Which Personal Loans for Bad Credit Online is Better for Me?
CreditYelp knows how stressful it can be to borrow money, especially with bad credit, and we are committed to helping you secure a loan easily, irrespective of your credit score. We provide objective and all-inclusive information, expert comparison, and evaluation so you can make informed financial decisions. You can take advantage of our affiliation with over ten quality loan groups on our platform to obtain a loan with bad credit at the lower interest rate possible.
- Min. credit score:
- No minimum credit score requirement
- Est. ARP:
- 5.99%-35.99%
- Loan Amount:
- $1,000 to $35,000
- Credit Check:
- Soft
- Min. annual income:
- Depending on lenders
- Lending Period:
- 3-72 months
Overview: PersonalLoans.com provides quick and easy access to loans of $1,000-$35,000 that can be applied from your home or office or on the go via your mobile device.
Why choose Personal Loans™: They offer loans for multiple reasons, covering various expenses. Some examples include home improvement projects, payday loans, debt consolidation, bad credit lines of credit, medical expenses, and more.
- No hidden fees.
- No upfront cost.
- Speedy loan decision
- No minimum credit score required
- Ideal for short-term loans
- Free to use
- Quick loan request process
- Comprehensive knowledge base
- It asks for a lot of personal information
- It offers only small loans
Time to receive funds: One business day
Fees: Origination fees: 1%-5%. The fees will fluctuate depending on the lender you choose. Some lenders have additional charges that are based on the loan's purpose and other conditions within their contract. It is essential that you read over everything carefully before signing anything.
Payment frequency: Once a month or twice a month
Prepayment penalty: None
- Min.credit score:
- No minimum credit score requirement
- Est. ARP:
- 5.99% to 35.99%
- Loan Amount:
- $500 - $10,000
- Credit Check:
- Soft
- Repayment terms:
- 3 to 72 months
- Prepayment Penalties:
- Varies by lenders
Overview: BadCreditLoans.com is founded in 1998 by bringing together traditional lenders, peer-to-peer lending networks, and tribal loans (from Native American Indian Funds). Today, it has grown to offer personal loans and installment loans across the United States to all credit types.
Why choose BadCreditLoans: It provides borrowers with bad or good credit with a platform where they can find the best rates by receiving multiple offers from different banks and lenders.
- You don’t need any collateral
- No application fees
- Competitive APRs
- Easy online form
- Soft credit check
- Fast funding after approval
- It offers smaller loan amounts up to $10,000
- It may attract higher APRs depending on the lender
Availability: If none of the lenders or lending partners in our network are willing to offer you a loan, they may instead show you ads for other lenders. Additionally, they might connect you with offers for debt relief, credit repair, or other products and services related to credit. They won't share your sensitive loan information with other companies. The only thing they'll give them is your contact information so they can reach out to you.
Time to receive funds: Get your money as soon as the next business day.
Fees: Origination, Late Payment, and NSF fees all vary by lender.
Special features: BadCreditLoans is a unique platform that offers peer-to-peer borrowing and access to tribal loans. Tribal loans offer people who are self-employed or have a varied credit history to qualify for personal loans that they may not qualify for with a traditional lender.
Keep in mind that tribal loans are funded from sovereign native American lands and do not always have to meet state APR maximums.
They have relationships with various banks and lenders, allowing them to offer personal loans to people with bad credit, no credit, or limited credit. At BadCreditLoans, they work with various lenders who may be willing to give you a loan, even if you have bankruptcies, repossessions, and judgments on your record.
- Min.credit score:
- No minimum credit score requirement
- Est. ARP:
- 5.99% - 35.99%
- Loan Amount:
- $500 - $10,000
- Credit Check:
- Soft Credit Check
- Min. Monthly Income:
- $1,000
- Loan Term:
- 90 days - 72 months
Overview: Launched in 1997, CashUSA.com is a trusted online lending platform that connects borrowers with lenders. After making a single application on the website, you'll be presented with a list of lenders who might approve your loan request. This service is free and suitable for you if you need fast cash and have a poor credit score or no credit history.
Why choose cashusa.com: It is easy to get a loan, and the process is transparent. It facilitates the entire lending process and allows borrowers, especially those with bad credit, to shop around and find the best deal.
- Borrowers with a bad credit score or no credit history are eligible
- Fast loan offers and disbursement
- Transparent application process
- Industry-standard data encryption
- No hidden charges or fees
- Modest loan amounts
- Interest rates may be high
Eligibility Requirements:
- Be at least 18 years old
- Be a U.S. citizen or permanent resident
- Be employed for at least 90 days and meet your Lender’s income minimum specific requirements
- Have a checking account in your name
- Be able to provide work and home phone numbers, as well as a valid email address
Time to receive funds: Funds may be available within one business day.
