If you have bad or poor credit as defined by FICO (a score of 350 to 579), you won’t be able to qualify for a personal loan unless you apply with a co-signer. However, while some personal loans require credit scores of at least 670, there are several lenders, like those in this list, that are willing to loan funds to those with credit scores between 580 and 600.
Personal loan interest rates vary depending on your score and the qualification requirements you meet, so you shouldn’t expect to get the lowest rates or the most favorable terms with damaged credit.
But if you have bad credit, you likely shouldn’t be looking for the best rates; the provider that offers a loan your score qualifies for is typically the best one for you. And if there are multiple options open to you, then compare loan limits and interest rates to find the one that best fulfills your needs.
Methodology
We reviewed 18 popular lenders based on 14 data points in the categories of loan details, loan costs, eligibility and accessibility, customer experience and the application process. We chose lenders that have a minimum credit score requirement of 600 or lower and ranked them based on the weighting assigned to each category:
Loan details: 20%
Loan cost: 25%
Eligibility and accessibility: 30%
Customer experience: 15%
Application process: 10%
Within each category, we also considered several characteristics, including loan amounts, repayment terms, APR ranges and applicable fees. We also looked at whether each lender accepts co-signers or joint applications and the geographic availability of the lender. Finally, we evaluated each provider’s customer support tools, borrower perks and features that simplify the borrowing process—like prequalification and mobile apps.
Tips for Comparing Personal Loans for Bad Credit
Consider these tips when comparing personal loans for bad credit:
Compare the top-end range of interest rates. Because interest rates largely depend on your qualifying credit score, you’re likely to land a rate at the top end of the range with bad credit. So, when comparing personal loans for people with bad credit, be sure to compare the maximum rate.
If possible, prequalify with a provider. Several providers offer the opportunity to prequalify you for a personal loan. This means you can submit details like your income information, desired loan use and housing situation to learn about potential loan limits, rates and repayment options. Prequalifying also only requires a soft credit check, which doesn’t hurt your credit score, so you can safely find the best rates.
Check for additional fees. Some personal loan providers charge no origination fees, late payment fees or prepayment penalties. However, there are some that may charge all or some of these fees. When comparing bad credit personal loans, be sure to look at the fee structure beyond the potential interest rate you can receive.
Evaluate the lender’s customer support options. If you’ve found a lender, there’s one more thing to consider before signing the loan agreement. While customer support may not seem like a big deal, it can make a huge difference if you encounter issues with payments or face a financial hardship during your repayment period. Review the lender’s customer service resources and read reviews to make sure it’s a good fit.
What Is a Bad Credit Score?
Based on the FICO credit score range of 300 to 850, a score below 580 is considered to be a bad credit score. Lenders refer to borrowers who fall in this range as subprime borrowers, and those borrowers tend to be riskier. A bad credit score can make it more difficult to qualify for things like a car, a mortgage or a loan for a business, so it should be in your best interest to improve your score before submitting an application.
Bad credit scores are typically a result of poor payment history, high credit usage and/or too many credit applications or hard credit check inquiries. These are some of the most important factors that make up your credit score. If you want to avoid a bad credit score, it’s best to not neglect these areas of your credit profile.
What Is a Bad Credit Loan?
Some lenders offer bad credit loans for applicants who have had little to no time to build a credit history or who may have experienced some pitfalls. While it can be difficult to get a loan with a credit score below 580, some lenders, including those on this list, are willing to extend funds to applicants with scores between 580 and 600. Minimum credit score requirements tend to vary between lenders, so be sure to check if your score qualifies through your preferred lender.
Bad credit applicants will typically receive high interest rates and lower loan limits due to their credit scores. The lowest rates and most favorable terms are reserved for high-qualified applicants.
What Are the Interest Rates on Bad Credit Loans?
Lenders calculate interest rates based on a number of variables ranging from your creditworthiness and income to the size of the loan and repayment term. Because your credit score and history play a key role in determining the interest rate you receive, you should not expect the lowest rates on bad credit loans; the lowest rates are typically reserved for highly qualified applicants.
Although interest rates on our list range from about 3% to 36%, it’s more than likely that the interest rate you receive will fall toward the top end of the range with damaged credit. If you want to improve your chances of getting a lower interest rate, take time to boost your credit score before applying.
How to Get a Loan With Bad Credit
Getting a personal loan with a bad credit score is not impossible, but it may require some extra legwork from you. While the process may vary depending on your specific score and lender, here are the general steps you can follow:
Check your credit score. Before you start looking for the best lender, it’s crucial to check your credit score online through a credit-providing website or your credit card provider. This will give you an idea of what you can and can’t qualify for. You should also check for any inaccuracies tied to your credit score, like a debt that does not belong to you.
Improve your score, if necessary. If you find out your score is too low, take time to improve it before submitting an application. Some quick ways to improve your credit include repaying any outstanding debts and reducing your credit usage.
Evaluate your budget. Prior to looking for the right lender, evaluate your budget and understand how much loan you can afford. If you take too big of a loan out, you may find yourself struggling to meet future repayment obligations and damaging your credit even more.
Prequalify with multiple lenders. Some lenders offer a prequalificaiton process, which lets you check whether or not you would qualify without a hard credit check and see what terms you’d receive once approved
Add a co-signer, if necessary. If you need to boost your application to receive better terms, consider adding a co-signer. A co-signer is a secondary person who agrees to pay back the loan if you fail to do so, which reduces the risk you pose to the lender.
Submit your application. Once you’ve found the best lender for your situation, submit an application online or in person. Prepare to provide your personal information, such as your Social Security number (SSN), address and income information.
Repay your loan. Once your lender approves your loan and disburses the funds, it’s time to start repaying your loan. Setting up autopay is a surefire way to never miss a payment.
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