Get a personal loan with bad credit — what FICO defines as a credit score below 580. But bad credit loans often have high interest rates and short loan terms. If you can wait, take steps to improve your credit before you borrow, like paying down debt or signing up for credit counseling.
We reviewed more than 260 lenders before selecting these best lenders. We paid special attention to interest rates, fees, customer reviews and reporting to credit bureaus, which can increase your credit score. And we review our selection each month. In November 2021, we replaced Lend Credit with SeedFi as our pick for rebuilding your finances, due to its lower rates, longer terms and built-in savings program.
We focus on alternative lenders that look beyond your credit score when you apply. And we've included a few installment loan providers. These offer more options to people with credit scores below 550 — or even 500. But they often charge higher interest rates than many states legally allow on a personal loan.
OneMain is a direct lender that specializes in personal loans for borrowers with less-than-perfect credit, offering the opportunity to back your loan with collateral to get lower rates. While you can get started online, you have to complete your application at a branch. This might take more time, but it gives you the chance to get real-time answers to your questions and find the best terms for your budget. If you change your mind after seven days, you can also return your loan at no cost.
Not available in: Alaska, Arkansas, California, Connecticut, Massachusetts, Michigan, Rhode Island, Vermont
* OneMain Disclosures: Example Loan: A $6,000 loan with a 24.99% APR that is repayable in 60 monthly installments would have monthly payments of $176.07.
Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on your ability to meet our credit standards (including a responsible credit history, sufficient income after monthly expenses, and availability of collateral). Larger loan amounts require a first lien on a motor vehicle no more than ten years old, that meets our value requirements, titled in your name with valid insurance. Maximum annual percentage rate (APR) is 35.99%, subject to state restrictions. APRs are generally higher on loans not secured by a vehicle. Depending on the state where you open your loan, the origination fee may be either a flat amount or a percentage of your loan amount. Flat fee amounts vary by state, ranging from $25 to $400. Percentage-based fees vary by state ranging from 1% to 10% of your loan amount subject to certain state limits on the fee amount. Active duty military, their spouse or dependents covered under the Military Lending Act may not pledge any vehicle as collateral for a loan. OneMain loan proceeds cannot be used for postsecondary educational expenses as defined by the CFPB’s Regulation Z, such as college, university or vocational expenses; for any business or commercial purpose; to purchase securities; or for gambling or illegal purposes.
Borrowers in these states are subject to these minimum loan sizes: Alabama: $2,100. California: $3,000. Georgia: Unless you are a present customer, $3,100 minimum loan amount. Ohio: $2,000. Virginia: $2,600.
Borrowers (other than present customers) in these states are subject to these maximum unsecured loan sizes: Iowa: $8,500. Maine: $7,000. Mississippi: $7,500. North Carolina: $7,500. New York: $20,000. West Virginia: $14,000. An unsecured loan is a loan which does not require you to provide collateral (such as a motor vehicle) to the lender.
Stilt specializes in loans for nonresidents who haven't had time to build their credit. But it can also be a great option for citizens who have bad credit due to a one-time event, like a divorce or unpaid medical bill. Instead of looking at your credit score, Stilt considers other aspects of your personal finances, such as your spending habits, education and work experience. But it's only available in 11 states and is a relatively new company with a limited track record.
Only available in: Arizona, California, Florida, Georgia, Illinois, Michigan, New Jersey, New York, Pennsylvania, Texas, Utah, Washington, Wisconsin
This highly rated installment loan provider offers relatively low rates compared to other lenders that accept borrowers with credit scores in the lower end of the bad credit range. Where many similar lenders charge rates over 300% APR, OppLoans doesn’t go higher than 160%. It also reports repayments to the three major credit bureaus to help improve your score. But it’s still expensive compared to a personal loan and should be saved for emergencies.
Not available in: Colorado, Connecticut, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Nevada, New Hampshire, New Jersey, New Mexico, New York, Pennsylvania, South Dakota, Vermont, West Virginia
SeedFi’s Borrow and Grow Plan offers a small-dollar personal loan for emergencies — plus more funds to help build your savings. SeedFi gives you a portion of the loan up front and deposits the rest into a savings account to help you avoid needing a loan the next time you’re hit with an unexpected expense. It accepts all credit types — but the $10,000 take-home income requirement may be higher than other bad credit loan providers.
