
• Interest rates: Compare interest rates to ensure you’re getting a competitive rate based on your credit score and overall financial profile. Different lenders have varying rates so you can rate shop to see which will save you the most money.  
• Customer service: Know how to reach customer service in case a question arises. Find out what the customer service hours are and how you can reach them; email, live chat, or over the phone. 

Apply for a Personal Loan 

After you have decided to get a personal loan, compared lenders, and chosen the lender you’re most comfortable with, you will need to apply for the loan either online, over the phone, or at a branch. Typically, you will need your identification, Social Security number, and proof of income which may include bank statements, pay stubs, and/or tax returns. 

Make sure your finances are in order or consider having a co-signer to improve your chances of getting approved for a loan. Once you’re approved for the loan, you will need to be aware of the repayment schedule so you can make your payments on time. Most lenders accept online payments, and some even help you set up auto-pay.

How to Get a Personal Loan with Bad Credit

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.

Frequently Asked Questions

What Does It Mean 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:

• Exceptional: 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.

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.

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.

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.

Methodology

To choose the best personal loans for bad credit, we considered factors such as reputation and ease of application process. We also considered minimum and maximum loan amounts, interest rates, loan terms, minimum required credit scores, and repayment options.