How can I get a loan with bad credit?

Finding good loan options may be a bit challenging for individuals who have bad credit scores. However, there are lenders offering personal loans for people with poor credit. To find the best options for your needs, compare rates and loan offers. Make sure you conduct your own research to better understand a loan’s terms.

Will a personal loan hurt my credit score?

Taking out a personal loan can have an impact on your credit score. Depending on the situation, this can be a good or bad thing. If the lender conducts a hard credit check, the inquiry will be recorded on your credit report. It is also important to remember that a personal loan is a debt that creditors will track.

What is the average APR for a personal loan with bad credit?

The <a href="https://www.federalreserve.gov/releases/g19/current/default.htm" target="_blank">Federal Reserve</a> reported that the average APR for personal loans in the fourth quarter of 2021 is 9.1%. Therefore, it stands to reason that the typical rate for borrowers with bad credit is higher than this.

What’s a good interest rate for a borrower with bad credit?

Generally, a personal loan rate is considered good if it is below the national average. That means a rate lower than the average, which is 9.1%, can be considered a good interest rate, regardless of your financial background.

Best Loans for Bad Credit in June 2023

There are several situations in which a person may choose to obtain a personal loan. These loans, which are not backed by collateral, are often used to address financial emergencies, pay for unexpected expenses, consolidate multiple debts into a single payment, or fund a significant purchase. Before applying for a personal loan, it is important to consider a number of factors, including one's credit score. This is because lenders will generally review a borrower's credit report in order to evaluate their creditworthiness and determine their risk level as a borrower. A good credit score can increase the chances of getting approved for a loan and may also result in a more favorable interest rate. On the other hand, a low credit score may make it more difficult to secure a personal loan or may result in a higher interest rate. It is therefore essential to understand one's credit score and take steps to improve it before applying for a personal loan. That said, if you have bad credit and need a personal loan, MoneyGeek has determined that the lenders highlighted below offer the best options.

WHAT WE’RE GEEKING OUT ON

The Best Overall Bad Credit Loan
Second Best Bad Credit Loan
Best Bad Credit Loan With Low Rates
Best Bad Credit Loans for Small Amounts
Best Bad Credit Loans for Limited Credit History
How to Choose the Right Bad Credit Loan for You
Calculate Your Monthly Payment Using Personal Loan Calculator
Frequently Asked Questions About Bad Credit Loans

Best Bad Credit Loans for 2023

A personal loan is a type of debt that must be repaid over a period of time, along with interest. The interest rate on a personal loan may vary based on a number of factors, including the borrower's credit score. Credit scores are used by lenders to assess a borrower's creditworthiness and risk level, and are typically calculated using a scoring system such as FICO or VantageScore. FICO credit scores range from 300 to 850, with scores below 580 generally considered to be "bad," while VantageScores range from 300 to 600, with scores in the 300 to 600 range considered to be "bad."

There are several reasons why you may want to consider taking out a personal loan. Some possible reasons include:

To cover unexpected expenses: Personal loans can be a useful source of funds in the event of an unexpected expense, such as a car repair or a medical bill.
To consolidate debt: If an individual has high-interest debt, such as credit card debt, a personal loan with a lower interest rate can be used to pay off that debt and consolidate it into a single, more manageable payment.
To finance a large purchase: A personal loan can be used to fund a large purchase, such as a home improvement project or a wedding, that may not be possible to pay for upfront.
To improve credit score: Taking out a personal loan and making timely payments can help to improve an individual's credit score over time.

It is worth noting that taking out a personal loan, even for a good reason, can have long-term financial consequences and should not be undertaken lightly. It is important to carefully consider the terms and conditions of any loan and to make sure that one will be able to afford the monthly payments.

