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Best Loans for Bad Credit of February 2024

Online lenders and credit unions offer bad credit loans. Compare multiple loan offers to choose the best one.

Annie Millerbernd
By
Last updated on January 29, 2024
Edited by
✅ Fact checked and reviewed
Kim Lowe
Edited by
✅ Fact checked and reviewed

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Best Personal Loan for Bad Credit
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5.0
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WHY OUR NERDS LOVE ITUpgrade accepts consumers with low credit, offering competitive rates, multiple rate discount options and credit-monitoring tools. It has special features for debt consolidation and home improvement loans.
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Best Loans for Bad Credit

Lender
NerdWallet Rating
Est. APR
Loan amount
Min. credit score
Learn more
Upgrade

Upgrade

See my rates
on NerdWallet's secure website
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Best for Overall bad credit loans
Rate discount

8.49-35.99%

$1,000-$50,000

560

See my rates
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on NerdWallet's secure website
Upstart

Upstart

See my rates
on NerdWallet's secure website
on NerdWallet's secure website
4.5
/5
Best for Thin credit
Fast funding
Flexible payments

6.40-35.99%

$1,000-$50,000

None

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on NerdWallet's secure website
on NerdWallet's secure website
BestEgg

Best Egg

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on Best Egg's website
on Best Egg's website
4.5
/5
Best for Secured loans
Secured loans
Wide range of loan amounts

8.99-35.99%

$2,000-$50,000

600

Get rate
on Best Egg's website
on Best Egg's website
Avant

Avant

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4.0
/5
Best for Fast funding
Fast funding
Flexible payments

9.95-35.99%

$2,000-$35,000

550

See my rates
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on NerdWallet's secure website
Universal Credit

Universal Credit

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on NerdWallet's secure website
4.0
/5
Best for Credit-building tools
Fast funding
Rate discount

11.69-35.99%

$1,000-$50,000

560

See my rates
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Explore all of our lender picks by category

Our pick for

Overall bad credit loans

Upgrade
Check Rate
on NerdWallet
on NerdWallet
Upgrade

Upgrade

5.0
Est. APR

8.49-35.99%

Loan amount

$1,000-$50,000

Min. credit score

560

Our pick for

Thin credit

Upstart
Upstart

Upstart

4.5
Est. APR

6.40-35.99%

Loan amount

$1,000-$50,000

Min. credit score

None

Our pick for

Fast funding

Avant
Avant

Avant

Est. APR

9.95-35.99%

Loan amount

$2,000-$35,000

Min. credit score

550

Our pick for

Credit-building tools

Universal Credit
Universal Credit

Universal Credit

Est. APR

11.69-35.99%

Loan amount

$1,000-$50,000

Min. credit score

560

Our pick for

Secured loans

BestEgg
Get rate
on Best Egg's website
on Best Egg's website
BestEgg

Best Egg

Est. APR

8.99-35.99%

Loan amount

$2,000-$50,000

Min. credit score

600

NerdWallet’s guide to bad credit personal loans

Upgrade: Best overall bad credit loans

Why it made the list: Upgrade has a low minimum credit score requirement and low starting rates — a somewhat rare combination. These loans come with credit-building tools, flexible repayment terms and special features for debt consolidation and home improvement projects.

  • Pros

    Cons

    • Multiple rate discounts.

    • Secured and joint loans.

    • Mobile app to manage loan payments.

    • Direct payment to creditors with debt consolidation loans.

    • Long repayment terms on home improvement loans.

    • Origination fee.

    • No option to choose initial payment date.

    • Minimum credit score: 560. 

    • Minimum credit history: 1 account and 2 years.

    • Maximum debt-to-income ratio: 75%, including mortgage and the loan you’re applying for.

    • Minimum annual income: None.

Upstart: Best bad credit loans for thin credit

Why it made the list: Upstart is known for its advanced underwriting capabilities. The lender looks beyond traditional borrower information like credit and income and reviews alternative data, like education and work history, to qualify borrowers.

  • Pros

    Cons

    • Accepts borrowers new to credit.

