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Bad credit loans are designed for borrowers with poor credit. This includes borrowers who may be at risk of missing payments. To offset the risk to the lender, these loans typically carry a higher-than-average interest rate and, possibly, higher loan fees than loans granted to borrowers with good or excellent credit. If you're curious which lenders are best for borrowers with poor credit, stick with us as we share some of our favorites.
Compare your personalized rates
Looking for a personal loan with a low interest rate? It's important to compare rates you could get, not just average rates. Click below to check what rates you could prequalify for across multiple lenders:
4.0/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
3.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
3.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
The full range of available rates varies by state. The average 3-year loan offered across all lenders using the Upstart platform will have an APR of 21.97% and 36 monthly payments of $35 per $1,000 borrowed. For example, the total cost of a $10,000 loan would be $12,646 including a $626 origination fee. APR is calculated based on 3-year rates offered in the last 1 month. There is no down payment and no prepayment penalty. Your APR will be determined based on your credit, income, and certain other information provided in your loan application.
How to choose a personal loan for bad credit
Get quotes from at least three lenders: Everything -- from interest rate to funding time -- varies by lender, so it pays to shop around.
Look for lenders that prequalify applicants using a soft credit check: When you apply for financing, make sure the lender uses a soft credit check to prequalify applicants.
Look at total loan costs: Check lender fees in addition to interest rates.
Read the fine print: The details in the fine print can mean a particular loan is more expensive, so look out for administrative fees and prepayment penalties.
4.0/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
We think Upstart is a great option for debt consolidation and credit building. Even though Upstart has a high upper-range interest rate, well-qualified applicants can snag lower rates for a wide range of loan amounts. Upstart does charge a high origination fee and late fees, but there are no prepayment penalties, giving you extra flexibility to pay off your loan early.
Options for those with bad credit: Upstart is willing to accept loan applications with credit scores as low as 300.
Fast: Borrowers can receive funds one business day after signing the loan.
Why Upstart made the list
Upstart provides personal loans to borrowers with credit scores as low as 300 in most states, and it's one of the few lenders that will consider a score that low. Loans of $1,000 - $50,000 are available, although Upstart does tack on an origination fee of 0% - 12%. Borrowers can choose terms of 36 or 60 months, and may receive their money one business day after signing.
How to qualify
If you're interested in an Upstart personal loan, you'll need to meet the following qualifications:
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Avant has flexible credit requirements, allowing applicants with lower scores to apply. While interest rates are not the lowest we've seen and the maximum loan amount is modest, Avant remains a convenient option with fast funding and no prepayment fees.
Accepts lower credit scores: Avant is open to lending to borrowers who have credit scores below the national average.
Small amounts: Borrowers can take out loans for as little as $2,000 (and up to $35,000).
Why Avant made the list
Avant accepts applicants with credit scores as low as 580, significantly lower than the national average. However, applicants may pay a high interest rate and a loan origination fee of 0% - 4.75%. Plus, Avant charges a late fee of $25 and a returned check fee of $15.
How to qualify
Avant has established the following minimum qualifications:
Have a monthly income of at least $1,200 (can include alimony, child support, or other maintenance)
Have a credit history that includes at least one account
Be able to apply on their own (no joint applications or cosigners are accepted)
Live in any state except for Hawaii, Iowa, Maine, New York, Vermont, or West Virginia
3.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Universal Credit Personal Loan is a good fit for borrowers who may have some negative information in their credit file, but who need a personal loan to consolidate debts or cover a large expense.
Flexible repayment terms
Loans for borrowers without stellar credit
Fast funding
No prepayment penalties
Highly rated mobile app
High APR range
Origination fees are higher than most competitors'
Makes consolidation easier: If you use loan funds to consolidate outstanding debt, Universal Credit Personal Loans will send loan proceeds directly to your current creditors.
Low credit scores accepted: Universal Credit is one of the only lenders that accepts applicants with credit scores as low as 560.
Why Universal Credit made the list
While Universal Credit's loan costs are higher than some, it can be a good fit for borrowers with emergency expenses or those who want to consolidate debt but fear they don't have a high enough credit score to land a loan.
How to qualify
Universal Credit's minimum qualifications are:
U.S. citizen or permanent resident, or living in the U.S. with a valid visa
At least 18 years old (in Alabama, the minimum age is 19)
3.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
OneMain Financial is interesting in that it minimizes the importance of credit scores. Instead, it considers the overall financial picture of each applicant. Another unusual feature of OneMain Financial is that it's one of the few online lenders that allows for secured loans.
