Easy to Get Loans With Bad Credit
Compare Personal Loan Rates
Current Personal Loan Rates
The above personal loan rates and details are accurate as of July 5, 2022. While we update this information regularly, the annual percentage rates (APRs) and loan details may have changed since the page was last updated. Keep in mind, some lenders make specific rates and terms available only for certain loan purposes. Be sure to confirm available APR ranges and loan details, based on your desired loan purpose, with your lender before applying.
Best Bad Credit Loans
Methodology
We reviewed 18 popular lenders based on 14 data points in the categories of loan details, loan costs, eligibility and accessibility, customer experience and the application process. We chose lenders that have a minimum credit score requirement of 600 or lower and ranked them based on the weighting assigned to each category:
- Loan details: 20%
- Loan cost: 25%
- Eligibility and accessibility: 30%
- Customer experience: 15%
- Application process: 10%
Within each category, we also considered several characteristics, including loan amounts, repayment terms, APR ranges and applicable fees. We also looked at whether each lender accepts co-signers or joint applications and the geographic availability of the lender. Finally, we evaluated each provider's customer support tools, borrower perks and features that simplify the borrowing process—like prequalification and mobile apps.
Where appropriate, we awarded partial points depending on how well a lender met each criterion.
Tips for Comparing Personal Loans for Bad Credit
Consider these tips when comparing personal loans for bad credit:
- Compare the top-end range of interest rates. Because interest rates largely depend on your qualifying credit score, you're likely to land a rate at the top end of the range with bad credit. So, when comparing personal loans for people with bad credit, be sure to compare the maximum rate.
- If possible, prequalify with a provider. Several providers offer the opportunity to prequalify you for a personal loan. This means you can submit details like your income information, desired loan use and housing situation to learn about potential loan limits, rates and repayment options. Prequalifying also only requires a soft credit check, which doesn't hurt your credit score, so you can safely find the best rates.
- Check for additional fees. Some personal loan providers charge no origination fees, late payment fees or prepayment penalties. However, there are some that may charge all or some of these fees. When comparing bad credit personal loans, be sure to look at the fee structure beyond the potential interest rate you can receive.
- Evaluate the lender's customer support options. If you've found a lender, there's one more thing to consider before signing the loan agreement. While customer support may not seem like a big deal, it can make a huge difference if you encounter issues with payments or face a financial hardship during your repayment period. Review the lender's customer service resources and read reviews to make sure it's a good fit.
What Is a Bad Credit Score?
Based on the FICO credit score range of 300 to 850, a score below 580 is considered to be a bad credit score. Lenders refer to borrowers who fall in this range as subprime borrowers, and those borrowers tend to be riskier. A bad credit score can make it more difficult to qualify for things like a car, a mortgage or a loan for a business, so it should be in your best interest to improve your score before submitting an application.
Bad credit scores are typically a result of poor payment history, high credit usage and/or too many credit applications or hard credit check inquiries. These are some of the most important factors that make up your credit score. If you want to avoid a bad credit score, it's best to not neglect these areas of your credit profile.
What Are Bad Credit Loans?
Some lenders offer bad credit loans for applicants who have had little to no time to build a credit history or who may have experienced some pitfalls. While it can be difficult to get a loan with a credit score below 580, some lenders, including those on this list, are willing to extend funds to applicants with scores between 580 and 600. Minimum credit score requirements tend to vary between lenders, so be sure to check if your score qualifies through your preferred lender.
Bad credit applicants will typically receive high interest rates and lower loan limits due to their credit scores. The lowest rates and most favorable terms are reserved for high-qualified applicants.
What Are the Interest Rates on Bad Credit Loans?
Lenders calculate interest rates based on a number of variables ranging from your creditworthiness and income to the size of the loan and repayment term. Because your credit score and history play a key role in determining the interest rate you receive, you should not expect the lowest rates on bad credit loans; the lowest rates are typically reserved for highly qualified applicants.
Although interest rates on our list range from about 3% to 36%, it's more than likely that the interest rate you receive will fall toward the top end of the range with damaged credit. If you want to improve your chances of getting a lower interest rate, take time to boost your credit score before applying.
How to Get a Loan With Bad Credit
Getting a personal loan with a bad credit score is not impossible, but it may require some extra legwork from you. While the process may vary depending on your specific score and lender, here are the general steps you can follow:
- Check your credit score. Before you start looking for the best lender, it's crucial to check your credit score online through a credit-providing website or your credit card provider. This will give you an idea of what you can and can't qualify for. You should also check for any inaccuracies tied to your credit score, like a debt that does not belong to you.
- Improve your score, if necessary. If you find out your score is too low, take time to improve it before submitting an application. Some quick ways to improve your credit include repaying any outstanding debts and reducing your credit usage.
- Evaluate your budget. Prior to looking for the right lender, evaluate your budget and understand how much loan you can afford. If you take too big of a loan out, you may find yourself struggling to meet future repayment obligations and damaging your credit even more.
- Prequalify with multiple lenders. Some lenders offer a prequalificaiton process, which lets you check whether or not you would qualify without a hard credit check and see what terms you'd receive once approved
- Add a co-signer, if necessary. If you need to boost your application to receive better terms, consider adding a co-signer. A co-signer is a secondary person who agrees to pay back the loan if you fail to do so, which reduces the risk you pose to the lender.
