Best Personal Loans for Bad Credit

If you’re dealing with a home improvement project, an unexpected expense, or looking into debt consolidation, personal loans can look appealing. Sometimes you need extra money quickly and personal loans can help, especially because you can use them as you choose. But if you pull up your credit report and your credit is bad, you may not qualify for personal loans. Still, there are specific companies that offer bad credit loans. Read on to learn more about where to apply for a personal loan if you don’t have a great credit history. Many of these are online lenders that can make the process simple and convenient, even when you have poor credit.

Overview of the six best personal loans for bad credit

Personal loanBest for
UpstartLarger loans (up to $50,000)
AvantLow APR for borrowers with fair credit
OppLoansSmaller loans (min $500)
LendingClubMultiple loan offers
OneMain FinancialMultiple options for repayment term
LendingPointFlexible options

Best personal loans for bad credit

Upstart

Whether you need a smaller loan of just $1,000 to cover an expense or need a larger loan, Upstart can help. Upstart offers personal loans from $1,000 to $50,000. On top of that, according to their site, a whopping 99% of applicants get their funding the next day.
So if you need a loan fast, this could be a good option. The interest rates range from 8.41% to 35.99%. The repayment terms on Upstart personal loans are either three or five years.
If you wanted to pay down the personal loan early, there are absolutely no prepayment penalties. To verify eligibility, you can check your rate in just five minutes on their site without affecting your credit score. You must have a credit score of 620 or above to qualify.
On the site, the loans are marketed “for any occasion” with examples such as moving, medical debt, home improvement, debt consolidation, and more. So whatever your personal loan needs are, you can get them covered. Just remember to only borrow what you need.

Avant

Avant is one of the online lenders that offer personal loans between $2,000 to $35,000. The interest rates on these personal loans will of course vary depending on your credit, but it could be as low as 9.95% and as high as 35.99%. Most of the Avant customers have credit scores between 600 and 700.
The repayment terms are between 24 months (2 years) to 60 months (five months). If you choose a shorter repayment term, your monthly payment will be higher. Opting for a longer repayment term lowers the monthly payment but increases how much you pay in interest. It’s important to note though that there is an administrative fee of up to 4.75%.
Repayment is also made easy with an online app and options for automatic payments. Since personal loans are considered installment loans, your monthly payments are fixed. Fixed payments remain the same throughout the repayment term, so you’ll know exactly what you need to budget.
You could get your Avant personal loan funding the next business day. If there are any issues, you can also contact a real person to get assistance. According to the site, the company has helped one million customers.

OppLoans

If you need a smaller personal loan, then you want to consider OppLoans. Through OppLoans, you can take out a personal loan as low as $500 up to $4,000. While this is a smaller amount than the other lenders, that can work in your favor if you need something within that range. The company doesn’t have a minimum credit score and reviews other factors to determine eligibility.
The company offers repayment terms up to 24 months or 2 years. One thing to be aware of is that OppLoans has much higher interest rates (APR) than the aforementioned lenders. The APR can range from 99 to 199%. When you compare the APR to that of payday loans, which is often as high as 400%, it’s not as bad.
The personal loan is unsecured so doesn’t need any collateral like a deposit or item of value to back the loan. The company says they can deposit the personal loan into your bank account within one business day.
The company reports to all three credit bureaus. So, unlike payday loans for fast funding, a personal loan from OppLoans can offer you that as well as help you build credit if you make on-time payments.

LendingClub

LendingClub is a peer-to-peer marketplace that offers personal loans up to $40,000. The personal loan has fixed monthly payments and has competitive interest rates. On top of that, there aren’t prepayment penalties so you can pay off the loan ahead of schedule. LendingClub has a minimum credit score of 600.
When you apply for a personal loan through LendingClub, you’ll get multiple loans offers to choose from. Loan terms are 36 or 60 months, so three or five years. You can check your rate in a matter of minutes without hurting your credit score. The APR can range from 10.68% to 35.89%. You should note that there is an origination fee on the loan of 2 to 6% of your total loan.
After being approved and funded by an investor, you’ll receive your money. The money can take up to four days to hit your bank account. To repay your personal loan, you can set up automatic payments from your bank account.
According to the LendingClub website, the company has served more than three million customers. The amount borrowed through LendingClub exceeds a whopping 60 billion dollars.

OneMain Financial

OneMain Financial is a lender that’s been around for a century and offers personal loans. Through OneMain Financial, you could borrow $1,500 up to $20,000. Typically, personal loans have better interest rates than credit cards but that’s not the case with this loan.
Personal loans from OneMain Financial have interest rates between 18.00% and 35.99%, which is comparable or even higher than credit card interest rates.
The repayment terms vary and you can choose from 24-, 36-, 48-, or 60-month terms (2, 3, 4, or 5 years respectively). Once you apply and get approved, you’ll need to visit a branch to fill out additional paperwork and chat with a loan specialist. OneMain Financial doesn’t list minimum credit score requirements.
OneMain Financial may offer you either a secured personal loan or an unsecured personal loan. A secured loan is backed by some form of collateral. That could be something like your car, for example. So if you ended up not repaying the loan, the car can be seized to repay the secured loan. The rates that you get will be dependent on your credit history, debt amount, as well as your income and expenses.