    • Fast funding.

    • Option to change your payment date.

    • Option to pre-qualify with a soft credit check.

    • Seven-day customer service availability.

    • May charge origination fee.

    • No joint, co-signed or secured loans.

    • No mobile app to manage loan.

    • Only two repayment term options.

    • Minimum credit score: 300 in most states.

    • Minimum annual income: $12,000.

Universal Credit: Best bad credit loan with credit-building tools

Why it made the list: Universal Credit borrowers have access to a credit report summary, credit score simulator and personalized recommendations for borrowers to build credit. The lender is owned by Upgrade, but bad-credit borrowers may be more likely to get approved with Universal Credit.

  • Pros

    Cons

    • Direct payment to creditors with debt consolidation loans.

    • Fast funding.

    • Offers multiple rate discounts.

    • Free credit score access.

    • Charges origination fee.

    • Two repayment term options.

    • Minimum credit score: 560.

    • Minimum credit history: 1 account and 2 years.

    • Maximum debt-to-income ratio: 75%, including mortgage and the loan you’re applying for.

    • Minimum income requirement: None.

Avant: Best bad credit loan for fast funding

Why it made the list: Avant can approve a loan application within one business day and typically funds loans the day after approval. The lender requires a minimum credit score of 550 and a minimum monthly net income of $1,200.

  • Pros

    Cons

    • Fast funding.

    • Option to pre-qualify with a soft credit check.

    • Mobile app to manage loan.

    • Wide range of repayment term options.

    • Seven-day customer service availability.

    • May charge an origination fee.

    • No co-signed, joint or secured loans.

    • No rate discounts.

    • Minimum credit score: 550. 

    • Minimum monthly net income: $1,200.

Best Egg: Best secured bad credit loans

Why it made the list: Best Egg accepts two types of collateral on its secured loans: a vehicle or a or a home fixture, such as built-in cabinets and shelving or bathroom lighting. A loan secured by a home fixture may be less risky than a auto- or home-secured loan because you won’t lose your entire house or vehicle if you fail to repay.

  • Pros

    Cons

    • Option to pre-qualify with a soft credit check.

    • Wide range of loan amounts.

    • Secured loan options.

    • Direct payment to creditors with debt consolidation loans.

    • No late fees.

    • Origination fee.

    • No rate discounts.

    • No option to choose initial payment date.

    • No mobile app to manage loan.

    • Minimum credit score: 600.

    • Minimum credit history: 2 years, 1 account. 

    • Minimum annual income: $3,500.

    • Minimum debt-to-income ratio: 40% or 65% including a mortgage.

What are bad credit loans?

A bad credit personal loan is for borrowers with low credit scores or thin credit histories. Bad credit loan amounts range from about $1,000 to $50,000 and annual percentage rates are capped at 36%.

Like all personal loans, bad credit loans have fixed rates and are repaid in fixed monthly installments over a period of one to seven years. These loans typically aren’t backed by collateral — they're unsecured.

Though you may qualify for a personal loan with bad credit, your rate will likely be on the high end of a lender’s range, and your approved loan amount may be smaller than what you request.

Pros and cons of personal loans for bad credit

A bad-credit loan can help you get through an emergency, consolidate other high-interest debt or make necessary home repairs, but consumers with poor credit frequently get the highest personal loan APRs and fees.

Review the pros and cons of bad-credit loans, and compare them with other ways to borrow money.

Bad credit loan pros

Bad credit loan cons

  • Fast funding.

  • Fixed, predictable payments.

  • On-time loan payments build credit.

  • Rates may be lower than credit cards and other high-interest loans.

  • Rates are often high.

  • Consumers with the lowest credit scores may not qualify.

  • Collateral or a co-signer may be required.

  • Predatory lenders may seek out bad-credit borrowers.

Pros

  • Fast funding. Some lenders can approve a loan application instantly, while others may take a day or two. Once approved, funding can happen the same day or take a couple of days.

  • Fixed, predictable payments. Unlike most credit cards and credit lines, personal loans usually have fixed interest rates, meaning you’ll have the same monthly payment for the full loan term.

