Bad credit loans

You don't have to have perfect credit to take out a personal loan, but expect to pay a higher interest rate if you're approved for a personal loan with bad credit by a bank, credit union, or online lender.

Credible partner lenders Avant, FreedomPlus, Lending Club, LightStream, Marcus, Payoff, Prosper, Upgrade, and Upstart offer personal loans to borrowers with fair to bad credit (credit scores under 699).

If your credit score is below 580, or you have no credit history, you are unlikely to be approved for an unsecured personal loan unless you apply with a cosigner. But a cosigner can be a good option since they can help you secure a lower interest rate, whether you need one to qualify or not.

Check Out: Personal Loan Lenders That Accept Cosigners

The interest rate you're offered on a personal loan depends on the type of loan you're applying for, your credit history, and how bad your credit score is. Rates are often lower than credit cards, making it a good idea to use a personal loan for consolidating credit card debt.

Using your home's equity to consolidate debt — through a cash-out mortgage refinance, home equity loan, or home equity line of credit (HELOC) — can often get you an even lower rate. But that's because you're putting your home up as collateral. A personal loan is unsecured, so you don’t need property to guarantee repayment.

Once you’ve completed the loan application process and are approved, many lenders are able to fund your loan as soon as the next business day. Depending on the lender and the details of your application, it can take up to about a week.

Using Credible to check rates won't impact your credit score. When you authorize Credible to perform a credit check, we use a soft credit inquiry that allows you to see personalized prequalified rates without having to apply for a loan.

If you see a loan option on your dashboard that you'd like to proceed with, you'll be asked to authorize a hard credit inquiry when you apply for the loan. A hard inquiry can impact your credit score by two to nine points, but typically by no more than five.

Learn More: How Debt Consolidation Loans Can Help Your Credit Score

None of the lenders on the Credible platform charge prepayment penalties. Whether you want to make more than the minimum monthly payment or pay off your loan entirely, there's no prepayment penalty. You may be charged an origination fee ranging from 0% to 8%, but we’ll always tell you the cost upfront so you can compare them across lenders.

If you're taking out a personal loan from a lender that's not on the Credible platform, read the terms of your loan offer to see if you'll be charged a prepayment fee and, if so, how much.

Having good credit can help you qualify for lower interest rates. If you have a low credit score, even a small improvement in your credit score may save you money. Before applying for a loan, here are three simple steps you can take to improve your credit score:

1. Pay bills on time: Missing payments on any of your loans or credit cards can harm your credit score, so it’s important to always pay your bills on time.

2. Pay down credit card balances: Lowering the credit utilization ratio on your credit card accounts can boost your credit score, so pay your balances off.

3. Improve your credit mix: If you don’t already have an installment loan (like a car loan), adding a personal loan to your credit mix can boost your credit score — particularly if you use it to pay down credit card debt with high interest rates.

More Tips: How to Build Credit Fast