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Best Loans for Bad Credit

Learn more about getting a loan if you have bad credit or limited credit.

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Taking out a personal loan can seem like an overwhelming process. There are countless lenders to choose from, each offering different options with various repayment terms and requirements. Getting a loan can feel even more daunting if you have less-than-stellar credit or limited credit history. That’s because many lenders will only work with borrowers who have good credit. 

Fortunately, you may still have options even with a bad credit score. Here’s what you need to know if you’re looking for a personal loan and have poor credit. Plus, we’ve compiled a list of our top bad credit loans to help make comparing options less intimidating. 


What’s a Bad Credit Loan?

Bad credit loans are typically unsecured or secured fixed-rate personal loans, but other loan types are also available. In most cases, the application process for a personal loan is simple and same-day or next business day funding may be available.

While many lenders only approve borrowers with good credit, bad credit loans work differently. Lenders offering bad credit loans may be willing to work with borrowers struggling with poor credit or limited credit, but they’ll likely face higher rates and shorter repayment periods.   

So what is bad credit exactly? The FICO Score, basically the gold standard for credit scoring, ranges from 300 to 850. Higher scores indicate better credit. Per the FICO model, your credit score is considered ‘poor’ if it’s within the 300 to 579 range and ‘fair’ if it’s in the 580 to 669 range.

Best Loans for Bad Credit

In general, loan options are fewer for borrowers with bad credit scores, as banks, online lenders, and credit unions may view them as a higher default risk. But that doesn’t mean there are no loan options available. Here are some of the top loans for borrowers with bad or limited credit.

Loan results will vary based on creditworthiness, loan purpose, loan amount, and other factors.

Best for Fast Funding

Avant

  • Loan Amount: $2,000 – $35,000
  • APR Range: 9.95% – 35.99%
  • Loan Terms: 2 – 5 years
  • Credit Score: 580 or higher

Avant offers small personal loans that are accessible to borrowers with fair credit, with funding available as soon as the next day.

Pros
  • Loan terms up to 60 months
  • Low minimum credit score requirement
  • Flexible payment due date
  • Next day funding available
Cons
  • No physical locations
  • Origination fee of up to 4.75%
  • Relatively low maximum loan amount ($35,000)
  • High minimum APR
  • No joint applicant or co-signer

Avant is known for its personal loans, which offer terms as long as 60 months. Customers can borrow up to $35,000 that can be used for a wide range of purposes, and funding can be completed as soon as the next business day once approved. The minimum APRs tend to be higher than competitors, but the maximum APR is comparable to other online lenders.

A unique feature offered by Avant is their flexible payment due date which allows a 10-day grace period without incurring a late fee.

While some lenders have credit score requirements in the mid-600s, Avant indicates it may approve borrowers with a 580 credit score.

Best for Co-Borrower Option

LendingClub

  • Loan Amount: $1,000 – $40,000
  • APR Range: 8.30% – 36.00%
  • Loan Terms: 3 – 5 years
  • Credit Score: 600 or higher

LendingClub offers quick funding and direct payments to creditors for debt consolidation loans.

Pros
  • Low minimum loan amount
  • Fast funding for personal loans (as little as 24 hours after approval)
  • Joint loans allowed
  • Direct payment to creditors
Cons
  • Has origination fees (3% to 6% of total loan amount)
  • No physical branches
  • Relatively high APRs
  • No co-signed loans allowed

Established in 2006 as a peer-to-peer lending platform, LendingClub offers personal loans as low as $1,000 and up to $40,000. Those seeking a personal loan will appreciate LendingClub’s offerings.

You can use LendingClub loans for almost any purpose, from home improvements to medical bills. Eligible borrowers can get personal loans with repayment terms of 3 or 5 years and borrowers can expect to receive funding as soon as 24 hours after approval. However, APRs do start at relatively higher rates than some competitors.

LendingClub can be a good fit for those looking to consolidate high-interest debt, as they offer the ability to pay your creditors directly from your loan.

You’ll likely need a credit score of at least 600 to get approved, and joint loans are available for those who need some assistance qualifying.

Best for Secured Loans

Upgrade

  • Loan Amount: $1,000 – $50,000
  • APR Range: 7.96% – 35.97%
  • Loan Terms: 2 – 7 years
  • Credit Score: 560 or higher

Upgrade offers flexible terms for personal loans and is accessible to borrowers with less-than-stellar credit profiles.