- Submit your application. Once you've found the best lender for your situation, submit an application online or in person. Prepare to provide your personal information, such as your Social Security number (SSN), address and income information.
- Repay your loan. Once your lender approves your loan and disburses the funds, it's time to start repaying your loan. Setting up autopay is a surefire way to never miss a payment.
Loans for Bad Credit Options
When it comes to personal loans, there are two types you can apply for: secured and unsecured loans. However, if you're having trouble qualifying for a personal loan, consider other loans for bad credit.
Secured & Unsecured Bad Credit Personal Loans
Traditional personal loans can either be secured or unsecured. Secured loans require you to provide something of value (also known as collateral), such as your car, savings account or home, to back (or secure) the loan. The lender can repossess the collateral if you fall behind on payments or default. This makes them less risky to a lender, which also means they tend to come with more favorable terms, like lower interest rates, and fewer qualification requirements.
Unsecured loans, on the other hand, are the more common of the two and don't require any collateral. Because these loans don't require collateral and therefore pose more risk to lenders, they typically come with more qualification requirements and higher interest rates. The loans on this list are all unsecured personal loans.
Student Loans for Bad Credit
If you're trying to cover higher education expenses, a student loan for bad credit is likely the direction you want to look. Although private student loans typically require good credit, borrowers with bad credit can take out federal student loans, which don't require a credit check. Federal loans also come with the most flexible repayment terms, including forgiveness if you work in public service or choose certain repayment plans.
Auto Loans for Bad Credit
An auto loan is a secured loan that uses your car as collateral, which means the lender can repossess your car if you fall behind on payments or default.
Similar to personal loans, auto loan qualification requirements vary for each lender and dealership. While we recommend a minimum credit score of 670 to receive the most favorable terms, you can still qualify for an auto loan with a lower score as long as you meet the debt-to-income (DTI) requirements and bring a larger down payment.
Payday Loans for Bad Credit
Payday loans are short-term, small-dollar loans (usually up to $500) that you repay once you receive your next paycheck, typically two to four weeks after you take out the loan. Many lenders don't require a credit check, which is often enticing for people with bad credit. However, don't get your hopes up. Payday loans come with a ton of their own risks and sky-high fees. Consider other alternatives first, like personal loans or borrowing money from friends and family.
Home Equity Loans & HELOCs for Bad Credit
If you have enough equity in your home—your home's current market value minus your remaining mortgage balance—you may be able to get a home equity loan or home equity line of credit (HELOC). Both let you draw against your home, which means your home secures the transaction and the lender can repossess it if you fail to repay. However, home equity loans are disbursed as lump-sum amounts while HELOCs limit you to withdraw funds on an as-needed basis.
But it's unlikely borrowers with bad credit scores can qualify for these loans. Most traditional lenders require minimum scores between 600 and 620. There might be a specialty lender or credit union that will make an exception, but it's not common. People with scores less than 600 would have to go through hard money lenders, such as private investors or companies, not a bank. While hard money lenders are more flexible, they're typically a more expensive route.
Frequently Asked Questions (FAQs)
Can you get a personal loan with a credit score of 550?
There aren't many lenders that accept applications from borrowers with credit scores of 550. However, there are lenders who allow for a co-signer—someone who agrees to repay the loan if the primary borrower cannot—which can help you qualify for a loan with a score of 550. If you know you have damaged credit, look to improve your credit before applying for a personal loan.
How much money can you borrow with bad credit?
A lender typically determines your loan limit based on your creditworthiness and income. The largest limits are reserved for high-qualified borrowers. If you have bad credit, you can expect to receive near the minimum loan limit your lender offers. If you need to borrow more money, consider improving your credit score prior to applying.
How do you fix bad credit to get a better loan?
If you know you have bad credit and are preparing to apply for a loan, take time to improve your credit score. Some common ways to do that include paying off your existing debts, reducing your overall credit usage, disputing any errors on your credit report and reducing the number of new credit applications made in a short period of time.
Can you get a loan with no credit check?
While most loans require a credit check, there are some loans that don't. Instead, lenders qualify applications based on the applicant's ability to repay the loan. Lenders will likely also require collateral—a personal asset used to secure a loan and one the lender can repossess if the repayment terms are not met. You can get no-credit-check loans through payday loan stores, auto title lenders, online lenders and pawn shops.
Which loan company is best for bad credit?
According to our evaluation of 18 popular lenders, Upgrade offers the best personal loans for bad credit. It requires a minimum credit score of 580, giving those with bad credit an opportunity to secure the financing they need. Interest rates range from 7.99% to 35.97%, and with bad credit, you'll likely land near the maximum interest rate.
Is there risk in bad credit loans?
Whenever you get a bad credit personal loan, you take on some level of risk. While most personal loans are unsecured, meaning you don't need to provide collateral to secure the loan (and therefore avoid losing a personal asset if fail to meet the repayment terms), you still risk damaging your credit score if you don't keep up with your monthly payments.
What is the easiest type of loan to get with bad credit?
The easiest types of loans to get with bad credit are typically no-credit-check loans, including payday, title and pawnshop loans. However, these debts come with excessive fees, and we recommend avoiding them. Instead, lean into personal loans for bad credit, like those on this list. Some lenders make loans available to applicants with credit scores as low as 550.
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Source: https://www.forbes.com/advisor/personal-loans/bad-credit-loans/