BEST OF

Best Bad Credit Loans of June 2021

Bad-credit loans from online lenders can get you funds quickly, but they may have high rates. Look for a bad-credit loan that will help you build credit.

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Consumers with low credit scores (roughly between 550 and 629 FICO) may qualify for a personal loan from an online lender that serves bad-credit borrowers. These lenders often provide a simple application process and fast funding, but the loans can have interest rates up to 36%.

Before you get a bad-credit loan, it's always a good idea to consider cheaper alternatives, like borrowing from a family member or picking up a side gig.

The online lenders listed here accept borrowers with low credit scores or thin credit histories and offer fast funding.

Bad-credit loan rates, amounts, terms

Borrowers with bad credit can expect rates at the high end of a lender’s range. Most lenders have a minimum credit score requirement, but some weigh additional factors — like your monthly cash flow or occupation — when deciding how much to lend you and what rate to charge.

Rates

Annual percentage rates on personal loans generally range from 6% to 36%; rates on bad-credit loans can be above 20%. In 2020, bad-credit borrowers who pre-qualified for a personal loan using NerdWallet received APRs between 26.7% and 32.4%. The rate you get on a loan depends on many factors, not just your credit score.

Amounts

Personal loan amounts for consumers with low credit scores typically range from $1,000 to $50,000. Few online lenders offer loan amounts below $1,000, and not everyone qualifies for the largest loans. Borrowers with consistent income and a credit history of regular on-time payments may qualify for higher loan amounts.

Terms

To repay your loan, you typically make monthly payments over a period of two to five years. In some cases, a lender may allow bi-weekly payments. A longer term gives you lower monthly payments, but you’ll pay more interest over the lifetime of the loan.

Bad-credit loan example

A $2,000 loan with a 28.7% APR repaid over 12 months would require monthly payments of $194, according to NerdWallet’s personal loan calculator. You’d pay $328 in total interest on that loan.

How to compare bad-credit loans

Here are five things to look for when comparing bad-credit loans:

  1. Affordable rates: Look for a lender that caps rates at 36%, which is the maximum that consumer advocates consider to be affordable. There are online lenders that offer no-credit-check loans at rates above 36%, but we recommend you consider these only as a last resort, after you’ve ruled out alternatives. (See our list of alternatives below.)

  2. Credit reporting: Find a lender that reports your payments to at least one of the three major credit bureaus. Ideally, a lender will report to all three, ensuring that on-time payments help you build credit and qualify for lower rates in the future.

  3. Fast funding: If you need money quickly, an online loan may be your best option. Online lenders can often fund a loan the day after you’re approved, if not the same day. Some banks and credit unions may also fund a loan quickly if you’re already a customer.

  4. Easy application: Online applications typically take a few minutes to complete. Pre-qualifying with an online lender can be a simple way to see your rates and loan terms without affecting your credit score.

  5. Perks: Some lenders have features that help you build your credit, like free access to your credit score. A lender may also offer free financial education on their website.

How to get approved for a bad-credit loan

Here are steps you can take to improve your application and potentially qualify for the loan you want.

Check your credit report. Is a credit reporting error keeping your credit score low? You can review your credit report for any incorrectly reported delinquencies or accounts that aren’t yours. Remedying these kinds of issues before you apply can improve your chances of qualifying.

Add a co-signer or co-borrower. Adding someone with better credit may boost your chances of qualifying since the lender will consider both applicants’ credit and income to make a decision. Keep in mind that whoever you add is on the hook for the loan if you fail to make payments.

Add collateral. You may be approved more easily or get a lower rate with a secured loan. Online lenders like OneMain, Upgrade and Oportun let borrowers secure a loan with collateral — typically a vehicle — while credit unions and some banks offer loans secured with savings or CD accounts. If you can’t repay the loan, though, the lender can take the collateral.

Bad-credit loan alternatives

Personal loans are one option if you need fast cash, but you may have access to cheaper alternatives.

Friend or family loan: Borrowing from a friend or family member takes your credit score out of the equation. You can draw up a contract and agree to repayment terms. Try to discuss how you both can keep the relationship intact once you’ve mixed in money.

Charity or nonprofit: If you’re having a hard time covering everyday expenses like groceries, gas and housing — or if an expensive emergency comes up — a local charity may be able to help. These organizations may provide assistance with food or rent, or offer small, interest-free loans.

Credit-builder loan: If you’re trying to build credit and don’t need money right away, a credit-builder loan is a safe option. These loans are typically offered by credit unions and community banks and require you to have an income that supports monthly payments.

