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Your credit score is a key factor in getting a personal loan. If it's too low, some lenders may decide you pose too great a risk and decline to lend you money.
However, it may still be possible to qualify for a personal loan even if your credit isn't in the best shape. The best personal loans for bad credit can can provide financial flexibility, allowing you to address needs like debt consolidation, unexpected expenses, or home repairs. Responsible repayment of these loans can also contribute to rebuilding your credit over time.
Remember that even the best personal loans for bad credit scores will come with higher interest rates compared with loans for borrowers with good credit. But they can be much safer than other alternatives often resorted to by those with bad credit, such as payday loans, which have exorbitantly high interest rates and can trap you in a cycle of debt.
Loans for Bad Credit in 2024
- Best for small loan amounts: Upgrade Personal Loan
- Best for easy qualification: Avant Personal Loan
- Best for low credit scores: LendingPoint Personal Loan
- Best for limited credit histories: Upstart Personal Loan
- Best for applying with a co-borrower: LendingClub Personal Loan
- Best for secured loans: OneMain Financial Personal Loan
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How to Apply for a Personal Loan With Bad Credit
If you're looking for a personal loan and have bad credit, you'll want to stick to lenders that allow you to prequalify. This allows you to compare interest rates and terms available without affecting your credit score. This is usually a fast process, so you should do so with several lenders.
After you've gotten prequalified, compare the offers and choose the one that best suits your needs. To complete the full loan application process you'll need documentation, including paperwork like:
- Pay stubs/proof of income
- W-2 forms or tax returns
- Documentation of 401(k)s and other financial accounts
- Photo ID
- Rent/mortgage payment history
- Proof of collateral, if you're pursuing a secured loan
If you're approved for the loan, the lender will send you final loan documents to sign off on. Make sure to read everything carefully to understand how exactly how much you'll be paying in total for the loan and be absolutely certain you can afford the monthly payments.
Bad Credit Loan Company Trustworthiness
Whether you're looking for a $5,000 loan or a $10,000 loan, finding a trustworthy lender can help improve your loan experience. To help you make a decision, we've compared each institution's Better Business Bureau score. The BBB measures businesses based on factors like their responsiveness to consumer complaints, truthfulness in advertising, and clarity about business practices. Here is each company's score:
| Lender | BBB Grade |
| Upgrade Personal Loan | A+ |
| Avant Personal Loan | A |
| Upstart Personal Loan | A+ |
| OneMain Financial Personal Loan | A+ |
| LendingClub Personal Loan | A |
| LendingPoint Personal Loan | A |
All of our top picks are rated A or higher by the BBB. Keep in mind that a high BBB score does not guarantee a positive relationship with a lender, and that you should continue to do research and talk to others who have used the company to get the most comprehensive information possible.
Other Types of Loans for Bad Credit
While some personal loan lenders such as Best Egg and Upgrade may accept collateral for a secured loan, which may get you a lower interest rate, most focus on unsecured loans, which are based entirely on your creditworthiness. Secured loans may get you a lower interest rate, but it's important to remember that you risk losing your collateral if you end up in a position where you can't afford the monthly payments. This can be financially devastating if you were to put up your car as collateral.
It's also important to predatory lenders that target borrowers with bad credit with loans at exorbitant interest rates that can trap you in a cycle of debt. Payday loans are among the most common examples. They're advertised as fast and helpful ways to get money to cover an unexpected expense but often end up saddling borrowers with loan terms and interest rates that severely damage their long-term financial health. Car title loans, which allow the lender to take ownership of your car if you can't pay, are also frequently associated with predatory lending.
Improving Your Credit With a Loan
Getting a personal loan with bad credit can itself help you to improve your credit score. While it may sound counterintuitive, there are several ways this can happen based on how credit scores are calculated.
For example, when you make payments on a loan, they're reported to the major credit bureaus, and your payment history accounts for more than a third of your overall credit score. Making your payments on time will have a positive impact.
If you use a personal loan for debt consolidation, it can also help improve your score. With a debt consolidation loan for poor credit, you roll multiple debt into a single loan with one monthly payment. This can reduce your credit utilization ratio, which determines about 30% of your credit score.
Why You Should Trust Us: How We Reviewed Loans for Bad Credit
We rate all personal loan products in our reviews and guides on a 1-5 scale. The overall rating is a weighted average that takes into account seven different categories, some of which are judged more heavily than others. They are:
- Interest rate (20% of rating)
- Fees (20% of rating)
- Term lengths and loan amounts (15% of rating)
- Funding speed (15% of rating)
- Borrower accessibility (15% of rating)
- Customer support (7.5% of rating)
- Ethics (7.5% of rating)
Each category's weighting is based on its importance to your borrowing experience. Rates and fees have the most direct impact on the overall cost of your loan, so we weigh those the most heavily. Customer support and ethics are still very important parts of the borrowing experience, but do not directly tie to a personal loan's terms, so they have less of an impact on the overall rating.
