Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as "Credible."

Credible’s goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”

Your credit score affects the types of loans you can get, as well as the interest rates and terms they come with. But a bad credit score doesn’t mean you can’t get a personal loan at all, as some lenders consider factors other than your credit score, like your income, debts, and collateral.

Having a bad credit score (a score lower than 670) may mean you have fewer personal loan options and will face higher interest rates and fees. But it can still be a better option that some high-cost credit products like credit cards or payday loans.

Let’s look at how bad credit personal loans work and how you can improve your chances of getting one.

Best personal loans for bad credit: Consider these lenders

When searching for the best personal loans for bad credit, look for lenders with a lower minimum credit score requirement and long repayment terms if you’ll need plenty of time to pay the money back. You may want to consider personal loans from these Credible partner lenders.

Avant

With a very low minimum credit score requirement, Avant may be a good choice for many people with poor credit.

Minimum credit score: 550

Loan term: Two to five years

Loan amount: $2,000 to $35,000

Good for: Borrowers who need funds quickly

You can check out Credible to compare personal loan rates from multiple lenders.

Best Egg

You may wish to use a Best Egg personal loan for home improvements, since the lender offers such high loan amounts.

Minimum credit score: 600

Loan term: Three or five years

Loan amount: $5,000 to $50,000

Good for: Home improvements

Discover

If you need a long repayment term so you can slowly chip away at your loan repayments, then you’ll appreciate that Discover personal loans have payment terms that stretch as far as seven years.

Minimum credit score: 660

Loan term: Three to seven years

Loan amount: $2,500 to $35,000

Good for: Long repayment terms

FreedomPlus

If you have multiple sources of high-interest credit card debt, consolidating that debt into a personal loan with FreedomPlus may make it easier to manage your debt.

Minimum credit score: Not disclosed

Loan term: Two to five years

Loan amount: $7,500 to $50,000

Good for: Consolidating high-interest credit card debt

LendingClub

If your credit score is at least 600 and your debt-to-income ratio is low, applying for a personal loan through LendingClub may be a good financing fit.

Minimum credit score: 600

Loan term: Three or five years

Loan amount: $1,000 to $40,000

Good for: Borrowers with a strong credit score and low debt-to-income ratio

LendingPoint

Personal loans through LendingPoint have a few advantages. Not only does LendingPoint offer loans to those with lower credit scores, but it provides funds quickly and allows borrowers to pay off their loan early without a prepayment penalty.

Minimum credit score: 580

Loan term: Two to five years

Loan amount: $2,000 to $25,000

Good for: Paying off your loan early

LightStream

If you need to borrow a large amount of money for a major home improvement project or other expensive purchase, you may find enough funding through LightStream.

Minimum credit score: 660

Loan term: Two to 12 years for home improvement loans or two to seven years for all other loan purposes

Loan amount: $5,000 to $100,000

Good for: Borrowing money for a car or home improvement project

Marcus by Goldman Sachs

With personal loans from Marcus by Goldman Sachs, you get tailored monthly payment options designed to fit your budget.

Minimum credit score: 660

Loan term: Three to six years

Loan amount: $3,500 to $40,000

Good for: Those who like to stick to a budget

OneMain Financial

OneMain Financial offers personal loans to borrowers with lower credit scores. Just note that you’ll have to pay a higher interest rate.

Minimum credit score: None

Loan term: Two to five years

Loan amount: $1,500 to $20,000

Good for: Those with low credit scores

Payoff

Payoff offers personal loans that can help you pay off high-interest debt at lower interest rates, which in turn can help you improve your credit score.

Minimum credit score: 640

Loan term: Two to five years

Loan amount: $5,000 to $40,000

Good for: Paying off high-interest credit card debt

PenFed

If you’re looking to borrow a smaller amount of money, you’ll be able to find loans as low as $600 at PenFed.

Minimum credit score: 670

Loan term: One to five years

Loan amount: $600 to $35,000

Good for: Borrowing $20,000 or less

Prosper

Because Prosper offers solid personal loan amounts (up to $40,000), its loans can help provide funding for home improvement projects.

Minimum credit score: 640

Loan term: Three or five years

Loan amount: $2,000 to $40,000

Good for: Home improvements

SoFi

If you need to borrow a large amount of money, you can apply for a personal loan of up to $100,000 from SoFi.

Minimum credit score: Not disclosed

Loan term: Two to seven years

Loan amount: $5,000 to $100,000

Good for: Borrowing large amounts of money

Credible can help you compare personal loan rates from various lenders.

