Americans like personal loans: personal loan originations grew faster than any other form of credit from 2017 to 2019. The pandemic slowed the borrowing, but the versatility of personal loans still makes them popular. These loans are popular for debt consolidation, medical costs, large purchases, vacations, and other uses. If you want to get a personal loan with poor credit, though, your options will be limited.
⚠️ A credit score between 450 and 579 is considered poor. It will be hard to get a loan with credit at this level. If you find a lender willing to make a loan, you will probably pay high interest rates and fees. You’ll also have to be careful about the lenders you deal with. The bad credit loan marketplace attracts questionable players.
You may be tempted to try payday loans, title loans, or other forms of “courtesy loans“. These loans don’t require a credit check, but they are almost never a good option. They carry devastating interest rates, often higher than 300% annually. Fees are often high.
Don’t give up, though. It is possible to get a personal loan with poor credit. Some lenders do not have a minimum credit score, though you may have to prove that you’re employed and you have enough income to pay the loan. You won’t get the best terms, but they will be better than what you’d get from payday lenders.
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Looking for a personal loan with poor 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 poor credit. Some of your applications are likely to be rejected.
- Expect to pay. Personal loans are expensive for borrowers with poor 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 poor credit. Preparation can make things easier.
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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 se that you are shopping for a deal and will record only one hard inquiry. That will help you avoid hurting your score.
Now that we’ve reviewed the process, let’s look at some lenders you can consider.
Where Can You Get a Personal Loan With Poor Credit?
It’s not easy to get a personal loan with very poor 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 poor 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.
Get Prequalified for a Personal Loan
Answer a few questions to see which personal loans you pre-qualify for. The process is quick and easy, and it will not impact 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.
Possible Finance makes small loans, up to $500, without a credit check. They advertise these as an alternative to payday loans. Loan terms are longer than payday lenders offer and your payments are reported to credit bureaus, helping you improve your credit score.
It’s also worth checking your area for local and regional lenders who are willing to work with borrowers who have poor credit.
These services are not lenders. They act as brokers, passing applications on to a network of lenders. Several loan matching services are willing to work with borrowers who have poor credit.
We do not recommend any of these companies. Complaints about bad credit lenders are common. We can’t verify the claims in those complaints, but we do suggest caution. Check the reputation of any loan matching service before you send key information.
Here are some options:
AmOne will lend as much as $50,000. Interest rates range from 3.49% to 34.99%. AmOne says they will lend to borrowers with any credit score.
LendingClub used to be a peer-to-peer loan service. It is now a loan matching service. Interest rates may reach 35.89%, with origination fees up to 6%. The maximum loan is $40,000. Their website does not list a minimum 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.
Even Financial represents lenders making loans up to $250,000. The top interest rate is 35.99%. They list a 550 minimum score but they claim that some lenders may use alternative data and some consider borrowers with lower scores.
Monevo claims to have loans available for borrowers with any credit score. They will handle loans up to $100,000. Rates can reach 35.99%.
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!
Peer-to-Peer Lending Services
Peer-to-peer loans are made by individuals. Lending services match these individual lenders with individual borrowers. These services usually will not work with borrowers with credit scores below a certain cutoff, usually 580-600, but there are exceptions. Most lenders who will work with bad credit borrowers will have income requirements.
PersonalLoans.com is both a loan matching company and a peer-to-peer lending platform. There’s no stated minimum credit score.
There are risks involved with peer-to-peer lending. The industry is not regulated and you may want to do research into prospective lenders.
What to Do Next
Hopefully, that list will help you solve your immediate problem: how to get a personal loan with poor 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 these 8 strategies for rebuilding damaged credit.
It’s not easy to get a personal loan with poor credit 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 poor 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!