Best Personal Loans for Bad Credit

LendingClub offers the best marketplace experience

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Allison Bethell
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Allison Bethell is a real estate investor, broker, writer, small-business owner, and consultant with over 13 years of real estate experience.
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Updated May 05, 2022
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Eric Estevez
Eric Estevez
Reviewed by Eric Estevez
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Eric is a duly licensed Independent Insurance Broker licensed in Life, Health, Property, and Casualty insurance. He has worked more than 13 years in both public and private accounting jobs and more than four years licensed as an insurance producer. His background in tax accounting has served as a solid base supporting his current book of business.
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Personal loans are loans offered by banks, credit unions, and online lenders. They don’t require collateral such as your home or business equipment. Instead, they are based on your overall financial profile including your FICO score and income. They can be used to help you consolidate debt and fund major purchases without using credit cards.

The best personal loans for bad credit are offered by reputable companies with easy application processes. They offer competitive interest rates and factor in details beyond your credit score when determining if you qualify.

Best Bad Credit Loans of May 2022

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 annual percentage rate (APR).

Best Marketplace Experience : LendingClub

LendingClub

LendingClub
  • Starting interest rate: 7.04%
  • Recommended credit score: 580+
  • Loan terms (range): 36–60 months
Why We Chose It

LendingClub is a large volume online lender that is well-established and offers fixed rates and two repayment terms to choose from. 

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

Pros and Cons
Pros

  • Low minimum loan amounts

  • No prepayment penalties

  • Get prequalified without affecting your credit

Cons

  • Origination fee deducted from loan amount

  • Higher interest rates

  • Late fees

LendingClub Personal Loan Details
Loan Amounts $1,000–$40,000
Fixed APR 7.04%–35.89%
Loan Terms 36 or 60 months
Fees Late fee of $15 or 5%, origination fee of 3%–6%
Time to Receive Funds Within four business days of approval
Recommended Credit Score 580+

Read the full review: LendingClub Personal Loans

Best for In-Person Customer Service : OneMain Financial

OneMain logo
  • Starting interest rate: 18%
  • Recommended credit score: 600+
  • Loan terms (range): 24–60 months
Why We Chose It

OneMain Financial, our choice for best in-person customer service, has about 1,400 branches you can visit for individualized assistance as well as less stringent credit requirements for borrowers.

Pros and Cons
Pros

  • Multiple repayment terms

  • Fixed interest rates

  • Same-day funding on some loans

Cons

  • In-person visit may be required for verification

  • Higher interest rates

  • Origination and late 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–$500 or 1%–10%
Time to Receive Funds Same day or longer
Recommended Credit Score 600+

Read the full review: OneMain Financial Personal Loans

Best Online Bank Lender : Avant

Avant logo

 Avant logo
  • Starting interest rate: 9.95%
  • Recommended credit score: 600+
  • Loan terms (range): 24–60 months
Why We Chose It

Avant is our top pick for the best online bank lender because it is entirely online, offers quick funding times, and fixed rates. You can check your loan options online without affecting your credit.

Pros and Cons
Pros

  • 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

Cons

  • 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 one business day
Recommended Credit Score 600+

Read the full review: Avant Personal Loans

Best for Credit Card Consolidation : Peerform

peerfrorm

 peerfrorm
  • Starting interest rate: 5.99%
  • Recommended credit score: 600+
  • Loan terms (range): 36–60 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.

Why We Chose It

Peerform is best for credit card consolidation because it offers loan programs that allow you to consolidate and pay off your debt without prepayment penalties.

Pros and Cons
Pros

  • Pay off debt within three years

  • No prepayment penalty

Cons

  • $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 Three business days or longer
Recommended Credit Score 600+

Read the full review: Peerform Personal Loans

Best for Installment Loans : LendingPoint

Lending point logo

 Lending point logo
  • Starting interest rate: 9.99%
  • Recommended credit score: 580+
  • Loan terms (range): 24–60 months

LendingPoint does not offer loans in Nevada and West Virginia.