Fees: With CashUSA, you can submit your personal loan request without paying any fees. Instead of receiving revenue from you, it comes directly from the affiliated lenders upon successful approval. Please remember that each lender may charge different interest rates and penalties depending on many factors.
Impact on financial wellness: CashUSA offers an educational resource center packed with invaluable information and advice on managing debt and income. After registering, you can explore the credit score system and look into what your loan offer entails. Furthermore, our blog will provide of all sorts of helpful insights, such as how to prioritize your finances or tackle any debts you may have. Don't miss out on all these great resources!
Special features: You are not obligated to accept any loan terms offered by the lender. If we can't find a suitable loan offer for you, we may share some minimal details about you with our marketing partners so that you can receive offers for credit repair, debt relief, or similar services.
- Min.credit score:
- No minimum credit score requirement
- Est. ARP:
- 6.50-35.99%
- Loan Amount:
- $1,000-$50,000
- Credit Check:
- Soft Credit Check
- Min. Monthly Income:
- $12,000
- Lending Period:
- 3 to 5 years
Overview: Upstart, a cutting-edge lending platform, provides personal loans for bad credit and debt consolidation. Harnessing AI, it assesses creditworthiness beyond credit scores, aiding borrowers overlooked by traditional lenders.
Why choose Upstart: Upstart offers personalized loan terms and quick online approvals. Its AI-based approach gives a fairer assessment, making it ideal for those with limited credit history or lower scores.
- Accepts borrowers new to credit.
- Fast funding.
- Option to change your payment date.
- Option to pre-qualify with a soft credit check.
- Offers free financial education.
- Origination fee may apply
- No secured loan option
- No co-sign option
- No mobile app to manage loan.
- Only two repayment term options.
Eligibility Requirements:
- At least 18 years old (or 19 years old, depending on your state of residence).
- U.S. residential street address and currently reside there .
- Valid email account.
- Verifiable name, date of birth and social security number.
- Regular source of income, or a full time job offer starting in six months.
- Not available in West Virginia or Iowa
- Personal banking account at a U.S. institution with a routing transit number.
Time to receive funds: One business day
Fees: Origination: 0% to 10%. Late fee: 5% of the unpaid amount or $15; whichever is greater.Returned check fee: $15.
Payment frequency: Once a month or twice a month
Prepayment penalty: None
Special features: Upstart uses artificial intelligence to streamline the loan approval process. This AI-driven approach allows for more accurate risk assessment, potentially approving more borrowers at lower rates. Additionally, Upstart offers an education-based evaluation, considering factors like education and job history, which could be beneficial for borrowers with a short credit history but strong potential.
- Min.credit score:
- 560
- Est. ARP:
- 8.49% - 35.99%
- Loan Amount:
- $1,000 – $50,000
- Credit Check:
- Soft Credit Check
- Min. Monthly Income:
- No minimum credit score requirement
- Lending Period:
- 24-84 months
Overview: Upgrade is a digital lending platform offering quick funding options. It caters to various financial needs, from personal loans to credit-building, with a swift application process and rapid funding.
Why choose Upgrade: Upgrade provides a simple, fast online application process with quick decisions and funding, making it an excellent choice for those in immediate need of financial assistance.
- Provides loans with minimal amounts.
- Facilitates direct disbursement to external creditors.
- Doesn't charge fees for early loan repayment.
- Supports co-applications.
- Accommodates borrowers with lower credit scores.
- Offers loans starting from just $1,000.
- Levies fees for loan origination.
- Caps loan amounts at $50,000.
- Tends to have higher APRs relative to competitors.
Eligibility Requirements:
- At least 18 years old (or 19 years old, depending on your state of residence).
- You must be a U.S. citizen or permanent resident or living in the U.S. on a valid visa.
- A verifiable bank account and valid email address.
- Minimum credit score requirement
Time to receive funds: 1 business day after clearing any verifications. 1-3 business days is typical.
Fees: It charges an origination fee between 1.85%and 9.99% for its personal loans.
Payment frequency: Monthly
Prepayment penalty: None
What to watch out for: Every personal loan is subject to an origination fee ranging from 1.85 percent to 8.99 percent. Additionally, a $10 fee is applied for failed payments.
Special features: Upgrade also offers a hardship program and credit health tools as special features.
- Min.credit score:
- 660
- Est. ARP:
- 7.49%-24.49% (with autopay)
- Loan Amount:
- $5,000–$100,000
- Credit Check:
- Hard Credit Check
- Min. Monthly Income:
- No minimum credit score requirement
- Lending Period:
- 24-84 months
Overview: LightStream, Truist's online lending division, specializes in competitive, low-rate debt consolidation loans. It stands out for its streamlined service, transparent terms, and wide range of loan amounts and repayment terms. It's a great option if you want to consolidate a lot of debt or undertake an expensive home improvement project.
