Best Personal Loans for those with Bad Credit

When a lender receives an application for a personal loan, they normally take your credit score and overall creditworthiness into serious consideration. They often require minimum credit scores to qualify. This makes it difficult for borrowers with poor credit scores to access these loans. There are some lenders, however, who offer personal loans for bad credit.
Unfortunately, those with low flying credit scores often get grounded with higher interest rates and other unsatisfactory terms when applying for a loan. If you have bad credit, it’s typically difficult to qualify for a loan. Bad credit loans generally come with high fixed rates that are offered by lenders willing to loan you funds despite your low credit rating. These types of loans, however, can help you build credit so you can become eligible for better loan terms and opportunities in the future.

Obtaining A Bad Credit Loan

It is typically very difficult, but not impossible, to get a personal loan with bad or no credit. If you take the time to work on your credit, you could save a lot of money by benefiting from a lower interest rate. If you need a personal loan now though, try these tips to find the best loan for you:

Check Your Credit Score

Keeping tabs on your score can help you gauge which lenders you could possibly qualify with. You can check your credit score at LendingTree to see where you stand, then find ways to improve your credit score. Since your score is generated by the information in your credit report, you can also request your credit reports from the three major bureaus through to look for and dispute any errors.

Choose A Lender

Seek lenders that consider more than just your credit. It may be easier to qualify with lenders whose assessments of your creditworthiness aren’t dependent on just your FICO Score. For instance, some lenders may also take into account your income, employment and education level. Prequalify for Loans Online Through prequalification, you can check whether you’re likely to be approved for a loan and what rates you may be eligible to receive. This process won’t harm your credit score, as it only generates a soft inquiry. Compare Loan Offers Once you’ve received a few personal loan offers, you’ll want to select the best option for you. That means reviewing interest rates, lender fee structures and available terms. Submit Application(s) After narrowing down your options, it’s time to submit a formal application. This will trigger a hard inquiry, which will temporarily lower your credit score. After applying, you may need to wait a few business days to receive a loan decision. If your application is denied, you’ll typically be notified of the factors that contributed to the denial.

Where Can I find Bad Credit Loans?

Personal loans for bad credit can be found at a variety of types of institutions. Here are a few different types of lenders where you can start your search: Banks Some banks, such as Wells Fargo Bank, offer personal loans. However, you may be required to visit the bank’s local branch in order to go through the application process. While the online process can be convenient, visiting a branch can provide a personal touch when seeking a personal loan. Some banks may require you to have a relationship with them already, such as having a checking or savings account, before applying for a personal loan. Credit Unions Getting a personal loan through a credit union often requires borrowers to be members of that institution. For instance, with PenFed Credit Union, you don’t have to become a member to apply, but if you decide to proceed with your offer, you’ll have to become a PenFed member to close the loan. Online Lenders When applying for a personal loan through an online lender, the process is typically 100% remote. You’ll fill out an online application then submit documentation to verify your identity, income and address.

Types of Loans for those with Poor Credit

Bad credit loans are not just limited to traditional, unsecured loans. Here are the types of loans you can get with bad credit.

Secured Loans
With a secured loan, you’ll have to offer your lender an asset as collateral, like a car, a home or even a savings account. Because secured loans require collateral, they’re often easier to obtain than unsecured loans and generally offer better rates, since the lender is at less risk. They are best for consumers with bad credit who own valuable collateral they can afford to lose should they default on the loan. If you default on a secured loan, however, your lender may legally confiscate your collateral to recover the money. And if your lender doesn’t recoup the cost of the loan by redeeming your assets, you may be responsible for the difference.

Unsecured Loans
Since unsecured loans don’t require borrowers to offer up collateral, lenders of these types of loans rely on factors such as credit history, income and debt obligations to determine your eligibility. Unlike secured loans, if you default on an unsecured loan, your lender cannot seize your assets.

Since these types of loans don’t require collateral, lenders that offer unsecured loans rely heavily on your creditworthiness when it comes to approvals. This means that if you don’t have good or excellent credit, you may have a hard time qualifying or receiving low interest rates. If you default, your credit score is likely to take a major hit.

Joint Personal Loans
If your credit score isn’t quite high enough to get you approved by a lender, consider getting the support of a friend or loved one and file for a joint personal loan. This enables you to apply for a personal loan with a second person. This approach makes it easier for consumers with bad credit to be eligible for a loan, as it lowers the primary borrower’s risk.

If you’re unable to make payments on this type of loan, not only can your lender attempt to collect from you, they can also try to collect on the loan from your co-borrower. This can also impact both of your credit scores, not to mention your relationship.

Cash Advances
They are small, short-term loans that you can get from your credit card company. In these instances, you can withdraw cash from your credit card from your total balance. It is best for those who are in a financial emergency and need money quickly. You won’t have to go through a credit check and can receive money fast if you need it.

You may have to pay a fee, and you’ll pay much higher APRs than you would on typical credit card purchases.

Bank Agreements

If you have a strong relationship with your bank, you may be able to get what’s known as a bank agreement. This can take the form of a small, short-term loan or even the ability to overdraft on your account (up to a certain amount). This is best for consumers who have good histories with their bank. If you’re in need of a short-term fix, you can use an already favorable relationship for financial assistance.

Are there home equity loans for people with bad credit?

If you have bad credit, you may be able to cash in on the equity you’ve built into your home. These loans have fixed rates and typically are paid off between five and 30 years. Like personal loans, with a home equity loan, you’ll be given the money in a lump sum. The home equity loan allows borrowers to take out up to 80% of their home’s value. Because you’re using your home as collateral, however, defaulting on your home equity loan may result in losing your home.

