There are many reasons people may need a personal loan when they have bad credit, but it is often to help pay off or consolidate debt. Most bad credit lenders prefer to work with people who have a credit score between 550 and 629. However, you might see interest rates as high as 36%. Below are five of the best places to look for bad credit options.
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Top 5 List of the Best Personal Loans for Bad Credit
- Bad Credit Loans: The best option for low credit scores
- Avant: The company provides several repayment options
- Lending Point: An excellent choice for small loans
- Lending Club: Best user experience
- Upstart: Good choice for people with limited credit history
5 Best Personal Loans for Bad Credit
1. Bad Credit Loans
Bad Credit Loans is a loan aggregator, meaning the company refers clients to reputable lenders. There is no charge for using the service, but all applicants must be 18 years old. You can receive loans of up to $10,000 with interest rates ranging between 5.99% and 35.99%. The company prides itself on an application process that can get almost anyone approved for a loan.
Avant provides unsecured loans to people with at least a 580 FICO score. The loans range from $2,000 to $35,000 with two to five-year terms. The interest rates vary between 9.95% and 35.99%, depending on your creditworthiness. The primary benefit of getting a loan through Avant is the repayment options and fund availability as soon as the next day.
LendingPoint is another lender providing unsecured loans to those with lower credit scores, 585 or better. The loan amounts vary between $2,000 and $25,000 with term lengths as long as five years. LendingPoint can approve an application in only a few minutes, with fund delivery the next day. This lender is better for smaller loans.
4. Lending Club
LendingClub is an excellent option for people with a credit score of 600 or better. It provides the best customer experience. LendingClub also allows applicants to use a cosigner, which is not something most bad credit lenders will do. Interest rates range between 8.05% and 35.89%, with a loan cap of $40,000 and a term length of up to five years. LendingClub also offers a 15-day grace period if you are unable to make a payment on time.
Upstart is a well-known lender of unsecured loans. Beyond a minimum credit score of 600, Upstart will also factor in an applicant’s job history, education, and area of study. Interest rates range between 8.69% and 35.99%, with loans between $1,000 and $50,000 and terms between three and five years. Borrowers should be aware of a one-time origination fee of up to 8% of the loan amount. Because of Upstart’s approval methods and quick fund delivery, it is a suitable option for people with limited credit histories.
Each of the above lenders is willing to work with people who have limited credit histories or low credit scores. While the interest rates might not be among the most favorable, they are fair for the risks the lender is taking providing unsecured loans.
Several financial institutions, including banks and private lenders, will provide a personal loan for people with poor credit. However, people with exceedingly low credit scores, like those below 500, will find it challenging to get approved for any substantial sum. If you have a really low score, you might consider paying down debt or consulting with a bankruptcy attorney for other potential options.
The easiest loan to receive approval for is a secured loan. Secured loans require some form of collateral that is equal to or greater than the loan’s value, for example, a house, car, or another piece of property. By providing collateral, the bank or lender feels more confident in their risks because failure to pay back the loan results in the forfeiture of your property.
A personal loan is still a conventional loan, and it can take time to process. If you need immediate and short-term funds, you might want to try using a lending alternative, like a payday loan. Be careful using such lenders because the interest rate on most payday loans is significant. Also, people often get stuck in a cycle of taking out the loans only to pay off the previous loans.
When you’ve managed to grow your credit rating all the way up to Excellent a whole different marketplace open up. Check out our guide to the Best Loans for Excellent Credit here.