Why choose LightStream: LightStream is an excellent choice for individuals seeking debt consolidation options, offering low rates, rapid approval and funding, and no fees, which is particularly beneficial for those with strong credit histories.
- Offers low interest rates.
- Charges no fees.
- Provides quick approval and funding.
- The minimum loan amount is relatively high.
- Requires a substantial credit history.
- Lacks a preapproval process.
Eligibility Requirements:
- At least 18 years old.
- Social Security number.
- Valid checking account.
- Valid U.S. address.
- Minimum FICO credit score of 640.
- No current delinquencies.
- Sufficient income.
Time to receive funds: As soon as the same day
Fees: It charges an origination fee between 1.85%and 9.99% for its personal loans.
Payment frequency: Monthly
Prepayment penalty: None
Special features: LightStream offers a unique Rate Beat program. If you find a lower rate from a competitor, LightStream will beat that rate by 0.10 percentage points, under certain conditions. It also guarantees customer satisfaction with a $100 guarantee within 30 days if unsatisfied with the loan process.
- Min.credit score:
- 640
- Est. ARP:
- 0.50% – 29.99%
- Loan Amount:
- $5,000 – $40,000
- Credit Check:
- Hard Credit Check
- Min. Monthly Income:
- No minimum credit score requirement
- Lending Period:
- 24 to 60 months
Overview: Happy Money is a fintech company. With its network of FDIC and NCUA insured lenders, Happy Money is focused on helping individuals pay off their credit card debt through consolidation loans. It emphasizes financial health by combining psychology and finance. Additionally, it offers first-year quarterly check-ins to address any questions or concerns.
Why choose Happy Money: Happy Money is an excellent option for those looking to consolidate credit card debt, offering customizable loan terms, money management tools, and no application or late fees.
- Offers customizable loan terms.
- Provides money management tools.
- Charges no application or late fees.
- Slower funding process compared to competitors.
- Charges an origination fee.
- Does not support joint applications.
Eligibility Requirements:
- At least 18 years old.
- Social Security number.
- Valid checking account.
- Valid U.S. address.
- Minimum FICO credit score of 640.
- No current delinquencies.
- Sufficient income.
- Substantial credit history.
Time to receive funds: Three to six business days
Fees: An origination fee of up to 5 percent
Payment frequency: Monthly
Prepayment penalty: None
Special features: Happy Money offers its members access to financial tools and educational resources to promote financial wellbeing. They also provide free credit score monitoring to help borrowers stay on top of their credit health.
- Min.credit score:
- 600
- Est. ARP:
- 8.99-35.99%
- Loan Amount:
- $2,000-$50,000
- Credit Check:
- Hard Credit Check
- Min. Monthly Income:
- $50,000
- Lending Period:
- 3 to 5 years
Overview: Established in 2014, Best Egg is a reputable online lender based in Wilmington, Delaware. With over 788,000 customers and 1.1 million loans funded, it caters to borrowers with fair to excellent credit, offering competitive rates and a streamlined application process to meet various borrowing needs.
Why choose Best Egg: Best Egg is ideal for borrowers with good credit profiles who value fast, simple loan applications and the convenience of direct payments for debt consolidation.
- Offers prequalification.
- Accessible to a broad spectrum of borrowers.
- Provides direct payments for debt consolidation
- Charges a loan origination fee.
- Does not disclose loan terms on its website.
- Offers no discounts for autopay.
Eligibility Requirements:
- At least 18 years old.((19 in Alabama and Nebraska)).
- Social Security number.
- Valid checking account.
- Sufficient income.
- Certain credit score
Time to receive funds: As soon as the next business day
Fees: Origination fee between 0.99 percent and 8.99 percent.
Payment frequency: Monthly
Prepayment penalty: None
Special features: Best Egg provides a fast funding process, usually depositing loan funds into your account within 1-3 business days after approval. Its simple and clear application process sets it apart in the online lending space.
- Min.credit score:
- 600
- Est. ARP:
- 9.57% – 36.00%
- Loan Amount:
- $1,000 – $40,000
- Credit Check:
- Soft Credit Check
- Min. Monthly Income:
- No minimum credit score requirement
- Lending Period:
- 36 to 60 months
Overview: LendingClub is a distinguished peer-to-peer platform that connects investors with borrowers for personal, business, auto, and medical financing. Renowned for its flexibility, it's ideal for those seeking to apply with a co-borrower or needing the option to alter due dates. This unique broker model eschews traditional banks, with investors funding loans directly.