LendingPoint

Another option to consider for personal loans is LendingPoint. The company offers personal loans of up to $25,000. According to the site, the company gets 100,000 requests for financing and in total has 1.8 billion dollars borrowed.
LendingPoint has flexible options so you can cater the loan to your needs, with repayment terms of up to 48 months, or four years. You can check your rate on the site without it affecting your credit score. The APR can range from 9.99% to 35.99%. The company considers your income, employment, financial history, and credit to determine eligibility. LendingPoint has a minimum credit score of 585 to qualify.
If you do get approved for a personal loan, you could get your funding as soon as the next business day. The loan also has no prepayment penalties, which means you won’t get dinged if you end up paying the loan before the repayment term is over.
According to INC 500, the company is listed as number two in financial services and INC’s magazine 17th fastest-growing private company in the U.S.

Overview of best personal loans for bad credit

LoanAmountsAPRRepaymentPrepayment PenaltyAvailable
Upstart$1k to $50k8.41%-35.99%3- or 5-yrNone1 day
Avant$2k to $35k9.95%-35.99%24-60/moup to 4.75%1 day
OppLoans$500 to $4k99%-199%Up to 24/moN/A1 day
LendingClubUp to $40k18%-5.99%2%-6%36 or 60/moNone
OneFinancial$1,500 to $20k18%-35.99%24, 36, 48, or 60/moN/AN/A
LendingPointUp to $25k9.99%-35.99%Up to 48/moNone1 day

FAQS

What is a good credit score?

If you have bad credit, you probably want to know what is considered a “good” credit score. According to the credit bureau Experian, a credit score of 700 or above is considered good. But FICO, which is the major credit score model used, has a different breakdown and oftentimes your FICO score matters most.
FICO considers less than 580 a “Poor” credit score, anything 580-669 a “Fair” credit score, and a “Good” credit score is anything 670-739. If you have a credit score between 740-799 that is considered “Very Good” and anything above 800 is “Exceptional.”

How can I improve my credit?

Your credit shows a lender how responsible you are as a borrower. If you have bad credit, you want to boost your credit score. That way you can increase your chances of getting approved but more importantly, you can score a better interest rate, which can save money over time. To improve your credit, it’s important to know what factors contribute to your credit score.
Your payment history makes up the bulk of it at 35%. Next, your amounts owed, or how much you’ve borrowed makes up 30%. How long you’ve had credit, which is your length of credit history, contributes 15% of your score. Credit mix, or how many types of loans you have makes up 10% and another 10% comes from new credit. Lenders find it risky if you consistently apply for new credit.
These factors mean every late payment you make or your debt-to-income ratio is high, you could have a bad credit score and that means high interest rates even if you do qualifying for bad credit loan options.
To lower interest rates, the main thing you can do to improve your credit is to make all of your payments on time. The next best thing is to keep your balances low on your credit cards, ideally below 30%. Using up too much of your credit is considered risky to lenders. Taking these two steps should help improve credit.

What should I look out for when considering a personal loan?

If you’re in the market for a personal loan, the main thing you want to compare is the Annual Percentage Rate (APR). Your APR will affect how much you pay in interest and your creditworthiness affects your loan rates. You also want to consider the repayment term, or how long you have to pay back the loan.
The longer the repayment term, the smaller your monthly payment will be. Conversely, if you have a shorter repayment term, your monthly payment will be larger. You want to make sure to find something that fits within your budget and that you can afford to pay back.
Plus, review any minimum loan amounts and maximum loan amounts. You can go online and check out reviews from the Better Business Bureau and find consumer reviews at TrustPilot. Lastly, check for any fees, such as origination fees which can cost you even more money.

When personal loans make sense

The lenders listed above can help you score a personal loan if you need extra money. Personal loans are good alternatives to credit cards, as oftentimes they have a lower APR. So if you’re looking to consolidate your debt or pay for an emergency, a personal loan can make sense.
Compared to payday loans, which have exorbitant interest rates, personal loans are also a better alternative. Typically, personal loans can distribute the money relatively quickly. In many of the cases listed above sometimes as soon as one business day.
If you do take out a personal loan, make sure you only borrow the amount that you need. Make sure to exhaust your other options first before taking out a loan. A loan can be costly and it’s tough (and not fun) to pay back debt.
Make sure you have a plan to pay it back and that you can afford to do so with the repayment term you’ve chosen. The key is to be a responsible borrower and use the loan to your advantage. Use it for what you need, then pay it back on time or even early. You can build your credit and lower the amount you pay in interest.

How to avoid scams

Unfortunately, there are personal loan scams out there aside from the legit lenders listed above who are offering loans. You want to avoid scams and protect yourself financially. It’s important to note that a lender will not call you.
Additionally, if you’re asked to pay anything upfront or if you see the words “guaranteed” anywhere, run. Remember the saying, if it seems too good to be true, it probably is.
Look to see if their website is secure. You should see “HTTPS” and/or a lock on the left-hand corner of the URL (the website domain). That designates the site is secure. Not having that can be a red flag.
You can check the Better Business Bureau before working with any lender. Also, make sure you can find an address and contact info for the lender.
The Federal Trade Commission also has tips on how to avoid a scam, as well as how to report a scam if you’ve already been a victim. Taking all of these steps can help you spot a scam and avoid any trouble.

The bottom line

Ever those with a low credit score can find their loan application approved without a cosigner. Financial institutions are willing to work with you, including the six lenders listed above. If you get accepted for a personal loan and pay it back on time, it can help rebuild your credit and improve your score, helping you work your way up to an excellent credit report. So you can get the funding you need and improve your credit at the same time. Before applying, be sure to read all of the fine print, check for fees, review loan terms, and borrow only what you need. Regardless of the reason you need the money, even if it's short-term, a debt consolidation loan, a student loan, or an emergency, it’s still a loan you have to pay back.

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