Pros
  • Accessible to borrowers with bad credit
  • Flexible loan terms
  • Joint applications allowed
  • Direct payment to creditors
  • Secured loan options
Cons
  • Has origination fees from 1.85% to 8%
  • No physical branches
  • Higher APRs than some competitors

Upgrade offers personal loans up to $50,000 for qualifying borrowers and is accessible to those with not-so-ideal credit scores. The low loan minimum of $1,000 also makes it an easy choice for those with small financing needs. However, borrowers in certain states will be subject to higher minimum loan amounts. If you live in Massachusetts, Upgrade’s minimum loan amount is $6,400.

While other lenders may offer longer repayment terms of up to 144 months, those are typically reserved for certain loan purposes. Upgrade has repayment terms of 24 to 84 months for eligible borrowers, no matter what expense you’ll be covering. This flexibility can be useful, especially if you’d prefer a longer timeframe to pay off your loan. 

With this lender, you can expect to pay an origination fee between 1.85% and 8%. Borrowers can view their rate before applying without impacting their credit score. 

Overall, Upgrade is worth considering if you’re looking for a lender that offers multiple banking products and loans with competitive rates and flexible terms.

Best for Limited Credit History

Upstart

  • Loan Amount: $1,000 – $50,000
  • APR Range: 6.50% – 35.99%
  • Loan Terms: 3 – 5 years
  • Credit Score: 300 or higher

Using artificial intelligence to help evaluate borrowers, Upstart is a unique lending platform that looks beyond your credit score for personal loan approval.

Pros
  • Considers factors beyond your credit score in lending decisions
  • Loans up to $50,000
  • Fast funding time
Cons
  • No physical locations
  • Limited repayment terms
  • Has origination fees of 0% to 10%

Upstart is a first-of-its-kind online lending platform that uses artificial intelligence to help make smarter lending decisions. This means the company considers factors beyond a borrower’s credit score to help determine creditworthiness. Upstart indicates its model has resulted in 43% lower rates for borrowers than traditional credit score models.

Beyond your credit score, Upstart will also look at your employment history, income, and level of education when deciding whether to approve you for a loan. it states that borrowers with credit scores as low as 300 might be able to get approved for a personal loan, though that loan may come with a relatively high APR. 

Those seeking a personal loan can borrow up to $50,000 and as little as $1,000. While its repayment terms of 36 or 60 months are fairly limited compared to other online lenders, its rates are fairly competitive and loan funds are disbursed as soon as one business day after approval. In addition, this lender charges origination fees of 0% to 10%, so it’s important to read the fine print before applying.

Best for Small Loans

PenFed Credit Union

  • Loan Amount: $600 – $50,000
  • APR Range: 7.74% – 17.99%
  • Loan Terms: 1 – 5 years
  • Credit Score: 660 or higher

PenFed offers no fees and small personal loans as low as $600.

Pros
  • Pre-qualification is available
  • No origination fee, hidden fees, or prepayment penalties
  • Borrow as little as $600
  • Allows co-borrower
Cons
  • Must be a member to receive the loan
  • Limited customization on payment plans
  • No option for direct payment to creditors for debt consolidation

Penfed is an established credit union founded in 1935 and headquartered in McLean, Virginia. While you will need to become a Penfed member if you decide to get a personal loan there, anyone can apply for membership and the process is quick and simple. 

Many lenders have relatively high minimum loan amounts of $1,000 or $2,000, which isn’t ideal if you’d like to borrow a small amount to cover an unexpected cost. Unlike some competitors, Penfed offers loans as small as $600 (or up to $50,000), with no origination fees and APRs ranging from 7.74% to 17.99%. Borrowers can get repayment terms as long as 60 months. 

If you’d like to view personal loan rates with Penfed, you can do so without impacting your credit score. While this lender doesn’t disclose a minimum credit score requirement, you’ll likely need a credit score in the mid-600s to get approved for a personal loan. 

How to Choose a Bad Credit Loan

woman going over finances
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When choosing a personal loan with poor credit, there are certain things to pay attention to as you shop around, including: 

Annual Percentage Rate (APR)

One important consideration is the APR each lender offers, as borrowers with less-than-perfect credit will often get higher rates. While getting a higher rate is common if your credit isn’t great, avoiding predatory loan options with astronomical interest rates is best.

Fees

Personal loan fees are another important consideration that can increase your borrowing costs. While certain fees might be rolled into the loan’s APR, some may be charged upfront. For example, a lender may charge origination fees, application fees, late payment fees, and prepayment penalties. 

Co-Borrower or Co-Signer Option

Certain lenders offer borrowers the option to apply for a loan with a co-borrower (sometimes called a co-applicant) or co-signer. A co-borrower applies for and is responsible for loan payments upon approval, essentially borrowing the amount with you. A co-signer simply agrees to pay back the loan if you default.