Why choose LendingClub: Opt for LendingClub if you value the flexibility and inclusivity of a peer-to-peer lending model. It's particularly beneficial for applicants considering a joint loan, as it supports co-borrowing. Additionally, LendingClub offers the convenience of adjusting due dates, catering to borrowers who require flexibility in their repayment schedule.
- Supports joint applications.
- Offers flexibility to change your due date.
- Charges origination fees.
- Offers limited loan term options.
- Has a high maximum APR.
Eligibility Requirements:
- At least 18 years old.
- Social Security number.
- Valid U.S. address.
- Valid checking account.
- Sufficient income.
- Certain credit score
Time to receive funds: One business day
Fees: LendingClub charges an origination fee of 2 to 6 percent of the loan amount.
Payment frequency: Monthly
Prepayment penalty: None
Special features: LendingClub provides a unique peer-to-peer lending experience, enabling borrowers to potentially secure funding from multiple investors. This model can provide more flexibility and options for borrowers.
- Min.credit score:
- 590
- Est. ARP:
- 7.99% to 35.99%
- Loan Amount:
- $2,000 to $36,500
- Credit Check:
- Soft Credit Check
- Min. Monthly Income:
- $20,000
- Lending Period:
- 24 to 72 months
Overview: Specializing in small loans ranging from $2,000 to $36,500, LendingPoint is an online lender based in Atlanta, serving borrowers in 48 states. It optimally caters to individuals with lower credit scores, ensuring swift funding to meet urgent financial requirements.
Why choose LendingPoint: Choose LendingPoint if you seek smaller loans, have a lower credit score, and value fast funding options. The absence of prepayment penalties offers additional flexibility.
- Caters to those with lower credit scores.
- No penalties for early loan repayment.
- Provides quick funding.
- Does not offer joint loans.
- High maximum APR.
- Charges an origination fee.
Eligibility Requirements:
- Be at least 18 years old
- Have a photo ID issued by a federal, state or local government
- Have a Social Security number
- Have a verifiable personal bank account in your name
- Credit score requirements: 600
- Income requirements: annual income of $20,000 or higher
- Co-signers and co-borrowers: Not permitted
Time to receive funds: One business day
Fees: Charges an origination fee.
Payment frequency: Bi-weekly or monthly payments
Prepayment penalty: None
Special features: LendingPoint offers Next Day Funding, where approved loans can be funded as quickly as the next business day.
- Min.credit score:
- 580
- Est. ARP:
- 9.95% to 35.99%
- Loan Amount:
- $2,000 - $35,000
- Credit Check:
- Hard Credit Check
- Min. Monthly Income:
- Average monthly income: $4,000.
- Lending Period:
- 12 to 60 months
Overview: Avant is an online lending platform catering to borrowers with less-than-perfect credit. It provides unsecured personal loans with a range of amounts and ensures swift funding, often by the next business day. Avant's user-friendly mobile app further enhances its service, making it an ideal choice for those with poor credit seeking quick and convenient lending solutions.
Why choose Avant: Choose Avant if you have bad credit and seek a lender offering various loan amounts, fast funding, and no prepayment penalties, all managed through a handy mobile app.
- Offers a broad range of loan amounts.
- Provides a mobile app for easy loan management.
- Ensures quick funding.
- No penalties for prepayment.
- Does not support co-borrowers.
- High maximum APR.
- Potentially steep fees.
- Not available in all states.
Eligibility Requirements:
- Minimum age of 18 (19 in certain states).
- Valid Social Security number.
- Personal checking or savings account.
- Adequate income.
- Credit score between 600 and 700.
Time to receive funds: One business day
Fees: Avant charges a $25 late payment fee, a $15 returned payment fee and an administration fee of up to 4.75 percent.
Avant has three payment options:
- Single annual payment.
- Monthly installments with a 2.5% administration fee.
- Quarterly installments with a 2.5% administration fee.
Prepayment penalty: None
Special features: Avant's standout feature is its mobile app, which lets borrowers manage their loans conveniently from anywhere. This includes viewing upcoming payments, making additional payments, and seeing payment history.
Understand your credit score to get a loan
What is a bad credit score?
FICO and VantageScore are the two most popular credit-scoring models. The FICO scoring model values range from 300 to 850; a score below 670 is considered “not good”. More specifically, a score of 580 to 669 is rated as fair, and one between 300 and 579 is rated as poor.
VantageScore also uses the range of 300 to 850. Here, a score of 601 to 660 is considered fair; 500 to 600 is rated poor, while any score between 300 and 499 is very poor.
How bad credit affects a personal loan application?
Lenders will check out your credit history and your credit score to determine how responsible you will be in paying back your loan. This information also helps them determine how much to lend you and the interest rate they would charge.