  • On-time loan payments build credit. Payment history is the biggest factor that determines your credit score, so paying on time can give you a big boost.

  • Rates may be lower than credit cards and other high-interest loans. Though a low credit score often results in high personal loan rates, your rate may still be lower on a personal loan than some credit cards and other high-interest loans.

Cons

  • Rates are often high. Bad-credit borrowers can expect an annual percentage rate on the high end of a lender’s range. Personal loan rates max out at 36%, and it‘s possible someone with a low score could get a 20% APR or higher.

  • Consumers with the lowest credit scores may not qualify. Minimum credit scores among bad-credit lenders are often between 550 and 600. A score that meets the minimum requirement doesn’t guarantee approval, and those with scores below the requirement are unlikely to qualify.

  • Collateral or a co-signer may be required. If you fail to qualify for a personal loan, the lender may suggest you add a co-signer or get a secured loan. These options may help you qualify, but late payments will put your collateral or co-signer’s credit at risk.

  • Predatory lenders may seek out bad-credit borrowers. Predatory lenders — those that use deceptive practices to provide potentially harmful loans — may seek out consumers with low credit scores who fear they won’t qualify elsewhere. (More on spotting a personal loan scam below.)

How to compare bad credit loans

Qualification requirements and cost are the most important features to consider when choosing a personal loan. Here are some tips to compare personal loans for bad credit.

1. Check the borrowing requirements

Bad-credit lenders consider many factors on a loan application, including:

  • Credit score: If a lender has a minimum credit score requirement, you’ll need at least that score, but ideally a higher one, to qualify.

  • Debt-to-income ratio: This is the percentage of your monthly income that goes to debt payments. Lenders typically like to see that you can cover your monthly bills, including any other loan or credit card payments, and have money left over after your new personal loan payment.

  • Co-applicant and collateral: If the lender offers a co-signed or secured loan, the person or item you add to the application becomes a factor in deciding whether you qualify.

2. Review the annual percentage rate

A loan’s APR consists of the interest rate plus any fees a lender charges. Many bad-credit online lenders charge an origination fee and it is included in the APR. The highest APR an affordable bad credit loan should have is 36%, according to most consumer advocates.

3. Calculate the monthly payments

Review your budget to determine what an affordable monthly payment would be. Then, use a personal loan calculator to see what rate and repayment term you’d need to get that monthly payment.

4. Compare other loan features

If you have two or more competitive bad credit loan offers, compare other loan features like funding time, whether the lender provides credit-building assistance and if you’re allowed to change the payment date.

Where to get a personal loan for bad credit

Online: Some online lenders offer personal loans specifically for bad-credit borrowers. These lenders may consider information beyond your credit and income to qualify you, though those are still major factors in a loan decision.

Credit unions: Credit unions rely more on traditional information like credit and income but may also consider your history as a member. A member in good standing with the credit union may qualify for a personal loan despite a low credit score.

Bad credit loan rates and fees

The average pre-qualified personal loan rate for a bad-credit borrower was 22.20% in December 2023, according to aggregate, anonymized data from NerdWallet’s lending marketplace.

Here are the average personal loan rates for each credit score range.

Borrower credit rating

Score range

Estimated APR

Excellent

720-850.

13.40%.

Good

690-719.

15.86%.

Fair

630-689.

18.93%.

Bad

300-629.

21.14%.

Source: Average rates are based on aggregate, anonymized offer data from users who pre-qualified in NerdWallet’s lender marketplace from Jan. 1, 2024, through Jan. 31, 2024. Rates are estimates only and not specific to any lender. The lowest credit scores — usually below 500 — are unlikely to qualify. Information in this table applies only to lenders with maximum APRs below 36%.

One of the most common bad credit loan fees is an origination fee, which is 1% to 10% of the loan amount. The fee is included in your APR, but a lender may take it before sending you the funds, effectively reducing your loan amount, or add it to your monthly payment.

A two-year, $10,000 loan with a 20% interest rate and a 5% origination fee has an APR of 25.14%. If the lender takes the origination fee before sending you the loan, you’d receive $9,500 and the lender would keep $500.

