When your credit isn’t perfect, securing a personal loan can feel like a daunting task. However, just because you have bad credit doesn’t mean you’re out of options. In fact, there are several lenders and strategies designed specifically for individuals who may not have the highest credit scores.
In this guide, we’ll walk you through the best personal loans for people with bad credit, offering insights into where to apply and what you should know before borrowing. Whether you’re consolidating debt, funding an emergency, or making a large purchase, you’ll find valuable options here to help you get the money you need.
What is a Bad Credit Loan?
A bad credit loan is simply a loan provided to someone with a low credit score. Lenders typically consider a credit score below 580 to be in the “bad” credit range. Having bad credit can make it difficult to get approved for traditional loans, but bad credit personal loans are designed to cater to people with less-than-perfect credit histories.
Bad credit loans usually come with higher interest rates to offset the risk lenders take by offering financing to individuals with poor credit. However, if you need access to funds and can manage to repay the loan, they can be a useful option for improving your credit over time.
How to Get the Best Personal Loan With Bad Credit
When applying for a personal loan with bad credit, here are a few things to keep in mind to increase your chances of approval and minimize costs:
1. Check Your Credit Score
Before applying for a loan, make sure you know your current credit score. Free credit reports and scores are available through websites like AnnualCreditReport.com or via many banks and credit card companies. Understanding where you stand will help you determine which loan options are best suited for your financial situation.
2. Consider the Interest Rate
Lenders offering personal loans for bad credit tend to charge higher interest rates due to the increased risk. Shop around to compare rates and choose the one that works best for your budget. If possible, opt for a fixed-rate loan so that your monthly payments remain predictable.
3. Secure a Co-Signer
If you have someone with better credit willing to co-sign the loan, you may qualify for better terms. A co-signer provides additional security to the lender, lowering the risk and potentially leading to a lower interest rate or higher loan amount.
4. Explore Secured Loans
Some lenders offer secured loans, where you put up collateral (like a car or home) to back the loan. While these loans tend to have lower interest rates, keep in mind that if you fail to repay, you risk losing your collateral.
5. Consider Online Lenders and Credit Unions
Many online lenders and credit unions specialize in offering loans to individuals with poor credit. These options often come with more flexibility and lower rates than traditional banks.
Best Personal Loans for People With Bad Credit
Now that you know what to look for, let’s dive into the best personal loans for people with bad credit. The following lenders cater to individuals with less-than-perfect credit, offering competitive interest rates and flexible terms.
1. Upstart
Best For: Borrowers with limited credit history
Loan Amount: $1,000 – $50,000
APR: 5.4% – 35.99%
Repayment Terms: 3 to 5 years
Upstart is an online lender that uses AI and machine learning to assess your loan application, factoring in factors like your job history and education in addition to your credit score. This is great for individuals with limited credit history or a spotty credit score. The process is quick and allows you to receive funds as soon as the next business day.
2. OneMain Financial
Best For: People who need a secured loan
Loan Amount: $1,500 – $20,000
APR: 18.00% – 35.99%
Repayment Terms: 24 to 60 months
OneMain Financial specializes in offering personal loans to individuals with bad credit. You can apply for either a secured or unsecured loan, and the company has physical branches in many locations, making it a good option if you prefer to discuss things face-to-face. OneMain is also known for offering personalized customer service and flexible loan terms.
3. BadCreditLoans.com
Best For: Borrowers looking for a large variety of lenders
Loan Amount: $500 – $5,000
APR: 5.99% – 35.99%
Repayment Terms: 3 to 36 months
As the name suggests, BadCreditLoans.com is specifically geared toward individuals with bad credit. The platform connects you with a network of lenders that are more willing to work with those with low credit scores. While loan amounts may be on the smaller side, this site offers a quick application process and can help you find a loan within minutes.
4. LendingClub
Best For: Borrowers with at least a 600 credit score
Loan Amount: $1,000 – $40,000
APR: 7.04% – 35.89%
Repayment Terms: 3 to 5 years
LendingClub is a peer-to-peer lending platform that offers personal loans to individuals with credit scores as low as 600. The platform connects borrowers with individual investors who are willing to lend money. While LendingClub tends to offer lower interest rates for those with better credit, it still offers competitive rates for people with bad credit.
5. Avant
Best For: Borrowers with fair credit
Loan Amount: $2,000 – $35,000
APR: 9.95% – 35.99%
Repayment Terms: 2 to 5 years
Avant specializes in personal loans for borrowers with fair to bad credit. The process is entirely online, and you can get an answer in as little as a few minutes. With fair credit, you can still secure competitive rates and a loan that fits your needs. Avant offers flexible repayment terms and quick funding, making it an ideal choice for those needing funds urgently.
How to Improve Your Credit Score for Better Loan Options
While bad credit may feel like a permanent barrier, improving your credit score over time can open up better loan options with lower interest rates. Here are some tips for improving your credit score:
-
Pay bills on time: On-time payments have a significant impact on your credit score.
-
Pay off existing debt: Reducing debt will improve your credit utilization ratio, which can boost your score.
-
Dispute errors: Review your credit reports and dispute any inaccuracies.
-
Consider a credit-builder loan: These loans help you build or improve your credit over time by making small payments.
Final Thoughts: Is a Personal Loan with Bad Credit Worth It?
When you have bad credit, getting a personal loan can be challenging, but it’s far from impossible. The best personal loans for people with bad credit are out there—you just need to know where to look and what to consider before applying. Whether you need funds for an emergency, home improvement, or debt consolidation, there are lenders willing to help.
Before committing, it’s important to shop around, compare interest rates, loan amounts, and repayment terms. And remember, using a personal loan to improve your credit score can help set you on the path to better financial health in the long run.
✅ Quick Recap:
-
Upstart, OneMain Financial, BadCreditLoans.com, LendingClub, and Avant are great options for personal loans for people with bad credit.
-
Co-signers, secured loans, and online lenders may improve your chances of getting approved.
-
Work on improving your credit to access better loan terms in the future.
If you have bad credit but need a loan, don’t despair—take the time to explore these options and make an informed decision. A little research can go a long way in securing the best deal for your financial situation.
