Best Personal Loan for Bad Credit
How we picked the companies to evaluate:
NerdWallet reviewed and rated personal loan products offered by the 10 largest traditional banks and by digital lenders that met these criteria: They cap interest rates at 36%, the maximum rate allowed by some states and considered affordable by consumer advocacy groups; they serve consumers in more than one state; and they are the top lenders by search volume. Some of the lenders we reviewed are NerdWallet partners, but this did not influence our selection of the winner.
How we chose the winner:
NerdWallet scored all lenders against six categories and 28 subcategories. We weighted five of the categories in this way:
- Features that do not negatively impact consumers’ credit scores, including performing soft credit checks to pre-qualify and reporting payments to all three credit bureaus - 25%.
- Features that affect affordability for consumers, including no origination or prepayment fees and lower rates for autopayments - 25%.
- Features that offer consumers flexibility, including options to change payment due dates; multiple loan types, amounts and terms; and refinancing options - 20%.
- Features that enhance the customer experience, including available and convenient customer support, mobile apps and financial education - 15%.
- Transparency of lender rates, terms, fees and common questions - 15%.
The sixth category is unweighted and discretionary. A lender’s score may be lowered if it has faced governmental regulatory action in the past five years, been accused by a reputable source of predatory practices or has a poor online reputation based on consumer complaints.
To determine the award winner, we grouped lenders that cater to consumers with bad credit scores (roughly coinciding with a FICO score between 300 and 629). Within that group, the lender with the highest score was the winner.
How we verified our data:
NerdWallet writers sent a comprehensive list of 45-plus questions to all loan companies we reviewed. We interviewed lenders to better understand their products and confirm details. NerdWallet writers and editors cross-checked fees, rates and other features on each company's website. At least three writers and editors verified the scores and ratings we gave to lenders.