Lenders also usually charge late payment and non-sufficient funds fees.

How to get a personal loan for bad credit

Here are the steps to get a bad credit personal loan:

1. Check your credit

Review your credit reports from the three major credit bureaus to ensure the information is accurate and up to date. Fixing errors on your report before applying may improve your chances of qualifying. You can get your credit reports for free through NerdWallet or at AnnualCreditReport.com.

2. Pre-qualify to compare offers

Many lenders let you pre-qualify online to preview potential loan offers. You provide some information about yourself, like your income, desired loan amount and loan purpose, and the lender does a soft credit pull to determine your eligibility. No two lenders have the same borrowing requirements, so it pays to pre-qualify with multiple lenders.

3. Submit an application

Once you’ve found the right lender, gather documents, including proof of income and employment, a government-issued ID and bank statements. Most lenders have online personal loan applications, but your local bank or credit union may require an in-person application. The lender will do a hard credit check when you apply, causing your score to temporarily drop. Expect a decision within a few days.

4. Add the new loan payment to your budget

On-time loan payments can build your credit. Add loan payments to your monthly budget and set up autopay to avoid missing any.

Other tips to qualify for a bad credit loan

  • Some lenders offer secured personal loans, which require you to provide collateral in order to borrow the money at a lower rate than an unsecured loan would have. Online lenders typically accept a vehicle as collateral, while banks and credit unions accept a savings or investment account. If you miss too many payments, the lender can take the collateral.

Types of bad credit loans

Type of bad credit loan

Summary

When to use

An unsecured loan doesn’t require collateral. Instead, a lender determines whether you qualify based on factors like your credit score, income and cash flow.

  • To make large purchases, debt consolidation and home improvement projects.

  • If you get a low rate.

A secured loan requires you to pledge collateral — usually a vehicle or bank account — to borrow money.

  • The rate is lower than with an unsecured loan.

  • Pledging collateral is worth the risk.

A co-signed loan requires someone to vouch for your ability to repay the loan.

  • The rate is lower than without the co-signer.

  • The co-signer understands the risk.

A joint loan is one you get with another person, meaning they share responsibility for payments and can access the funds.

  • You get a lower rate than without a co-borrower.

  • You and the co-borrower need equal access to the funds.

“Buy now, pay later” is an at-checkout financing option that lets you split a purchase into smaller installments.

  • Necessary purchases that will otherwise stretch your budget.

  • You have a plan to make the payments.

A cash advance app gives you an advance up to a few hundred dollars and withdraws repayment — plus any tips and fees — on your next payday.

  • To bridge a temporary income gap.

  • You don’t regularly spend more than you earn.

  • You can cover regular expenses when the advance is taken from your next paycheck.

Alternatives to personal loans for bad credit

A personal loan may not be the right option if you have bad credit. Even if you’re approved, you’ll likely pay a high APR. Consider these alternatives before borrowing.

  • Borrow from a trusted friend or family member. It may help to have a plan for interest, repayment terms and payment frequency in mind when you ask for the loan. Then you and the lender can formalize the details in a family loan agreement.

  • If you’re struggling to cover rent, utilities or credit card payments, consider asking for an extension or getting on a hardship program. Your credit card issuer, mortgage lender or utility company’s website may have an online application for hardship assistance, but you may have to ask a landlord directly.

  • Medical bill negotiators, medical credit cards or a payment plan with your provider may help take some of the stress and urgency out of paying a steep medical bill. These options may come with fees or interest, so compare medical bill payment options to find the most affordable one.

How to spot a bad credit loan scam

The lenders on this page offer legitimate personal loans. Here are a few red flags to look out for when you're shopping for a personal loan for bad credit.

  • No credit check or guaranteed approval. Reputable lenders dig into your finances, including your credit and income, to determine whether you can repay the loan. A lender that doesn't do this may charge exorbitant rates that could land you in a debt trap.

  • No state license. The Federal Trade Commission requires lenders to register in states where they do business. Many lenders list state licenses on their websites.