Bad credit reveals to a lender that you have struggled to repay your debts in the past and that loaning you some money is a credit risk. The result, thus, is that the lender might deny your loan request or approve a small loan with a high Annual Percentage Rate (APR). If you have bad credit and don't need a loan urgently, it is best to take the time to build your credit score before applying so you can enjoy a more favorable loan deal.
Estimated APR by FICO score range
| CREDIT CATEGORY | CREDIT SCORE | PEOPLE IN THIS CATEGORY, % | ESTIMATED APR |
|---|---|---|---|
| Exceptional | 800 - 850 | 21% | 10.3 - 12.5% |
| Very good | 740 - 799 | 25% | 10.3 - 12.5% |
| Good | 670 - 739 | 21% | 13.5 - 15.5% |
| Fair | 580 - 669 | 17% | 17.8 - 19.9% |
| Very poor | 300 - 579 | 16% | 28.5 - 32% |
What Factors Determine Your Bad Credit Score?
-
Payment history
FICO Score indicates that this is the most influential factor on your credit score, affecting about 35% of your score. Your payment history considers how prompt you have been with loan repayments in the past and factors like your public records.
Things like a history of delayed payments, loan defaults, charge-offs, bankruptcy filing, foreclosure, etc., lead to a bad credit score. These kinds of negative information on your credit report continue to impact your score negatively as long as they are there.
-
Amount owed
This is also called your credit usage, accounting for 30% of your credit score. Your credit usage is primarily determined by your credit utilization ratio, as well as how much debt you owe in loans and how many accounts you have balances in.
The credit utilization ratio is the percentage of your available credit that you have used. It is calculated by dividing the sum of the balances in all your credit accounts by the sum of all your credit card limits and multiplying by 100%. A credit utilization ratio above 30% can cause a bad credit score.
-
Length of credit history
This accounts for about 15% of your FICO score, which simply refers to how long your credit account has been reported as open. Other factors like the length of time specific types of credit accounts have been opened and how much time has passed since you've used your credit accounts also contribute to your length of credit history.
An account that has had a good standing over the years by prompt repayment of loans will have a good credit score, while a new account with no credit history can cause a poor credit score.
-
New Credit
Applying for a loan too frequently can lead to your lender running a hard credit check or inquiry on you, which can negatively impact your credit score. A hard inquiry is a request by your lender to review your full credit report before approving your loan application.
Also, opening a new credit account can lower the average age of your accounts, which can hurt your score. New credit accounts for 10% of your score, so it is advisable to consider the potential drop in your credit score before applying for extra credit.
-
Credit mix
This makes up 10% of your credit score and refers to having different credit accounts. A healthy credit mix has a blend of both revolving credits (e.g., credit cards, personal lines of credit, and home equity lines of credit) and installment credits (e.g., student loans, mortgages, auto loans, and personal loans).
Sticking with one type of credit can affect your score negatively. A diverse credit mix proves that you can manage different credit accounts responsibly, improving your credit score.
Preparations for getting a personal loan with bad credit
-
Check your credit score and credit reports.
Before applying for a personal loan, it is necessary to know your credit score and credit reports. Most lenders have a minimum credit score required to approve a loan, while others are more flexible, so checking your credit score and reports helps you know the loans you can apply for. It also helps you identify any negative mark on your record or any issue that should be corrected before applying for a personal loan.
You are entitled by Federal law to a free copy of your credit report from the three major credit-reporting bureaus (Experian, Equifax, and TransUnion) every year. Visit AnnualCreditReport.com to request a free copy of your credit report from them. Your credit report doesn't reveal your credit score. You can view your credit score from the websites of these credit-reporting agencies for free, although you will be charged a nominal fee with TransUnion.
-
Make sure you can repay the loan.
Applying for a loan you cannot repay will only worsen your credit score. When you shop for loans, ensure you are properly aware of the monthly payment and interest rates to determine if you can meet the repayment plan.
If you make your assessment and see that you will have trouble repaying a loan, do not take it on. Rather, consider other alternatives like borrowing from family or friends.
-
Compare personal loans for bad credit.
Check out the lending requirements from the available bad-credit lenders and compare their loan features to choose the best suits you.
-
Get prequalified.
Prequalification is also known as pre-approval. Many lenders allow you to prequalify for a loan online to determine how likely you are to qualify. This process does not need a hard credit check, so your credit score will not be affected. Prequalification would require you to provide the necessary information about the loan you want, and your potential eligibility will be determined.
Talk to prospective lenders to see if you can prequalify for a personal loan. Compare the prequalified loans' interest rates and loan terms to choose the best deal.
-
Consider secured loans.
Secured loans are backed by assets such as your home, car, savings, or investment accounts. They usually have lower interest rates and are easier to qualify for with bad credit because something valuable can be taken in case you default on your repayment.