HELOC Loans for Bad Credit
A home equity line of credit works similarly to a credit card. Consumers can borrow as much as they need (up to a limit) against their home’s equity and only have to pay back the amount they took out. Unlike home equity loans, HELOCs typically have variable interest rates. Consumers can borrow and pay back as needed, and reuse the line of credit. Since interest rates are variable, borrowers may experience higher monthly payments.

What about obtaining student loans for bad credit?

If you’re in school or preparing to attend college and have poor credit, you may be able to get student loans for bad credit to help cover expenses. While many lenders don’t allow borrowers to use a personal loan toward education financing, lenders like Upstart do allow for it. Some student loan lenders will cover up to the entire cost of your tuition. Watch out for lenders that have strict or vague forbearance and deferment programs, in case you’re unable to repay the loan down the road.

Understanding Your Credit Score

If you have bad or poor credit, your score in most scoring models likely falls somewhere between 300 and 579. Poor credit may be a result of the lack of time or opportunity to build up your credit, financial missteps such as missing payments or having a high debt-to-income ratio, decline in income, or perhaps being a victim of a scam or identity theft.

Lenders often consider your credit score as a signal of your creditworthiness, or how likely you are to pay them back. As a result, poor-credit borrowers often have to pay higher APR rates than those with good or excellent credit.

Here are some of our most recent statistics on what kind of APR you may expect based on your credit score.

How should I compare personal loans for my bad credit?

Compare lender APRs
The annual percentage rate (APR) is what your financial institution charges you for taking out a loan, but it’s not the same as the interest rate.

While the APR does include the interest rate you’ll be paying to borrow the funds, it gives you a more comprehensive picture of how much your loan will cost, since it  includes any additional fees. The lower the APR, the less the loan will cost you over time. You may want to choose a lender that can offer you a lower APR.

Account for fees
Your financial institution could charge you several fees for your personal loan in addition to the annual interest rate. Some of these fees could include administrative costs deducted upfront from the amount you’re borrowing, while others could be charged for making a late payment or paying off your loan before the end of its term. Keep an eye on the fine print.

3 Common Personal Loan Fees

Late Payment Fees
The origination fee, if included, is typically equal to 1% to 8% of the total amount of the loan. It’s a processing or administrative fee that is typically deducted upfront from the total amount you’re borrowing.Loan origination fee

The origination fee, if included, is typically equal to 1% to 8% of the total amount of the loan. It’s a processing or administrative fee that is typically deducted upfront from the total amount you’re borrowing.Prepayment penaltyYou could be charged a penalty for paying off your loan ahead of time. However, most lenders don’t charge this fee for personal loans.

Examine Repayment Terms
Your repayment terms can make a difference in how large or small your monthly payments will be. Lenders offer unsecured personal loan repayment terms between 12 to 60 months, but you can find loans with long-term repayment plans.

The longer your payment term, the higher your APR rate may be, but you’ll pay in smaller monthly payments. You’ll also pay more in total interest over the life of a long-term loan. If your repayment plan is shorter, however, your APR rates may be lower but your monthly payments will be larger.

While some lending companies only offer two or three different repayment terms, other companies may have more flexible terms to choose from.

Here are some ways to spot and avoid scams related to bad credit loans.

Unfortunately, some poor-credit loans really are too good to be true. To avoid being scammed by a shady lender, be on the lookout for the following signs.

The lender demands that you pay fees upfront.
A legitimate lending institution won’t ask for payment before you’ve been approved and receive your loan. While some trustworthy lenders may require that you pay an application fee or a credit report fee, these are typically taken out of the loan you borrowed.

The lender requires that you act immediately: If a lender is pressuring you to make a decision within a small window of time, that may be a red flag. A proper lender won’t corner you and understands that the decision to take out a loan may require some time to think over.

The lender has no physical address.
A reputable lender will have the company’s physical address listed on its website (not a post office box).    

The lender is not registered in your state.
Whether a lender is online or in person, in order to do business in your state, it must be registered in your state, according to the Federal Trade Commission (FTC). Lenders should note which states they are or aren’t registered with. If you’re suspicious of a scam, you can reach out to your state attorney general’s office to find out if that lender is registered where you live.

The lender contacts you first.
If you did not initiate contact with the lender, you may not want to answer any phone calls or other types of communication. It’s probably a ploy to get your financial information. A credible lender won’t cold call you, asking you to disclose your personal information.

The lender does not have a secure website.
Some scammers may attempt to steal your information through their website. When researching bad credit loans, be sure to check that a website’s URL has the letter “s” following “http,” as well as a padlock icon on pages that ask you for your financial information.

The lender does not check your payment history.
A reputable lender won’t guarantee your approval for a loan. Legitimate lending institutions will first want to see your payment history, your credit and DTI ratio and other financial information.

What should I do if I suspect I have been scammed?

If you find out you’ve been scammed, the first step is to contact law enforcement and file a police report. Unfortunately, there may not be much they can do, but you’ll want to document the crime.

Once you’ve filed a police report, you should also report the scam to the FTC Internet Crime Complaint Center. By reporting it, you could potentially prevent others from being scammed in the future.


PAYDAY LOANS are questionable and sketchy and come with monstrously high fees and interest rates.

They are typically less than $500 and are expected to be paid back within two to four weeks. Many people who take out payday loans often have to take out additional loans to pay off the original payday loan, trapping them in a cycle of debt and despair.

Those who can afford the sky-high fees and can pay the loan back right away, though it’s wise to avoid this type of loan if you can.

Payday loans don’t require credit checks, and you can often get your money right away. These types of loans, however, are often predatory and may charge as much as 400% APR.

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