MoneyGeek’s Top Pick for Bad Credit: Upstart

Upstart
- 3.22% to 35.99%APR Range
- 300Minimum Credit Score
- $1,000 to $50,000Loan Amount Range
- 36 to 60 monthsRepayment Terms
- Next DayTime to Receive Funds
Based on MoneyGeek’s analysis, Upstart offers the best personal loans for bad credit. For a credit score as low as 300, you can qualify for Upstart personal loans. The company offers its services in 48 states. Borrowers need not worry about prepayment penalties or origination fees. You can also get the money within one to two days.
Upstart only makes soft credit inquiries at first. Thus, your credit report will not immediately be affected. A hard credit check will only be done once you accept the rate and proceed with the application. The interest rate can also be as low as 3.22%.
However, if you are in need of more than $50,000, this company is not for you. Individuals with a debt-to-income ratio of more than 45% are not qualified for Upstart loans. Upstart is also not for you if you have new or no credit.
Pros
Low minimum credit score requirement
Get funds the next day
No prepayment penalty
Can have 0% origination fee

Cons
Low borrowing limits
Has a late fee ($15)
Can have up to 8% origination fee
Debt-to-income ratio limit of 45%
Does not accept borrowers with new or no credit
APR Range: 3.22%–35.99%
Minimum/maximum loan amount: $1,000–$50,000
Minimum credit requirement: 300
Repayment terms: 36–60 months
Time to receive funds: Next day
on Upstart Website

Runner-Up: Upgrade

Upgrade
- 5.94% to 35.47%APR Range
- 560Minimum Credit Score
- $1,000 to $50,000Loan Amount Range
- 36 to 60 monthsRepayment Terms
- Same DayTime to Receive Funds
Upgrade is the second-best option for individuals with bad credit. The company offers loans in amounts as low as $1,000 and as high as $50,000. If qualified, you may get an interest rate as low as 5.94%. Getting funds also does not take long as Upgrade releases money on the same business day that your loan application is approved. For convenience, the company accepts online applications. Borrowers can access their loan information through its mobile app.
However, Upgrade may not be a great option for some individuals. For example, the company does not allow borrowers to use the money to fund their post-secondary education. Upgrade also has a 2.9%–8% origination fee. Finally, if you have a credit score below 560, an Upgrade personal loan is not for you.
Pros
1% auto payment discount
No prepayment penalty
No minimum gross income requirement
Same-day funding

Cons
2.9%–8% origination fee
Charges late fees ($10)
Does not accept those with new or no credit
Cannot be used for post-secondary education
APR Range: 5.94%–35.47%
Minimum/maximum loan amount: $1,000–$50,000
Minimum credit requirement: 560
Repayment terms: 36–60 months
Time to receive funds: Same day
on Upgrade Website

Best for Low Rates: Avant

Avant
- 9.95% to 35.95%APR Range
- 600Minimum Credit Score
- $2,000 to $35,000Loan Amount Range
- 24 to 60 monthsRepayment Terms
- Next DayTime to Receive Funds
Avant can be a good option for borrowers who don’t have excellent credit standing since they only have a minimum credit score requirement of 600. They also conduct soft credit inquiries when you check for possible loan options, which doesn't impact your credit score. However, it does have a pay-off — its interest rates. Even at the low end of the spectrum, you can expect an APR of 9.95% at the very least.
Avant offers several advantages to borrowers who prioritize efficiency and convenience. You can complete the entire application process online — from checking whether you pre-qualify or not to closing. You can also manage your loan using their mobile app, which works best if you’re always on the go.
Pros
Conducts soft inquiry when you check your loan options
The minimum credit score is 600
Releases funds as soon as the next business day
Does not charge a penalty for prepayment
Has a mobile app

Cons
The lowest possible APR is 9.95%
You can only borrow up to $35,000
Does not offer a discount for automatic payments
The administration fee can be up to 4.75%
Currently does not accept applications from Hawaii, Iowa, New York, Vermont and West Virginia

Best for Small Loans: Ally

Ally
- 0% to 26.99%APR Range
- Not DisclosedMinimum Credit Score
- $500 to $65,000Loan Amount Range
- Not DisclosedRepayment Terms
- Same DayTime to Receive Funds
Ally Lending is the lending division of Ally Financial, who offers personal loans to consumers through certain service providers in the healthcare, home improvement, automotive and retail industries. Their unique business model allows service providers to offer zero-interest financing at their discretion, which can be beneficial for consumers with fair or strong credit scores.
It’s worth noting that Ally Lending’s services are not available in all 50 states.
Pros
They do not have any application fees
Their pre-qualification doesn’t impact your credit
They have no prepayment penalties
They offer interest-free loans through some providers
You can easily set up your account and manage your loans online