Borrowers with bad credit might choose to use a co-borrower or co-signer with a better credit history to increase the chances they’ll be approved for a loan. 

Pre-Qualifying to Compare Rates

In addition to the option to use a co-borrower or co-signer, you’ll also want to determine if lenders offer a prequalification option. Pre-qualifying for a loan involves checking your interest rate without being subject to a hard credit inquiry, which could ding your credit score. Working with lenders that allow you to pre-qualify can help you compare options to find the best interest rates without damaging your credit.

Secured Loan Option

Many personal loans are unsecured, meaning they don’t require borrowers to use collateral, like their home, car, or savings account. But unsecured personal loans have stricter credit requirements, so they can be hard to qualify for if you have bad credit. 

While most personal loans are often unsecured, some secured options are available. Secured loans do require collateral, but they may have less strict approval requirements and offer better rates for borrowers with poor credit. 

Lender Reputation

As you research your loan options, consider the lender’s reputation. Determine how long they’ve been in business, read customer reviews, and look into whether or not the lender has any recent complaints in the Consumer Financial Protection Bureau’s Complaint Database. Doing your due diligence can help ensure that the lender you’re comparing is reputable and has a decent reputation with customers, while also helping you to avoid personal loan scams

Types of Loans to Avoid

Shady lenders often prey on individuals with bad credit, as they know that fewer loans are available to these borrowers. For example, some target bad credit borrowers with payday loans, which can come with costly fees and APRs as high as 400%. Here are some loans to watch out for when shopping around.  

Payday Loans

While a payday loan might offer fast funding and no credit check for borrowers, these loans can be dangerous. Interest rates are so high that it may be challenging to pay off your loan, and getting behind on payments can harm your credit score. Overall, it’s best to avoid payday lenders and instead work with reputable lenders offering loans with lower interest rates and manageable fees. 

Car Title Loans

Car title loans are another loan you’ll probably want to avoid. Like payday loans, car title loans generally come with flexible qualifying criteria and astronomically high APRs. These loans also use your vehicle as collateral, so if you fall behind, the lender could repossess your car and leave you stranded.



FAQs

How much can you borrow if you have bad credit?

The loan amount you can get if you have poor credit varies based on the lender and your unique situation. For instance, some lenders may let you borrow up to $50,000 while others may offer smaller loan amounts. As you compare options, consider pre-qualifying with a soft credit check to determine which loan terms, rates, and amounts might be available to you.

Are bad credit loans better than using a credit card?

Whether bad credit loans are better than using a credit card depends on a few factors. Consider the APR and your ability to repay the loan over a long period of time. If you’re making a relatively small purchase and can repay it within a month, a credit card can make more sense. But if you qualify for a loan rate that is lower than a credit card APR, then a bad credit loan may be a better fit. Compare both options’ cost and pros and cons before deciding which is right for you.

What is the easiest type of loan I can get with bad credit?

If you have less-than-ideal credit, it might be easier to qualify for a secured personal loan than an unsecured personal loan. Remember that secured personal loans require collateral, like a savings account, or your home or car. 

You could also consider working with a lender that allows co-borrowers or co-signers to increase your chances of being approved for an unsecured personal loan with a decent rate and favorable loan terms. Compare bad credit loans from brick-and-mortar and online lenders to see which offers the best options.

What’s the lowest credit score you need for a personal loan?

Credit score requirements for personal loans vary by lender. While some lenders might require a minimum credit score of 670, others might require a credit score of just 300. Research credit score requirements for each lender as you shop around for bad credit loans. 

Checking your credit before applying for a loan is a smart idea, even if you know you have bad credit. Each of the major credit bureaus — Equifax, Experian, and TransUnion — lets you access a free credit report each year through annualcreditreport.com

While we work hard on our research, we do not always provide a complete listing of all available offers from credit-card companies and banks. And because offers can change, we cannot guarantee that our information will always be up to date, so we encourage you to verify all the terms and conditions of any financial product before you apply.

Jess Ullrich
Jess Ullrichhttps://www.linkedin.com/in/jessicaullrich/
Jess is a freelance personal finance writer. She's been creating financial and business content for over a decade. Before venturing into freelance writing, Jess was on the editorial teams at Investopedia, The Balance, and FinanceBuzz. She's created content across several verticals, including budgeting, credit, debt, insurance, investing, loans, and side hustles. In her spare time, you can find Jess reading about money, working in her garden, or spending time with family.

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