Estimated loan offers for $5,000

A bad credit score, one that’s below 630, doesn’t have to keep you from getting a personal loan. Some online lenders cater specifically to people whose credit history isn’t impeccable. These companies take into account your credit scores and history when deciding whether to loan you money, but they also have more flexible requirements than banks do.

While personal loans from reputable online lenders can be good options for many borrowers, NerdWallet recommends you first visit your local credit union when shopping for loans. Most credit unions offer flexible loan terms and lower interest rates than online lenders, especially for people with bad credit. The maximum annual percentage rate at a federal credit union is 18%.

» MORE: NerdWallet’s best credit unions of 2017

If you can’t get a loan through your local credit union, NerdWallet recommends you compare offers from multiple lenders before signing any loan agreement. Rates for bad credit borrowers can vary dramatically depending on the lender’s underwriting requirements. The easiest way to compare actual rates is to pre-qualify using the tool located at the top of this page or the link below. Pre-qualification will not affect your credit score.

How to compare loans for bad credit

Borrowers with bad or fair credit scores — because of missed payments or high balances on credit cards — will pay more for any personal loan than those with good or excellent scores. You may also have to consider options like securing the loan with collateral or having a co-signer with good credit. But even the highest rate from online lenders, typically 36% APR, is lower than what you would pay for a payday loan, where rates are typically 400% APR.

» MORE: What goes into your credit score?

Here’s a breakdown of average personal loan rates by credit score:

Your rate, including fees, and monthly payment are primary decision factors when choosing any loan, but also look for these features if you have a low credit score:

• Does the lender report to credit bureaus? Lenders that report loan repayments to one or more of the three major credit bureaus can help you improve your credit score. Avant and OneMain Financial are two bad-credit lenders that report to all three credit bureaus.
• Are there options to reduce my rate? Ascend gives borrowers the option to reduce their rates over time by demonstrating responsible financial behavior such as paying down debt or building savings.
• Can I pre-qualify with a soft credit check? Most lenders will pre-qualify you for a loan with only a soft credit check. This allows you to see your rate and monthly payment before the loan is approved. For final approval, most lenders require a hard credit check, which can lower your credit score. OneMain and Mariner Finance, two large bad-credit lenders, do only hard credit checks. They also require an in-person visit to complete a loan application.

NerdWallet’s top lenders for bad credit

The table below lists lenders that consider borrowers with bad credit. NerdWallet has reviewed each of these lenders and rated them according to the consumer-friendly features they offer.

Lender	NerdWallet rating	Best for...
Not all lenders do business in every state.
Ascend		Rebuilding credit
Lending Club		Debt consolidation
Avant		Debt consolidation
LendingPoint		Debt consolidation
iLoan		Debt consolidation
Mariner Finance		Secured and co-signed loans; human touch
OneMain Financial		Secured and co-signed loans; human touch

Other loan options for bad credit

If you’re having trouble keeping up with multiple payments, for debts like medical bills or balances on high-interest credit cards, then consider a debt consolidation loan. This type of personal loan rolls all your debts into a single loan, ideally with a lower interest rate, saving you money in the long run.

Here’s a roundup of lenders that offer debt consolidation loans.

If your credit score prevents you from qualifying for an unsecured loan, some lenders may offer you a secured loan. Cars and certificate of deposit accounts are the most common types of collateral people can use to secure their loans.

Here’s a roundup of lenders that offer secured personal loans.

Some lenders allow borrowers with bad credit to add a co-signer with good credit. With a co-signer, you may get a lower rate or qualify for a loan that you couldn’t get on your own. It’s important for you both to know that a co-signer is responsible for paying the loan if the borrower defaults.

Here are the options for lenders that allow co-signers on personal loans.

Additional steps toward financial health

If you’re borrowing money to pay off other debt, a personal loan works best if you have a plan to tackle your debts. Creating a budget and starting a savings habit are small steps that could build a stronger financial future.

If you don’t have an immediate need for cash, work on building your credit score. A higher score will qualify you for more loan opportunities, lower interest rates and better loan terms in the future.

Amrita Jayakumar is a staff writer at NerdWallet, a personal finance website. Email: ajayakumar@nerdwallet.com. Twitter:@ajbombay.

Learn more

• Read all lender reviews
• How to get a personal loan
• Where to find a personal loan
• Personal loan payment calculator