Cons
You can only apply through a provider and not directly from Ally Lending
Their repayment terms and credit score requirements are undisclosed
You do not get a discount for automatic payments
on Ally Website

Best for Limited Credit History: LendingPoint

LendingPoint
LendingPoint, a financial technology platform founded in 2014, reviews loan applications and approves loans using proprietary algorithms and artificial intelligence. You can apply for loans ranging from $2,000 to $36,500 if you have a minimum credit score of 590 and an annual salary of at least $20,000.
Apart from its A+ rating with the Better Business Bureau and low eligibility criteria, the company's noteworthy qualities include the absence of a prepayment penalty and speedy loan processing. Depending on your creditworthiness, you will be offered a loan with a fixed annual percentage rate (APR) of between 9.99% and 35.99%.
Additionally, the company does not place restrictions on loan usage. As long as the intended use is legitimate, you are good to go. However, LendingPoint may not be for you if you wish to apply for a joint loan or want a co-signer. Additionally, West Virginia and Nevada residents are not eligible to apply.
Pros
No restrictions on usage of funds
Next-day funding
Moderate credit score requirement
Soft credit inquiry
No prepayment penalty
Low minimum income requirement

Cons
Charges origination fee of up to 6%
Higher than average APR
Maximum loan amount of $36,500
No autopay discount
Charges $30 late fees
No co-signed or joint loans
on LendingPoint Website

Other Loan Options to Consider

Lender	Minimum Credit Score	Loan Amounts	APR Range	Ready To Apply?
Sofi	680	$5K–$100K	5.74%–20.28%	Apply Now
Lightstream	660	$5K–$100K	4.49%–20.49%	Apply Now
Truist	None	$3.5K–$50K	8.14%–18.99%	Apply Now
American Express	660	$3.5K–$40K	4.93%–19.97%	Apply Now
Rocket Loans	640	$2K–$45K	5.97%–29.69%	Apply Now

Where to Start: Choosing the Best Loan if You Have Bad Credit

Deciding whether to take out a personal loan if you have bad credit is not a decision that should be made lightly. There are several factors that you should consider before applying for a personal loan, including your current debts, income, and credit score. It is also important to compare your loan options and think about how you plan to use the loan funds, whether for debt consolidation, financing a large expense, or making a significant purchase.

To help with the search for the best personal loan options for people with bad credit, MoneyGeek has created a guide that provides information about various lenders and their loan offerings. This guide can be a useful resource for anyone looking to obtain a personal loan with bad credit, as it provides information about the key features and terms of different loans and helps to compare the options that are available.

Ask Yourself the Important Questions

Determine whether a personal loan is the right option for you. Then, look for lenders offering loans suitable for your needs. Knowing what questions to ask can help. You can start with the following:

How much funding do I need?
What is my credit score?
Can I afford the monthly payment?
How much debt do I already have?

Do Your Research

Taking out a personal loan is a commitment. You will have to repay the money within a certain period, two to six years on average.

That is why research is important. Before you apply, make sure you understand your options well. Find out the requirements. You should also check out the review process of the lenders. For example, some lenders conduct a hard credit check. This type of inquiry can have an impact on your credit score.

It would also help to compare rates from different lenders. This way, you can find the best deal for your needs. MoneyGeek’s guide provides the necessary information to help you through the process. However, these recommendations may not be ideal for all borrowers. It would be beneficial for you to explore other options and compare them to find the right loan for you.

Wait

Do not apply for the first loan that you find. Personal loans require commitment. You will have to pay back the amount borrowed for a number of years. That is why it is important to be 100% sure about it.

After researching your options, wait for a day or two before applying. Think your decision over and determine whether getting a personal loan is the best solution for your needs.