Upgrade

Loans from Upgrade are great for those who are working on building their credit. Upgrade even offers quick approvals.

Minimum credit score: 580

Loan term: Three or five years

Loan amount: $1,000 to $50,000

Good for: Building credit

Upstart

Even if your credit score is on the lower side, Upstart takes your education and job history into account if it demonstrates your financial potential.

Minimum credit score: 580

Loan term: Three to five years

Loan amount: $1,000 to $50,000

Good for: If you have low credit, but potential to improve it

Other lenders to consider

The following lenders are not Credible partners, so you won’t be able to easily compare your rates with them on the Credible platform. But they may also be worth considering if you’re looking for a personal loan for bad credit. 

OppLoans

OppLoans offers a fully online application process and can fund loans as soon as the next business day following approval.

Minimum credit score: No minimum FICO or Vantage score

Loan term: Up to 18 months

Loan amount: $500 to $4,000

Good for: Borrowers who need a smaller amount or shorter repayment term

NetCredit

Although NetCredit does not disclose its minimum credit score requirement, if it has one, the lender says it looks at an applicant’s broader financial picture in making lending decisions.

Minimum credit score: Does not disclose

Loan term: Six months to five years

Loan amount: $1,000 to $10,000

Good for: Borrowers looking to customize their loan amount and repayment time

Methodology

Credible evaluated loan and lender data points in seven categories to identify “best companies” for mortgages. These categories included interest rates, fees, availability of repayment terms and discounts, eligibility requirements, minimum down payment, and the level of customer service provided. Because every lender has its own system for evaluating borrowers, the best loan or lender will depend on an individual’s unique circumstance, the loan features that are most important to them, and the interest rate and terms they qualify for.

What is a bad credit personal loan?

Personal loans are a type of credit that you can use to cover the costs of a large purchase or to consolidate high-interest debt. Personal loans often have lower interest rates than credit cards do, which makes them especially appealing for consolidating credit card debt.

A bad credit personal loan is a personal loan that provides funding to those with credit scores on the lower side. This is different from payday loan lenders, who usually don’t require credit checks, but who charge high interest rates and fees.

What’s considered a bad credit score?

A FICO credit score can range from 300 to 850. Scores above 670 are generally considered good. Scores between 580 and 669 are considered fair, but any between 300 and 579 are viewed as poor. FICO scores between 740 and 799 are considered very good, and scores above 779 are labeled exceptional. The following factors determine your FICO credit score.

  • Payment history (35%): How often you pay your bills on time, or are late or miss payments
  • Credit utilization rate (30%): How much credit you have available credit compared to how much you’re currently using
  • Length of credit history (15%): How long you’ve been using credit
  • Credit mix (10%): Current and past variety in your credit products
  • Recent credit activity (10%): How many credit accounts you’ve opened recently and the number of applications you’ve made

Here’s why credit scores are important

Lenders use your credit score to determine how much of a risk it is to lend you money. The lower your credit score is, the more they view you as a risk, since you may have late or missed payments in your credit report. This can limit your options when it comes to lenders and loans. To help offset their risk, lenders generally offer loans with higher fees and interest rates to those with lower credit scores.

The costs of a personal loan with bad credit

Many factors influence the cost of credit — and your credit score has a major effect. Generally, people with good or excellent credit qualify for better interest rates and terms, which means they pay less to borrow.

If you have bad credit, you’ll likely face higher interest rates, less favorable terms, and additional fees to borrow money.

What rate might I get for a personal loan with bad credit?

The interest rate you get on a personal loan can greatly affect how much you spend over the life of the loan. The higher the interest rate, the more the loan will cost you. Let’s look at how someone with bad credit might fare compared to someone with good credit.

Loan details

  • Loan amount: $10,000
  • Loan term: Three years

“Bad” credit

  • Origination fee: 5%
  • Interest rate: 29%
  • APR: 32.8%
  • Monthly payment: $419
  • Total interest cost: $5,086

“Good” credit

  • Origination fee: 1%
  • Interest rate: 10%
  • APR: 10.69%
  • Monthly payment: $323
  • Total interest cost: $1,616

What to know about personal loan fees

No matter what your credit score is, most loans come with some fees. Unfortunately, having bad credit can mean you spend more on fees. For example, the origination fee you’ll pay is usually determined by your credit score. The lower your credit score, the more you’re likely to spend on origination fees.