Side gig: There are legitimate ways to make extra cash, no matter how quickly you need it. From babysitting and selling your gently used clothes to becoming an influencer and creating for Etsy, you may be able to find another way to bring in extra money.

Lending circles: You can form a lending circle with a group of people you trust. Everyone contributes some amount of money, which is then pooled and distributed to one circle member every month or so. In some cases, contributions are reported to help build credit. It isn’t the fastest option, but it’s one way friends or family can help each other.

How to choose a bad-credit lender

NerdWallet has reviewed more than 30 lenders to help you compare and choose one that’s right for you. Here are lenders that offer bad-credit online loans:

Upgrade

Upgrade personal loans seem tailor-made for debt consolidation, even though you can use the loans for almost any expense. The lender will not only send your loan proceeds directly to your creditors to pay off your balances, but it may also discount your rate for choosing this option.

Upgrade

NerdWallet rating

Loan amount

$1,000 - $50,000

Minimum credit score

580

Other qualifying data

Free cash flow.

Fees

  • Origination: 2.9% - 8%.

  • Late: Up to $10.

  • Less-than-full payment: $10.

Funding time

One business day.

Upstart

Upstart stands out among bad-credit lenders because of its sophisticated underwriting model. The lender takes non-credit data  —  like college education and residence — into account when reviewing a loan application. This model may help young applicants with thin credit histories or lower credit scores but higher earning potential qualify for a loan.

Upstart

NerdWallet rating

Loan amount

$1,000 - $50,000

Minimum credit score

580

Other qualifying data

Earning potential, college education, job history, residence, other alternative data.

Fees

  • Origination: Up to 8%.

  • Late: Greater of 5% of payment or $15.

  • Returned/failed payment: $15.

Funding time

One business day.

Avant

Avant can fund a loan as quickly as the business day after an application is approved. It has competitive rates for bad-credit borrowers and allows you to change your pay date as often as you need to. You can refinance an Avant loan or a loan from another lender to get a potentially lower rate.

Avant

NerdWallet rating

Loan amount

$2,000 - $35,000

Minimum credit score

550

Other qualifying data

Income, existing debts.

Fees

  • Origination: Up to 4.75%.

  • Late: $25.

  • Unsuccessful payment: $15 in most states.

Funding time

One to three business days.

LendingClub

LendingClub has a loan specifically designed for credit card consolidation. Borrowers can consolidate debt from up to 12 credit cards. You can add a co-signer or co-borrower to a LendingClub application.

LendingClub

NerdWallet rating

Loan amount

$1,000 - $40,000

Minimum credit score

600

Other qualifying data

Credit history, debt-to-income ratio.

Fees

  • Origination: 1% to 6% of the loan amount.

  • Late: Greater of 5% of unpaid installment amount or $15.

Funding time

A few days to a week.

OneMain Financial

OneMain doesn’t have a minimum credit score requirement, instead prioritizing ability to repay and overall credit stability. This lender offers joint loans and vehicle-secured loans, which may help borrowers qualify or get a lower APR.

OneMain

NerdWallet rating

Loan amount

$1,500 - $20,000

Minimum credit score

None

Other qualifying data

Ability to repay, credit stability, collateral.

Fees

  • Origination: $25 - $400 or 1% - 10%, depending on state.

  • Late: $5 - $30 or 1.5 - 15% of payment depending on state and loan.

  • Nonsufficient funds: $10 - $50.

Funding time

Same day if approved by noon.

Oportun

Oportun operates in only 12 states; however, this lender can loan as little as $300. This lender doesn’t require a credit score to apply but your score will be considered on an application if you have one.

Oportun

NerdWallet rating

Loan amount

$300 - $10,000

Minimum credit score

None

Other qualifying data

Income and cash flow, payments toward utility and cell phone bills.

Fees

  • Origination: $0 - $300.

  • Late: May be a fixed amount or percent, no higher than $15.

Funding time

Same or next day.

Last updated on June 4, 2021

Methodology

NerdWallet's ratings for personal loans award points to lenders that offer consumer-friendly features, including soft credit checks, no fees, transparency of loan rates and terms, flexible payment options, accessible customer service, reporting of payments to credit bureaus and financial education. We also consider the number of complaints filed with agencies like the Consumer Financial Protection Bureau. This methodology applies only to lenders that cap interest rates at 36%, the maximum rate financial experts and consumer advocates agree is the acceptable limit for a loan to be affordable. NerdWallet does not receive compensation of any sort for our reviews.

To recap our selections...

NerdWallet's Best Bad Credit Loans of June 2021

Frequently asked questions