Allows for cosigners: If you need a little help qualifying for a loan, OneMain Financial allows you to enlist a cosigner with a higher credit score.
Collateral allowed: Vehicles that are paid off or nearly paid off can be used to secure a loan, provided they pass all other eligibility requirements.
Why OneMain Financial made the list
OneMain Financial stands out in two ways. Rather than depend solely on credit scores, the lender considers an applicant's overall financial situation. It's also one of the few online lenders that will consider a secured loan.
How to qualify
To qualify for a OneMain Financial loan, you need to:
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
LendingPoint has flexible credit requirements. The maximum loan limit may be lower than average, but so is the minimum. This could be a great option for someone who needs a smaller loan, as well as someone still building their credit.
Soft credit check
Low minimum loan amount
No prepayment penalty
Fast funding
Instant approval
Higher upper-end APR
Expensive origination fee
Highlights
Quick loan funding: LendingPoint can fund a loan in as little as one business day.
Allows bankruptcy: LendingPoint is one of the few lenders willing to make a loan as soon as 12 months after bankruptcy.
Why LendingPoint made the list
Since 2015, LendingPoint has provided billions of dollars in funding to individuals and businesses. While traditional personal loan companies only lend to prime and super-prime borrowers LendingPoint provides credit to consumers across the credit spectrum.
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
An excellent loan option for borrowers with a high enough credit score to qualify for the lowest interest rates, lowest origination fees, and best terms for consolidating expensive, high-interest debt. If your own credit score isn't up to snuff, Achieve allows you to apply with a cosigner.
Competitive interest rates
Borrowers with poor credit may gain loan approval
No prepayment fee
Significant variation in origination fees
Not available in all states
High minimum loan amount
Highlights
Allows cosigners: If you need a little help qualifying for a loan, enlisting a cosigner with a strong credit score can help.
Interest rate discount: Achieve offers a rate discount to borrowers who use their loans to pay off other debt.
Why Achieve made the list
Achieve, formerly known as FreedomPlus, offers competitive interest rates for those with good to excellent credit. Achieve may approve those with credit as low as 620. Your interest rate, however, will be high. There is no prepayment fee, but there is an origination fee that ranges from 1.99% to 6.99% of the loan.
How to qualify
Before applying, ensure you can meet the following loan qualifications:
Have a credit score of at least 620
Be able to verify your income
Have a verifiable bank account
How to qualify for a personal loan for bad credit
Here's a minimum of what most lenders would like to see:
Credit score high enough to let a lender know you have a history of managing your debt well. While the higher the score, the lower the interest rate attached to a loan, some lenders consider other criteria, like how long the applicant has been on the job.
Debt-to-income (DTI) ratio low enough to assure the lender that you'll have no problem making the monthly loan payments. DTI refers to how much of your monthly income goes toward debt payments.
Stable, reliable source of income.
Verifiable bank account.
How to apply for a personal loan for bad credit
Gather personal information (contact information, Social Security or Individual Tax Identification Number, employment/income/housing details, any other financial documents as requested) and then take these steps:
Fill out a loan application.
Be prepared to provide the lender with any other documentation requested.
Wait for the application to go through underwriting and to be approved.
Carefully read the loan contract you're provided with.
Sign the contract.
Await funding.
Pros and cons of a personal loan for bad credit
Deciding whether to take out any loan is a big decision. As with every major financial decision, there are pros and cons.
Pros
A personal loan for bad credit may be a good way to consolidate debt with an even higher interest rate.
A personal loan for bad credit allows those with less-than-ideal credit scores to borrow money when they need it most.
Making on-time payments can lead to a higher credit score.
Cons
Using a personal loan to pay off existing debt but then charging up credit cards again can lead to deeper financial trouble.
Only highly qualified loan applicants are offered the lowest interest rates, meaning those with lower credit scores receive a higher interest rate to repay.
Loan fees associated with personal loans for bad credit are likely to be much more expensive than fees charged to borrowers with good or excellent credit.
Types of personal loans for bad credit
One benefit of a personal loan for bad credit is the number of ways it can be used. Here are a few options.
When your home requires repair, you don't always have as much time as you would like to consider your options. If you have equity in your home, a home equity line of credit (HELOC) may be a less expensive way to make repairs.
Unexpected expenses
Experts recommend keeping enough in an emergency savings account to cover three to six months' expenses. If you don't have that much, a personal loan for bad credit can help cover a family emergency or get you over a financial hurdle.