  • Application fee: You may have to pay an application fee when applying for your loan, but this isn’t the case with every lender. This fee covers the cost that the lender takes on when processing your application.
  • Late payment fee: If you make a late payment, you may run into either a flat fee or a percentage-based fee as a penalty.
  • Origination fee: You’re more likely to come across this fee if you’re dealing with an online lender, and it’s usually calculated as a percentage of your loan to cover the costs of processing or underwriting your loan.
  • Prepayment penalty fee: While it may seem like a good thing to pay back your personal loan early, some lenders charge a fee for doing this. That’s because they make less money in interest when you repay your loan early.
  • Returned check fee: If your payment doesn’t go through because you have insufficient funds in your bank account or you bounce a check, you may run into a returned check fee. This is typically a flat amount.

With Credible, you can view personal loan rates side by side.

4 pros and cons of personal loans for bad credit

Every financial product comes with advantages and disadvantages, so it’s important to weigh the benefits against the costs to determine if a personal loan is good for your needs. Here are some pros and cons to consider when it comes to personal loans for bad credit.

Pros

  • Often more affordable than credit cards due to lower interest rates
  • Can help boost credit if paid back on time
  • Can make a big purchase more manageable
  • Good for consolidating multiple high-interest debts

Cons

  • You can run into high interest and fees
  • Missing a payment can hurt your credit score
  • Falling behind on loan payments can lead to the debt going into collections
  • If a bad credit personal loan is too expensive, it can make it harder to pay all your bills on time

Tips for comparison shopping for a personal loan

When shopping for a personal loan, it can be helpful to compare multiple offers to make sure you’re not overspending. To comparison shop for loans, you should request loan estimates from multiple lenders and then compare the estimates by looking at how much you’ll pay in fees, what your repayment terms are, what the rate type is (adjustable or fixed), and how high your APR will be.

It’s especially important to compare APRs because the APR combines your interest rate, repayment term, and fees, which gives you a clearer picture of which loan is the best offer for your situation. The APR isn’t the same as the interest rate, which is a single component of the APR.

Steps to get a personal loan with bad credit

If you have bad credit, these are the steps you’ll generally take to get a personal loan.

  1. Check your credit score to get an idea of what types of loans you can apply for.
  2. Comparison shop with multiple lenders.
  3. Prequalify with different lenders to get a better idea of the loan each might offer you.
  4. Compare your loan offers and choose the right fit.
  5. Officially apply for the loan.
  6. If you’re approved, you may gain access to your funds as soon as the next day, depending on the lender.

Other options when you can’t get a personal loan

If a personal loan isn’t the right fit because of your credit score, you may have some other borrowing options. While you’ll want to avoid predatory lenders like payday lenders (because they charge such high fees and interest rates), these options may work for you under the right circumstances.

  • Friends or family: Borrowing money from a loved one can be difficult to navigate, but may be a more obtainable option if you have bad credit.
  • Get a cosigner: If you have your heart set on a personal loan, having a family member or friend with good credit cosign on the loan can increase your odds of qualifying.
  • Sign up for a 0% APR credit card: A credit card with an introductory 0% APR can give you free financing for a set period of time. Just make sure you have a plan to pay back what you owe before that introductory period ends and your interest rate shoots up.

How prequalifying might help you get a personal loan

Prequalifying for a personal loan can help you understand what interest rate you might get and how much you might be approved for. Another benefit of prequalifying is that if you’re not approved for a loan, you’ll learn more about what you need to do to qualify for a personal loan and where to target your efforts to become a stronger applicant.

If you want to improve your credit score before you start applying for personal loans, consider taking these actions to give your score a boost. It’s important to remember that it can take months or even years to improve your credit score, so patience is key, but these strategies are the fastest ways to make an impact.

  • Make your payments on time.
  • Decrease credit utilization rates by paying down debt.
  • Review your credit report for mistakes and fix any.

About the author: Jacqueline DeMarco has been a personal finance writer for over seven years. She has contributed content to more than a dozen financial brands, including LendingTree, Credit Karma, Fundera, Chime, MagnifyMoney, Student Loan Hero, ValuePenguin, SoFi, and Northwestern Mutual. Jacqueline received a bachelor’s degree in literary journalism from the University of California, Irvine.

About the author
Jacqueline DeMarco
Jacqueline DeMarco

Jacqueline DeMarco has been a personal finance writer for over seven years and is a contributor to Credible. She has contributed content to more than a dozen financial brands, including LendingTree, Credit Karma, Fundera, Chime, MagnifyMoney, Student Loan Hero, ValuePenguin, SoFi, and Northwestern Mutual.

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