Online lenders usually accept vehicles as collateral, while banks and credit unions often accept an investment or savings account. Before applying for this loan, weigh the option of getting a loan against the possibility of losing your collateral.
-
Add a co-signer if necessary.
If you have a bad credit score, a co-signer is someone that jointly signs with you to obtain a loan with better terms based on their good credit score and history. They also take full responsibility for repaying your loan if you default because your debt is in their name.
When you cosign a loan, you have a better chance of qualifying for a loan. You also have access to higher loan amounts with lower interest rates. You need to confirm with your lender if cosigning is possible, and you must understand the terms of the agreement before deciding to add a co-signer.
-
Collect financial documents.
To qualify for a personal loan, there are certain financial documents that your lender will have to review before they approve your request. These documents are essentially the same for every lender; preparing them ahead of your application process can increase your chances of approval. They include:
-
Personal information, such as your social security number, full name, address, and date of birth
-
Proof of identity, e.g., your driver's license, birth certificate, state-issued ID, or other forms of personal identification
-
Loan application information such as loan amount, why you need the loan, and the loan term you want.
-
W-2 forms for the last two years
-
Employer and income verification documents like your recent pay stubs and your federal tax return for the last two years
-
Two most recent bank statements for all bank accounts
-
Proof of address like a utility bill, mortgage statement, voter registration card, lease agreement, etc.
Your lender can ask for additional documents. Make sure you are prepared to provide them quickly when requested.
-
-
Be ready for a hard credit check.
When you officially apply for a loan, remember that your lender will likely perform a hard credit check on your account. A hard credit check is also called a hard pull, and it temporarily lowers your credit score. When you have too many hard pulls within a short time, it would seem you are applying for loans you can't afford. When approved, you can gradually restore your credit score by making prompt payments on the loan.
Where can I get a personal loan with bad credit?
Online personal loans for bad credit: Applying for a personal loan online with bad credit is easier and usually 100% remote. Online platforms usually have customer-friendly features, like prompt funding, and you can also be given tips on improving your credit. You would be required to submit an initial loan application and then compare offers from available lenders.
Credit unions: Credit unions are one of the best options for a loan with bad credit, but you have to be a member of the institution to apply. Credit unions usually consider your loan history as a member to grant your request; as such, having a good relationship with the union improves your chances of approval.
Banks: Some banks offer personal loans. You can especially get personal loans from a bank you already have a working relationship with. You would need to visit the bank's local branch to go through the application process required to obtain a loan.
How long does it take to get my personal loan for bad credit?
The time it takes to get your personal loan upon request varies from lender to lender. Online lenders are usually the fastest option than credit unions and traditional banks. Depending on your lender, you should expect the following funding times:
-
Online lenders: Less than two working days.
-
Credit unions: Between one to seven working days.
-
Banks: Between one to seven working days.
There are things you could do as a borrower to avoid unnecessary delays in receiving your funds. These include:
-
Fill out your loan application as accurately as possible.
-
Provide the necessary documentation in time.
Significantly, some lenders which cooperate with CreditYelp provide fast personal loans with quicker funding times that could be as soon as the same day or the next.
Types of bad credit loan
Your loan options for bad credit are not just limited to traditional personal loans. There are other varieties of loans you have access to. Compare these options and their pros and cons to find the one that fits your need.
# Secured personal loan:
These loans require collateral like your home or car to be granted. A secured personal loan usually has a more favorable interest rate and loan term because the lender owns your asset and thus is at less risk if you fail to repay the loan.
Pros
- Easier to qualify for
- Better rates offer
- Suitable for borrowers with bad credit
Cons
- You need collateral to qualify
- Risk of losing your asset if you default on the loan repayment
Secured loans help people with bad credit have access to loans with a better APR. You can consider it if you've exhausted your loan options and have acceptable collateral. However, weigh the option of the possibility of losing your assets if you default on the loan.
# Unsecured personal loan:
These loans do not require collateral to be granted. The lender relies on other factors like your credit history, cash flow, debt obligation, and income to determine your eligibility.
Pros
- You don't need assets to qualify
Cons
- A bad credit score reduces the chances of approval and good interest rates.
- Loan default can affect your credit score adversely
- Less favorable rates when compared to secured loans
Unsecured loans are one of the best personal loan options to apply for, but it is difficult to qualify for or get a favorable interest rate with bad credit.
# Co-signed personal loans:
With this type of loan, a co-signer jointly signs with you to obtain better terms based on their creditworthiness. A co-signer has no access to the loan funds and information about your payment. Nonetheless, they take full responsibility for repaying your loan if you default because your debt is in their name.
Pros
- Access to higher loan amounts with lower interest rates.