Read the Fine Print

Lenders have different terms, conditions and requirements. That is why it is important to always read the fine print.

Some borrowers make the mistake of overlooking some details about their loans. While some information may seem minor, looking into every aspect can help prevent any mistakes and help you save money in the long run. Always review fees, such as early payoff fees, origination fees and prepayment penalties.

Apply

After thorough research, you can choose the lender you think is best for your needs. Check their application process. Determine what documents and information you need to submit. In most cases, lenders require identification, address verification and proof of income.

Some lenders allow online loan applications. For some individuals, this option is more convenient. However, calling or visiting the lender can help you better understand the personal loan and clarify any concerns you may have.

Key Takeaways

Ask Yourself the Important Questions: Determine how you will be using the loan amount and consider the repayment conditions.

Do Your Research: Compare rates from multiple lenders. Check their loan offers and requirements.

Wait: Think it over for at least a day or two. Do not be hasty.

Read the Fine Print: Make sure you understand all details to avoid issues.

Apply: Check the application process of the lender you have chosen and submit the required documents.

Calculate Your Monthly Payment

It is essential to keep in mind that a personal loan involves borrowing money that must be repaid over time, typically in monthly installments, along with interest. Before taking out a personal loan, it is important to carefully calculate the monthly payment that will be required in order to determine whether your finances can realistically handle the added debt. This is especially important if the loan has already been pre-approved by a lender, as this may indicate that the lender believes you are capable of repaying the loan.

To calculate the monthly payment on a personal loan, you will need to know the loan amount, the loan term (the length of time over which the loan will be repaid), and the interest rate. You can then use our personal loan calculator to determine the monthly payment that will be required. It is important to be realistic about your budget and to ensure that you will be able to afford the monthly payments on the loan, as failing to make payments on time can have serious consequences, including late fees, damage to your credit score, and even legal action.

Month	Payment	Principal	Interest	Balance

Frequently Asked Questions: Bad Credit Loans

Your personal needs and other credit and income factors will determine the best personal loan lender for you. MoneyGeek explains some relevant information by answering frequently asked questions about personal loans for bad credit.

Methodology

We reviewed more than 30 personal loan lenders using 35+ individual data points across six key categories: loan affordability, accessibility, consumer friendliness, customer service, flexibility and lender transparency. Using this information, we narrowed down the best personal loans for individuals with low credit scores.

Here at MoneyGeek, we value you, the consumer, so we also factor in each lender’s customer support, business ratings and additional features that could make your experience easier and more accessible, like prequalification, payment options and mobile apps.

After careful consideration and calculation, our picks are made with your best interest in mind. Our personal loan recommendations and expert tips are meant to help you make the best decision when choosing a lender that meets your needs.

Expert Advice on Best Bad Credit Loans

How can someone tell that an online lender is legitimate and trustworthy when offering personal loans?
Are there any additional fees associated with taking out a personal loan if the borrower has a low credit score?
What advice would you give to those considering taking on a loan with a low credit score?
Are there different terms and conditions for personal loans taken out by people with a poor credit score?

Malcolm Robinson

Professor of Economics at Thomas More University

Nirit Rubenstein

CEO & Co-founder of Dovly

Di Qing

Assistant Professor and Director of Financial Planning at Carolina University

Todd Schwartz

Chief Executive Officer, Executive Chairman, and Founder of OppFi

Qian Wang, Ph.D.

Associate Professor of Finance, College of Business and Computing at Georgia Southwestern State University

About Claire Swinarski

Claire Swinarski is a writer and Wisconsin Badger based out of Milwaukee. She's written for Vox, Milwaukee Magazine, Northwest Quarterly, Relevant and many other publications.

sources

Federal Reserve. "Consumer Credit." Accessed March 2, 2022.

The content on this page is accurate as of the posting/last updated date; however, some of the rates mentioned may have changed. We recommend visiting the lender's website for the most up-to-date information available.

Editorial Disclosure: Opinions, reviews, analyses and recommendations are the author’s alone and have not been reviewed, endorsed or approved by any bank, lender or other entity. Learn more about our editorial policies and expert editorial team.