Personal loans are a flexible solution for debt consolidation, medical expenses, and large purchases. If you have bad credit, these loans are harder to get, often come with high interest rates and significant fees, and may involve less reputable lenders. The best personal loans for bad credit will get you the best deals possible.
A credit score between 300 and 579 is considered poor, making it tough to find a willing lender. While options like payday loans or title loans might seem tempting due to their lack of credit checks, they’re usually not advisable due to exorbitant interest rates, sometimes exceeding 300% annually, and hefty fees.
Don’t lose hope. Obtaining a personal loan with bad credit is possible. Some lenders don’t require a minimum credit score, though they might need proof of employment and sufficient income. The terms won’t be ideal, but they’re certainly more favorable than what payday lenders offer.
|24 to 60 months
|up to $500
|up to 240.52%
|varies by lender
|6 to 84 months
|3 to 72 months
|36 to 60 months
|up to 72 months
|up to $40,000
|24 to 60 months
|up to $10,000
|3 to 72 months
|up to $10,000
|3 to 72 months
Best Personal Loans for Bad Credit
It’s not easy to get a personal loan with bad credit. You’ll have to try several lenders, and there’s no guarantee that any will approve your application.
Your Credit Union or Bank
Many borrowers overlook this possibility. If you’re a regular customer at a local credit union or bank you may be able to get a loan even with bad credit. They have your financial information and they are in a position to assess your cash flow. You can often have a face-to-face conversation with someone who can make a decision.
Some local banks and credit unions have loan products specifically designed to help customers avoid using payday loans. It’s always worth asking.
Your credit score will close you out of most online lending options, but there are still a few possibilities.
Prequalify for a Personal Loan
Check your personal loan rates by answering a few questions. It only takes two minutes and has no impact on your credit score.
OneMain Financial makes personal loans of $20,000 and below. Instead of a credit check, they use an “ability to pay evaluation” which considers income, employment history, and other factors.
It’s also worth checking your area for local and regional lenders who are willing to work with borrowers who have bad credit.
Loan Matching Services for Bad Credit
Loan matching services do not lend money. They are brokers that pass your details on to multiple lenders to see what offers you can get. There are a number of loan matching services that serve borrowers with bad credit.
Most of these companies have online complaints, ranging from reports of numerous calls and emails from lenders to customer service issues to claims that personal information was not properly secured. Check the service carefully and be alert for signs of trouble.
Some loan matching services to consider:
Bankrate can help you match with lenders whose rates are no greater than 35.99% APR* with terms from 6 to 84 months.
PersonalLoans.com is both a loan matching company and a peer-to-peer lending platform. There’s no stated minimum credit score.
AmOne will lend as much as $50,000. Interest rates range from 3.99% to 35.99%*. AmOne says they will lend to borrowers with any credit score.
CashUSA does not have a minimum credit score. Borrowers must earn a minimum of $1000/month post-tax and have an active checking account. Loans are up to $10,000, rates are up to 35.99*%.
BadCreditLoans.com handles loans up to to $10,000. Rates are up to 35.99%*. They do not list a minimum credit score but they require evidence of a steady income.
These services specialize in bad credit loans. They will still have other criteria, and you cannot be certain that they will approve your application. They are still a good place to start!
What to Expect
Looking for a personal loan with bad credit is not going to be a picnic, but you probably knew that already. Here’s what’s in store.
- Expect to be turned down. It is not easy to find a lender that makes personal loans to borrowers with bad credit. Some of your applications are likely to be rejected.
- Expect to pay. Personal loans are expensive for borrowers with bad credit. Interest rates range up to 35%, and you may also pay a substantial origination fee.
- You may deal with sketchy lenders. The bad credit loan marketplace attracts vultures who prey on desperate borrowers. Always look for independent reviews of a lender’s business record.
None of that is something you want to face, but that’s the reality of bad credit. Preparation can make things easier.
How to Prepare
Getting a personal loan with bad credit will be easier if you consider these factors.
- Why do you need the money? You’ll be paying a very high interest rate. Unless it’s essential, you might be better off not borrowing. Using a personal loan for debt consolidation is not worth it if the interest on your loan is higher than the interest on the debts you’re consolidating.
- What’s your credit score? Always check. Remember that your lender will use a FICO score and your free credit score provider will probably use VantageScore. They can be different.
- What’s in your credit report? Knowing where you stand is a good start. Get your credit reports and review them carefully. Check our guide to understanding your credit report.
- Are there errors on your credit report? Errors can harm credit scores. If entries on your credit report seem suspicious, use the dispute process to challenge the errors.
- Would credit repair help? The credit repair industry has earned a shaky reputation. There are still companies that are legit and may be able to help you boost your score. Start by understanding the credit repair process and look into legitimate credit repair companies.
- What do you have going for you? Do you have a steady job with a decent income? Any assets? Have you made your rent and utility payments on time? Some lenders will consider these items.
- What are your options? Make a list of lenders that might consider your application. The possibilities we list below will give you a start.
- Plan your applications. File all your applications within a 15-day period. Credit bureaus will see that you are shopping for a deal and will record only one hard inquiry. That will help you avoid hurting your score.
What to Do Next
Hopefully, that list will help you solve your immediate problem and find a personal loan for bad credit. Once you’re past that hurdle you’ll probably want to consider another challenge: improving your credit so you have more options next time you need to borrow.
That may sound like an insurmountable problem, but part of the solution is right in front of you. Start by making the payments on your new personal loan on time, every time. That will move your score in the right direction.
That’s step one. For other practical ways to improve your credit, check out our guide on how to rebuild credit.
Personal loans for bad credit are not easy to get. It will take effort, it will be expensive, and you may deal with lenders you’d rather avoid. Those are the penalties we pay for having bad credit, and there’s no way to get around them. You may still be able to get the loan you need, and the experience can motivate you to change your credit for the better!