- Suitable for borrowers with bad credit
- The borrower exclusively owns the loan
Cons
- Loan default affects your credit score and that of your co-signer
Co-signed personal loans allow you to take advantage of your co-signer's good credit to obtain a loan. Ensure your co-signer is fully aware of the agreement, and try not to default on the loan so that their credit scores are not affected negatively.
# Joint Personal Loans:
These loans are similar to co-signed loans because more than one person will be registered on the loan documents. If you have a bad credit score, you can get the support of a loved one with higher credit to obtain a joint personal loan.
Pros
- Suitable for borrowers with bad credit
- Access to higher loan amounts and better terms
- You both build your credit score if you don't default
Cons
- Loan default affects your credit score and that of your co-borrower.
- Can increase both parties' debt burden
With this loan, both the borrower and co-borrowers have the financial responsibility to repay the joint loan. Make sure there is a plan to repay the loan promptly to avoid further weakening your credit score.
# Cash advance:
A cash advance is a small, short-term loan that can be obtained from your credit card company. The amount requested can be withdrawn from the total balance available on your credit card.
Pros
- No credit check, thus it is suitable for borrowers with bad credit
- Quick, easy, and suitable for urgent financial needs
Cons
- There may be fees attached
- Higher interest rate compared with the usual credit card purchases
- The loan must be repaid within a short time.
This is an easy and good loan option for emergencies because collateral is not needed, and little paperwork is involved. However, the high-interest rates and fees and short time frame are downsides to consider.
# Payday loans:
These are short-term loans of $500 or less, usually due to being paid by your next paycheck. Payday loans have extremely high fees in exchange for quick cash.
Pros
- No hard credit check, thus suitable for borrowers with bad credit
- Quick to obtain
Cons
- Sky-high rates and fees as high as 400% APR
It is best to avoid this type of loan because the extreme rates and fees are likely to put you into more debt.
# Car title loans:
Car title loans are short-term loans granted to borrowers who use their vehicle's title as collateral to obtain the loan. The amount granted is usually between 25% to 50% of the value of your automobile, and it is payable within 30 days after receiving the loan. If you default on the loan, your lender will repossess your vehicle.
Pros
- No hard credit check, thus suitable for borrowers with bad credit
- Quick loan
- You can use your vehicle while it serves as collateral
Cons
- High-interest rates and excessive fees
- Risk of losing your asset if you default on the loan repayment
With this loan option, you are at risk of losing your vehicle, so it is good to consider it carefully before applying for it.
# Bank agreements:
You can obtain a bank agreement if you have a good relationship with your bank. It can be in the form of a short-term loan or a minimal overdraft on your account.
Pros
- A short-term solution to access a small amount of cash
- It doesn't depend on your credit score
Cons
- It depends on your banking history.
You stand a good chance of obtaining a bank agreement only if you have a strong relationship with your bank and if your bank has this offer available. You can contact your bank to know their policies on bank agreements.
# Home equity loans for bad credit:
These loans allow you to use your home as collateral for a loan. The loan is disbursed in a lump sum, and you must repay a fixed amount in monthly installments.
Pros
- You can get a huge sum of money upfront
- You have a fixed amount to repay over the life of the loan
Cons
- Risk of losing your home if you default on the loan repayment
You can apply for this loan if you need much money at once for good reasons like debt consolidation or home improvement projects. However, keep the risk of losing your home in mind.
# Home equity line of credit (HELOC) for bad credit:
These loans are similar to home equity loans because your home is used to secure it. However, they function similarly to credit cards. With HELOCs, you can borrow up to the limit of your home's equity, and you will have to repay the amount you took out.
Pros
- Lower interest rates
- You can borrow as high as the value of your home equity
- You repay only what you spent
Cons
- You need collateral to qualify
- Risk of losing your home if you default on the loan repayment
HELOCs are a good option if you need a loan, but they have variable rates. Shop around for lenders with the best interest rates.
# Student loans for bad credit:
You can apply for a student loan if you have bad credit but are preparing for college. These loans cover tuition, room, textbooks, and board expenses. Many personal loan lenders do not provide funding options for education. You would have to carefully search out those who do.
Pros
- You can afford college
Cons
- It is usually expensive
- Few lenders available
- Defaulting can greatly affect your credit score.
Student loans can be obtained for students who need funds for their education. If you have poor credit, you might need a cosigner to apply for them.
# Installment loan:
Installment loans include personal loans. It is a type of loan that allows you to borrow a lump sum of money upfront and pay it off with time. You usually have a fixed amount to pay for a specified number of months.
Pros
- Affordable terms
- Lower interest rates
Cons
- Late payments can damage your credit score
Installment loans are flexible options, and you can build your credit when you pay off your debt in time.
# Peer-to-peer (P2P) loan:
This is a loan that investors instead of lenders fund. While the requirement for this loan varies, your credit would not be closely scrutinized like other lending institutions.