  • Asking for a gift card. No legitimate lender asks for a gift card in exchange for a loan. If you're asked to provide a gift card — even by someone who says they work for a popular lender — consider it a scam.

  • No fee disclosures. The Truth in Lending Act requires lenders to disclose the loan's APR, total interest and total repayment amount before you sign a loan agreement. Ask to see this information before signing and walk away if the lender refuses.

How we chose the best bad credit loans

We compared more than a dozen lenders that require a minimum credit score of 620 or lower to choose the best personal loans for bad credit. Only lenders with APRs below 36% were considered for this list. Here are the other factors we considered.

Eligibility criteria and availability. We considered how widely available the personal loans are, their minimum credit score requirement as well as their average borrower’s credit score. Income, debt-to-income ratio and credit history requirements are also considered.

Affordability. Many lenders offer personal loans for bad credit, but the best bad-credit lenders are able to charge low APRs and other fees, provide rate discounts or an alternative type of loan (co-signed, joint or secured) to help borrowers qualify or lower the APR.

Flexibility. The ability to change a payment due date, get on a hardship program, how quickly the loan is funded, customer service availability during the borrowing and repayment process and wide loan amount and repayment term ranges are all considered when we compile this list.

NerdWallet star rating. Our writers and editors regularly review and update personal loan lender star ratings, and that information helps us determine which lenders provide the best products. Read more about our personal loan rating methodology.

Last updated on January 29, 2024

Methodology

NerdWallet’s review process evaluates and rates personal loan products from more than 35 technology companies and financial institutions. We collect over 50 data points from each lender and cross-check company websites, earnings reports and other public documents to confirm product details. We may also go through a lender’s pre-qualification flow and follow up with company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.

Our star ratings award points to lenders that offer consumer-friendly features, including: soft credit checks to pre-qualify, competitive interest rates and no fees, transparency of rates and terms, flexible payment options, fast funding times, accessible customer service, reporting of payments to credit bureaus and financial education. Our ratings award fewer points to lenders with practices that may make a loan difficult to repay on time, such as charging high annual percentage rates (above 36%), underwriting that does not adequately assess consumers’ ability to repay and lack of credit-building help. We also consider regulatory actions filed by agencies like the Consumer Financial Protection Bureau. We weigh these factors based on our assessment of which are the most important to consumers and how meaningfully they impact consumers’ experiences.

NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodologies for personal loans and our editorial guidelines.

To recap our selections...

NerdWallet's Best Loans for Bad Credit of February 2024

  • Upgrade: Best for Overall bad credit loans
  • Upstart: Best for Thin credit
  • Avant: Best for Fast funding
  • Universal Credit: Best for Credit-building tools
  • Best Egg: Best for Secured loans

Frequently asked questions

  • Our picks for the best bad credit loans are from these loan companies:

    • Upgrade: Best overall bad credit loan.

    • Upstart: Best bad credit loan for thin credit.

    • Universal Credit: Best bad credit loans with credit-building tools.

    • Avant: Best bad credit loan for low credit scores.

    • Best Egg: Best secured bad credit loans.

  • Borrowers with credit scores between 550 and 629 may qualify for a personal loan with a loan company that serves bad-credit borrowers. Having a bank account that shows consistent income and a credit history showing on-time payments to credit cards and other loans can help you qualify.

  • First, build your credit by fixing errors or catching up on late payments. Consider adding a co-signer with good credit, or securing your loan. It's always a good idea to pre-qualify to check the rate and loan amount you might get. Pre-qualifying does not affect your credit score.

  • First, check your credit report and fix any errors dragging your score down. Then compare loans and pre-qualify with multiple lenders. Learn all the steps to get a personal loan with bad credit.

  • Credit unions and online lenders offer personal loans for bad credit (credit scores below 630).

    Federal credit union personal loan rates may be low for bad-credit borrowers. These organizations look beyond your finances and income and consider your standing as a member.

    Some online lenders have low minimum credit score requirements, accept borrowers with limited credit history or consider other factors like employment and education.

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