Not available in: Colorado, Connecticut, Hawaii, Idaho, Iowa, Maine, Massachusetts, Minnesota, Nevada, New Hampshire, New Mexico, North Dakota, Oklahoma, Rhode Island, South Dakota, Vermont, Wyoming
If you're on the hunt for a long loan term, LoanStart may be able to help. Its lenders offer terms up to seven years and accept borrowers with bad credit. You'll still need to meet some credit requirements, however. Recent bankruptcies, late payments and overdue accounts may impact your ability to qualify with one of LoanStart's partner lenders. And with bad credit, you won't be eligible for the low starting APR of 4.84%
Only available in: Arizona, California, Florida, Georgia, Illinois, Michigan, New York, North Carolina, Ohio, Texas
Comparing lenders is key to getting the best deal on a loan, and it's especially important if your credit score is less than stellar. Here are some tips for comparing bad credit loans.
Look at the annual percentage rate (APR) to quickly compare the cost each year.
Look at the origination fee to compare the upfront cost of a loan. Also ask if the lender adds the origination fee to the loan or subtracts it from your funds.
Expect an APR on the higher end if your FICO score is close to a lender's credit score minimum. Personal loan interest rates can't go higher than 36% APR in most states.
Make sure you meet other requirements like minimum annual income cutoffs, debt-to-income ratio requirements and residency in an eligible state — bad credit lenders often don't serve all 50 states.
Watch out for signs of a personal loan scam — such as lenders that ask for money up front or don't display a physical address.
If you have a CD or other assets you can put up as collateral, consider getting a secured loan. Secured personal loans tend to offer lower rates and fees than unsecured loans. In some cases, collateral can help make up for a bad credit score.
Bad credit loan rates
The average rate for a bad credit loan is over 100% APR, according to a report from online loan marketplace LendingTree. People with credit scores between 560 and 579 received an average rate of around 102% APR in 2021. People with credit scores below 560 received an average interest rate of around 156% APR during that same period.
These numbers are high because they also include interest rates from payday and installment loan providers. If you apply for a personal loan, you won't pay more than 36% APR in most states. And if you improve your credit before you apply, you could qualify for a lower rate.
Personal loan alternatives for poor credit
If you have bad credit, you might want to consider options besides personal loans, since many personal loan providers are off the table. These include:
Pay advance apps offer hourly workers an advance on the salary they've already earned through apps like Earnin — typically up to $500 per pay period for a tip or monthly fee.
Paycheck advances may be available through some employers as a company benefit, typically without a credit check and at the same cost for everyone.
Home equity loans and lines of credit (HELOCs) allow you to use your home as collateral for a loan, making it easier to qualify with poor credit.
Payday loans can get you up to $500 for a fee of around $10 to $15 per $100 borrowed, which you repay when your next pay check comes in. There may be no-credit-check loansand no-bank-account options available, though payday loans are illegal in some states.
Save payday loans and installment loans as a last resort. The high costs can make it difficult to repay and traps many borrowers in a cycle of debt. Consider alternatives to borrowing before you apply.
How to improve your credit score
Got some time? Consider taking steps to improve your credit score before you apply to qualify for lower rates, higher amounts and an all-around better deal:
Check your credit report for mistakes that could be negatively affecting your credit, and contact the creditor if you see anything off.
Stay on top of your bills and reach out to your creditors if you think you might be late on a payment. The most important factor in your credit score is your history of on-time repayments.
Pay off debts can increase your credit score and make it easier to qualify for a loan when you apply. Focus on paying off higher-interest debts to save the most on interest.
Keep your credit cards open even after you pay off your credit card debt. The more access to unused credit you have, the lower your credit utilization ratio — which also plays into your credit score.
Consider a credit-builder loan if your credit history is too thin. These can add a history of positive repayments to your credit report — often while helping you build an emergency fund.
Alternative lenders can be the best option for bad credit loans — but they're expensive. Improving your credit score can open you up to more options and lower rates. If you need to borrow now, using a connection service can help you quickly compare rates and find lenders available to someone with your credit score and income range.
Anna Serio is a trusted lending expert and certified Commercial Loan Officer who's published more than 1,000 articles on Finder to help Americans strengthen their financial literacy. A former editor of a newspaper in Beirut, Anna writes about personal, student, business and car loans. Today, digital publications like Business Insider, CNBC and the Simple Dollar feature her professional commentary, and she earned an Expert Contributor in Finance badge from review site Best Company in 2020.
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