Compare the Best Personal Loans for Bad Credit
The best loans for bad credit offer prequalification, so you can see what your terms and interest rates would be before moving forward. Lenders that accept lower credit scores may require a co-borrower to secure the loan, or you might need to opt for a secured loan, which requires collateral.
Upgrade Personal Loan
Upgrade offers a low minimum APR. But you'll likely pay a higher rate if your credit isn't in good shape. With a poor credit history, you may end up paying an APR closer to 35.99%. Upgrade's smallest loan amount of $1,000 is lower than many other comparable lenders.
You'll pay an origination fee with Upgrade, which will be taken from your loan proceeds. Upstart may also charge you a late fee of up to $10. However, you won't pay any prepayment penalties with this lender. Once you accept your loan offer, you should get your funds as soon as the next day.
Avant Personal Loan
Avant is one of the easier lenders to qualify for on our list. Its stated minimum credit score is just a guideline, not a requirement, but most Avant borrowers have a credit score between 600 and 700. Avant funds loans quickly — if the company approves your loan by 4:30 p.m. CT Monday through Friday, funds are often put into your account by the next business day.
Avant has excellent customer service hours, with its phone line open at least 13 hours every day of the week. The lender also has a strong mobile app.
LendingPoint Personal Loan
LendingPoint has the lowest minimum credit score requirement of any of our top picks, making it a good option if you can't qualify for other lenders with your credit score. LendingPoint has a quick application process. and you may be approved the same day you apply. You can often get your funds the next business day after approval.
Unfortunately, you're not able to take out a loan if you live in Nevada or West Virginia. You also might pay an origination fee, depending on the state you live in.
LendingPoint Personal Loans Review
Upstart Personal Loan
Upstart's minimum credit requirement is 300, but if your credit score is low, you might end up paying a high APR. However, Upstart also considers employment history and education history, such as where you went to school and your area of study, when making its lending decisions, which could help borrowers who may not qualify for a loan solely based on their credit score.
Upstart's loan repayment term options are fairly limited — you can choose between a three-year or five-year term. On the bright side, the company usually funds loans within one business day, which is useful if you need your money fast. There are no prepayment penalties with this lender.
LendingClub Personal Loan
LendingClub allows you to add a co-borrower to your loan application. So if you're worried about not qualifying for a loan or paying a higher interest rate than you can afford, you may consider this option.
However, it will take you two to four business days to get your money, which is longer than most of the other lenders on our list. You'll also pay an late fee of 5% of the minimum payment amount or $15 (whichever is greater) of your total loan amount.
LendingClub Personal Loans Review
OneMain Financial Personal Loan
OneMain Financial's minimum APR is higher than every other lender on our top picks, but there is no minimum credit score required to apply. That said, if your credit is in particularly rough shape, it may be easier to qualify for a loan with this lender. You may also be able to get your money the same day you apply.
OneMain's standout feature is that it offers secured personal loans (loans backed by collateral such as a house or a car) as well as unsecured personal loans. This is uncommon among personal loan lenders.
OneMain Financial Personal Loans Review
How to Choose a Personal Loan When You Have Bad Credit
To get the best bad credit personal loan, consider what is most important to you. Many borrowers prioritize the lowest personal loan interest rate, but also consider any fees, the minimum credit score needed, and the accessibility of the lender's customer service. You'll also want to make sure you're able to select a term length that works for you and that your loan's purpose is allowed by the lender you choose.
See the latest personal loan interest rates »
For bad credit loans specifically, you'll want to understand if you qualify for a loan or if you may need to add a cosigner to boost your chances of being eligible.
Bad Credit Personal Loan FAQs
The minimum score can vary widely among lenders; some offer loans specifically designed for borrowers with scores below 600. Others may have no minimum credit score requirement.
Personal loans for bad credit with a reputable lender are safe. Search for personal loans that are backed by a Member FDIC bank or NCUA-accredited credit union. Also, familiarize yourself with common personal loan scams so you know how to avoid them.
There is no such thing as a personal loan with guaranteed approval, and it's important to be cautious of such claims. No legitimate lender can guarantee you'll be approved for a personal loan, especially if you have bad credit.
To get a loan with bad credit, your best bet is one that is either secured with some sort of collateral, or one in which you have a more creditworthy borrower co-sign with you. That way, the lender will have less risk of not getting its money back.