Pros
- Lower interest rates
- Available offers for bad credit holders
Cons
- Less protection compared with traditional lenders.
A Peer-to-peer loan is an option you can consider because it can offer larger loan amounts and longer repayment terms for various purposes.
What can I do to improve my credit so I can get a better loan?
Review Your Credit Reports: It is very important for you to check your credit reports from Equifax, Experian, and TransUnion to dispute any mistakes or errors on them to improve your credit score.
-
Stay on top of payments: Paying your loans on time greatly affects your score. Ensure to avoid late payments, loan defaults, foreclosures, or anything that makes you appear as an irresponsible borrower to help improve your credit.
Lower your credit utilization rate: You should aim to pay down your credit balances to lower your utilization rate and increase your credit score. It is a great practice to keep your utilization rate below 30%.
-
Don't apply for new accounts too often: Applying for a new credit too often records multiple hard queries on your report. A hard inquiry will be on your credit report for up to 2 years, which can negatively impact your credit score.
-
Keep Old Accounts Open: If you have an old account you are not using, still keep it open. Closing a credit account while there are balances in other accounts can lower your credit.
-
Consider Consolidating Your Debts: If you have a couple of outstanding debts, you can consolidate them and pay them off as one. Debt consolidation helps improve your credit utilization rate and your credit score consequently.
-
Use Credit Monitoring to Track Your Progress: When you use a credit monitoring service, you are informed about how your credit score changes over time. Many credit monitoring services keep you up to date with your credit report. They also help protect you from identity theft.
How to tell bad credit loan scams
The lender isn't registered in your state: Every lender and loan broker is required by the Federal Trade Commission (FTC) to be registered. Any lender not registered in your state is probably a scam.
-
The lender has no physical address: Avoid any lender with no physical location. You should also verify any given location to be sure it is not a vacant space.
The lender guarantees approval: Stay away from lenders that guarantee approval without an interest in looking at your credit history to determine your creditworthiness.
-
The lender demands a prepaid card or another payment upfront: Any lender that requests prepaid debit cards, gift cards, or banking information is a big red flag. Although a legitimate loan lender may charge a fee for your application, it would be deducted from your loan.
-
The lender calls, writes or knocks: If you are offered a loan via a call, a letter, or a door-to-door solicitation, you should be alert and ignore such. The FTC has made it clear that it is illegal for a company to offer a loan via phone in the U.S. Also, ignore solicitations and reach out to your lender via their secure customer hotline or website instead.
-
The lender pressures you to act immediately: A lender that puts pressure on you to sign for a loan is a red flag. Avoid the ploy of making a rash decision, and take time to do your research before applying for a loan.
-
The lender is not transparent about its fees: Loan fees should be disclosed to you upfront before you sign any document. Lenders that avoid making their fees clear are illegitimate and untrustworthy.
-
It sounds too good to be true: Any loan offer that sounds too good to be true is most likely a scam, and you should stay away from such.
FAQs
The amount you can borrow with bad credit varies from lender to lender. It depends on the kind of loan you choose and other factors beyond your credit score. However, personal loans vary from $1000 - $50,000.
No-credit-check personal loans do not exist. However, you may see predatory loans with sky-high interest rates or/and unfavorable terms. For example, payday loans do not require a credit check, but they are:
-
High risk
-
Very expensive
-
They have APRs as high as 400%
-
They easily trap you in a cycle of debt
The best and easiest types of loans to get with bad credit are secured, joint, and cosigned loans. Payday loans or pawn shop loans are also very easy to get, but be wary of them because they have steep interest rates.
Personal loans are a type of installment loan, and they affect your credit report and your credit score. If you already have revolving credit in your profile, adding a personal loan will strengthen your credit mix, thus boosting your credit score. A personal loan will strengthen your credit over time if you consistently make your payments when due. However, failure to do so will make your credit score even worse.
Predatory lending refers to any fraudulent and unfair lending practice that takes advantage of people with low credit scores (under the guise of providing emergency payday loans) to take out loans with extremely unfavorable terms. Such loan offers have high fees and interest rates that could ultimately launch a borrower into a debt cycle.
Summary
This article is an ultimate guide on all the necessary things about personal loans for bad credit. It explains what a bad credit score is, how it affects your personal loan application and the factors that contribute to a bad credit score.
It also teaches you how to prepare for a personal loan and choose a bad credit loan lender with an offer that best suits you. Furthermore, it informs you on how to improve your credit to get better loans and how to identify illegitimate bad credit loan lenders.
CreditYelp is your trusted broker to find suitable lenders that grant bad credit loans. We are committed to making your loan journey easy!
Related Post
About the Author
PERSONAL FINANCE EXPERT CONTRIBUTOR, LEAD EDITOR