Alternatives to personal loans for bad credit
Sometimes, a personal loan isn't the best choice. You also have these options.
Home equity loan
If you own a home and have equity in that property, you may want to consider a home equity loan. Since your home serves as equity, you may even land a lower interest rate than you would have with a personal loan.
Peer-to-peer loan
Looking into a peer-to-peer (P2P) loan can be worthwhile if you have poor credit and have trouble qualifying for a traditional loan. P2P loans match borrowers with individual investors who may be willing to loan money to those with less-than-ideal credit. Due to the high interest rates they can carry, you may want to keep a P2P loan in your back pocket and only pull it out when you experience a financial emergency.
Loan from a friend or family member
Asking someone you know to loan you money can be embarrassing. Still, it may be your best option if you don't need to borrow much and can guarantee you'll repay the loan as promised.
Should I get a personal loan for bad credit?
Only you can decide whether to take out a personal loan for bad credit. As you consider the wisdom of a personal loan, you may want to ask yourself the following questions:
Is the money going to be used for something I want or something I need? Given the higher-than-average cost of bad credit loans, they're something you may want to consider only when the need is great.
Do I have room in my monthly budget to repay the loan?
What happens if I lose my job, become ill, or otherwise lose my income? Do I have another way to keep up with the loan payment?
Is there another way I can come up with the money? For example, can I take on a side hustle or save over time until I have enough?
What is a personal loan for bad credit?
A personal loan for bad credit is designed to meet the borrowing needs of consumers with fair to poor credit scores. Most bad credit loans have a fixed interest rate, and some accept collateral or a cosigner. A personal loan for bad credit almost always has a higher interest rate and loan costs than loans to borrowers with strong credit.
Our personal loans rating methodology
Loan products are rated on a scale of one to five stars, primarily focusing on:
Competitive APRs
The easiest way to save money when getting a loan is to find a product with a competitively low interest rate. Items assessed may include:
Current APR range
Presence of autopay discounts
Low to no fees
Cutting origination fees is now table stakes in the personal loans market. We also think fees should be $0 or justifiably low across the life of a loan. Items assessed may include:
Origination fees
Transfer and closing fees
Diversity of loan offerings
The most valuable loan products tend to offer a deep bench of options that meet a wide array of customer needs. These include a diverse range of loan amounts and terms, as well as loan structures. Items assessed may include:
You can get a loan with any credit score, as some lenders don't have a minimum credit score requirement. But if you have a low credit score, the interest rate on a loan can be prohibitively high.
Yes, loans can help build credit if you pay all monthly payments in full and on time.
But it's also important to keep your debt-to-income ratio at 36% or below, and taking out a new loan may nudge your ratio higher than that.
It takes lenders anywhere from one day to two weeks to fund the loan once you apply and are approved. If the speed at which the loan is funded is important, make sure to ask the lender before applying.
A cosigner may help you qualify for a loan you would not otherwise be able to get. A cosigner with a good credit score can even help you snag a lower interest rate.
The important thing is to pay the loan as agreed. Otherwise, your cosigner is on the hook for it.
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We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. Motley Fool Money does not cover all offers on the market. Motley Fool Money is 100% owned and operated by The Motley Fool. Our knowledgeable team of personal finance editors and analysts are employed by The Motley Fool and held to the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands.
Citigroup is an advertising partner of Motley Fool Money. Dana George has positions in Target. The Motley Fool has positions in and recommends Target, Upstart, and Visa. The Motley Fool has a disclosure policy.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. Motley Fool Money does not cover all offers on the market. Motley Fool Money is 100% owned and operated by The Motley Fool. Our knowledgeable team of personal finance editors and analysts are employed by The Motley Fool and held to the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands.
Citigroup is an advertising partner of Motley Fool Money. Dana George has positions in Target. The Motley Fool has positions in and recommends Target, Upstart, and Visa. The Motley Fool has a disclosure policy.
*Upstart Loan Disclaimer
The full range of available rates varies by state. The average 3-year loan offered across all lenders using the Upstart platform will have an APR of 21.97% and 36 monthly payments of $35 per $1,000 borrowed. For example, the total cost of a $10,000 loan would be $12,646 including a $626 origination fee. APR is calculated based on 3-year rates offered in the last 1 month. There is no down payment and no prepayment penalty. Your APR will be determined based on your credit, income, and certain other information provided in your loan application.
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