Our picks for the best personal loans for bad credit
The top lenders for bad-credit borrowers all have low or no minimum credit score requirements. Additional features that make these loans ideal include fast funding, flexible terms, credit-building tools, the ability to pre-qualify with a soft credit check and the option to add a co-applicant or collateral to increase approval odds.
Upstart: Best overall bad-credit loan
Why it made our list: Upstart says it considers loan applicants across the credit spectrum. It uses an AI-powered underwriting model that evaluates alternative factors, rather than relying heavily on credit scores for approval decisions. Its wide range of loan amounts and fast funding also make it a strong option for bad-credit borrowers.
Upgrade: Best for wide repayment terms
Why it made our list: Upgrade offers repayment terms ranging from two to seven years. This makes it ideal for both smaller loans you can pay off quickly and larger loans that require extra time to pay off.
Why it made our list: Universal Credit is owned by Upgrade, and borrowers get access to many of Upgrade’s features, including free credit score and credit monitoring. Universal Credit also offers a rate discount for enrolling in autopay, which lets borrowers save money in addition to maintaining on-time payments that can boost their credit scores.
Avant: Best for fast funding
Why it made our list: Avant shines in its ability to approve and fund a loan the day after you apply, which is ideal if you need money quickly to cover an emergency or other urgent expense.
Why it made our list: Best Egg offers two ways to get a secured loan: You can use a vehicle as collateral or household fixtures, such as cabinets and vanities. Both secured loan options come with lower rates than the lender’s unsecured personal loans.
Why it made our list: Prosper says its borrowing requirements may be less strict for joint loan applicants than for those who apply alone. Applying for a loan with a co-applicant may also increase your likelihood of getting approved for a lower rate or a higher loan amount.
How to choose the best personal loan for you
Requirements. You may have a tougher time qualifying for a personal loan with bad credit, but many lenders accept lower scores and weigh them equally with alternative factors. Narrow your search to lenders with credit score, income and other requirements you can meet.
Annual percentage rate. A loan’s APR consists of the interest rate plus origination fees and is one of the best ways to compare loan costs. Your rate may be on the high end of a lender’s range, from about 20% to 36%. Loan amounts and terms. Bad-credit loan amounts typically range from about $1,000 to $50,000, with repayment terms from two to seven years. Because lenders often view lower credit as added risk, your approved loan amount may be smaller than what you request.
Types of loans. Lenders often rely heavily on your credit score to determine approval for an unsecured loan. You may have a better chance of approval with a secured, co-signed or joint loan. With a secured loan, you’ll pledge collateral, usually a car or savings account, which the lender can take if you default on the loan. Adding a co-signer to your loan means someone with better credit or a higher income is vouching for your ability to repay. Adding a co-borrower means you’re sharing the funds and the repayment responsibility with another individual. Additional loan features. Some lenders offer perks like rate discounts, fast funding or the ability to change a payment due date. These loan features can help you choose between two or more competitive offers.
Before applying for a loan, use a personal loan calculator to determine your monthly loan payment and total interest costs, based on your desired loan amount, repayment term and estimated APR. Estimated monthly payment
$309.92
Total interest over 3 years
$1,156.95
Total loan payment
$11,156.95
PRINCIPAL AMOUNT — $10,000TOTAL INTEREST PAID — $1,156.95
How to apply for a bad-credit loan
1. Check your credit
In addition to your credit, lenders will consider the following on a loan application:
Income: Showing a lender that you have enough income to make the payments is crucial to approval, so be sure to include all sources of income when you apply. Many lenders accept income from employment, alimony, retirement, child support and Social Security payments.
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: Including a co-signer or co-borrower with high credit and income can strengthen your application, as can securing the loan with a vehicle or other asset.
2. Pre-qualify with multiple lenders
Many lenders offer pre-qualification, a short process that shows your likelihood of approval – with no impact to your credit score. You provide information, including your desired loan amount and loan purpose, and the lender does a soft credit pull of your credit. Pre-qualify with multiple lenders to compare rates. 3. Submit your application
Once you’ve pre-qualified and chosen a loan offer, you’ll then formally apply for the loan. Most lenders require documentation to verify your income, employment and other personal information. The lender will do a hard credit check, causing your score to drop by a few points. After approval, you can expect to receive funds within a few days, and your first repayment will be due in about a month.
Watch out for scams
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.
Guaranteed approval or no credit check. 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. Many reputable 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.