Why We Chose It

LendingPoint is best for installment loans because it offers a variety of flexible installment loans with varying loan terms and fast funding times. 

Pros and Cons
Pros

  • Payments by check don’t cause additional fees

  • No prepayment penalty

  • Funding as soon as the next business day

Cons

  • 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–$36,500
Fixed APR 9.99%–35.99%
Loan Terms 24–60 months
Fees No late fees specified, origination fee from 0%–6%
Time to Receive Funds At least one business day
Recommended Credit Score 580+

Read the full review: Lending Point Personal Loans

Best $500 Loan : First Tech Federal Credit Union

First Tech Federal Credit Union

 First Tech Federal Credit Union
  • Starting interest rate: 5.7%
  • Recommended credit score: 580+
  • Loan terms (range): 24–84 months
Why We Chose It

First Tech Federal Credit Union is our choice for best $500 loan because it has low borrowing limits, competitive rates, and a variety of repayment terms.

Pros and Cons
Pros

  • Borrow as little as $500

  • Relatively low rates for bad credit borrowers

Cons

  • Application requires hard credit pull which can affect your credit

  • Small application fee if you're not yet a member

First Tech Federal Credit Union Personal Loan Details
Loan Amounts $500–$50,000
Fixed APR 6.70%–18.00%
Loan Terms 24–84 months
Loan Fees No origination fee, no prepayment penalty
Membership Fee $8–$15, if you need to join an organization
Time to Receive Funds Up to three business days
Recommended Credit Score 580+

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

Best for Low Interest Rates : Local Banks and Credit Unions

  • Starting interest rate: Varies among institutions
  • Recommended credit score: Varies among institutions
  • Loan terms (range): Varies among institutions
Why We Chose It

Local banks and credit unions work with borrowers with varying credit scores and offer competitive rates.

Pros and Cons
Pros

  • In-person application assistance

  • Loan officer review instead of automated response

  • Guidance against predatory lenders

Cons

  • Takes time to visit in person

  • May require credit union membership

  • Hard credit inquiry may affect credit score

Overview

In a world of online banking and peer-to-peer (P2P) lending, brick-and-mortar institutions may seem irrelevant. They’re still helpful, though, particularly if you have bad credit. The best offers you see advertised online are available only to borrowers with excellent credit. However, 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 different 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.

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 

 Company Starting Interest Rate Recommended Credit Score Loan Terms (range) Maximum Loan Amount
LendingClub Best Marketplace Experience 7.04% 580+ 36–60 months $40,000
OneMain Financial Best for In-Person Customer Service 18% 600+ 24–60 months $20,000
Avant Best Online Bank Lender 9.95% 600+ 24–60 months $35,000
Peerform Best for Credit Card Consolidation 5.99% 600+ 36–60 months $25,000
LendingPoint Best for Installment Loans 9.99% 580+ 24–60 months $36,500
First Tech Federal Credit Union Best $500 Loan 6.7% 580+ 24–84 months $50,000
Local Banks and Credit Unions Best for Low Interest Rates Varies Varies Varies Varies

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, consider the purpose for the loan (financing a large purchase, debt consolidation, home repairs, etc.) and how soon you need the money. 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. Personal loans may come with a high interest rate, so 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:

  • Qualifications: Know what is required to get a personal loan. What are the minimum credit score, income requirements, and 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 because 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 need to apply for the loan either online, over the phone, or at a branch. Typically, you 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 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 lower than 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 often are 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.

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.

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.

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.

How We Chose the Best Personal Loans for Bad Credit

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.

Article Sources

  1. National Credit Union Administration. "Personal Loans." Accessed Jan. 24, 2022.

  2. U.S. Small Business Administration. "Credit Inquiries: What You Should Know About Hard and Soft Pulls." Accessed Jan. 24, 2022.

  3. Experian. "What Is a Good Credit Score." Accessed Jan. 24, 2022.

  4. Consumer Financial Protection Bureau. "Key Dimensions and Processes in the U.S. Credit Reporting System." Accessed Jan. 24, 2022.