June 15, 2024

Despite higher rates and fees, bad credit loans can still be accessible through comparison and shopping around. Generally, lenders may require credit scores over 560, but low scores can be offset with a trusted cosigner or co-borrower.

Bad credit loans are usually fixed-rate loans ranging from 7% to 36%. Qualifying applicants may experience higher rates, making the borrowing costlier. Federal credit unions with lenient credit requirements and capped interest rates at 18% are often beneficial in these scenarios.


To establish the most compatible lenders for bad credit loans, factors across five fields were considered: interest rate and fees, loan specifics such as amounts and funding timeline, eligibility criteria and loan availability, repayment terms, customer support, and consumer reviews. The focus was to encompass varied factors that potential borrowers might deem valuable.

Relevant data points included:

– 32 organizations reviewed
– 928 data points analyzed
– 29 features considered
– 35 primary data sources used

For added clarity, check out our [complete methodology](#methodology) here.

Loan Amount

These can vary from $5,000 to $100,000.

![SoFi’s logo](/cnn-underscored/money/images/uploads/2023/11/09061327/sofi-bg-e1706770583758.png?fit=cover&width=1000&format=webp#038;format=webp)

On [Credible’s Website](https://www.credible.com/personal-loan/lp/sofi?utm_source=cnn&utm_medium=referral&utm_campaign=sofi&preferred_lender=sofi-personal_pl&utm_content=).


Why it’s notable: While many lenders set low maximums for poor credit loans, Upgrade allows applications for up to $50,000. It has a low requisite credit score of 580, and provides room for co-borrowers, which facilitates better rates. You can repay your loan in up to seven years.

However, Upgrade’s loans come with origination fees as high as 9.99% of the amount – common for poor credit lenders, but quite high. Late payments bear a $10 late fee. The APR could be as high as 35.99%, which may prove challenging for some borrowers.

Pros include:

– Joint loans available
– Longer repayment terms available
– Next-day funding available
– Available nationwide
– Rate discount for direct creditor payments during debt consolidation

While cons include:

– High origination fees (up to 9.99%)
– High maximum APR (up to 35.99%)

Ideal for borrowers with credit scores above 580 who have not found a more affordable lender.

Navy Federal Credit Union

Best for military families.

![Navy Federal’s logo](/cnn-underscored/money/images/uploads/2023/11/09104401/navy-federal-e1714714635601.png?width=1000&fit=cover&format=webp#038;fit=cover&format=webp)

### FAQs

1. What is a Bad Credit Loan?

A bad credit loan is a type of personal loan offered to borrowers with weak, bad, or no credit. They are offered by various banks, credit unions, and online lenders.

2. What does the “origination fee” in a loan mean?

The origination fee in a loan is more of a processing fee that lenders charge borrowers for processing a new loan application, used as compensation for putting the loan in place.

3. Why are federal credit unions more beneficial for bad credit loans?

Federal credit unions are often more beneficial for bad credit loans as they tend to have relaxed credit requirements and cap their interest rates at 18%, which can make borrowing less expensive compared to other sources.For military personnel, either on active duty or retired, veterans, staff from the Department of Defense, or family members of these groups, Navy Federal Credit Union is a great place to get a personal loan. Their loan minimum is one of the lowest, needing you to only borrow $250. Their interest rates are quite competitive at a maximum of 18.00% annual percentage rate (APR), and they don’t charge origination fees or penalties for early repayment. In some instances, you could receive your funds on the same day you sign your loan agreement. However, a major disadvantage is the lack of a pre-qualification tool, which means one must undergo a hard credit check, temporarily decreasing your scores.

* Low rates
* No origination fees
* Same-day funding available
* Joint loans available

* Qualifying credit union membership needed
* No pre-qualification option
* No autopay discount
* Unclear eligibility criteria

Then, there’s the Upstart option, especially for students with no credit. This company allows borrowers with scores as low as 300 which is a significant advantage if you don’t have a credit score, but you must be a student. If you lack a credit score, you’ll have to provide evidence of enrolment or graduation from school with at least an associates or bachelor’s degree. Their loan amounts are up to $50,000 and you could have your loan within a day, assuming you meet specific criteria. Despite all these, Upstart can charge as high as 12% in origination fees, one of the most expensive costs in the market.

* Accepts borrowers with no credit scores
* Lower potential APRs
* Range of loan amounts
* Possibility of next-day funding
* Transparent eligibility criteria

* High maximum APR (up to 35.99%)
* Limited duration for repayments
* High origination fees (up to 12%)
* No cosigners or co-borrowers allowed
* Not available in certain states

PenFed Credit Union also has some competitive offerings, particularly if you’re applying with a co-borrower. They have low rate loans with no origination fees, making them quite appealing to borrowers with poor credit. Their APR is capped at 18% by the National Credit Union Administration, making them an attractive offer compared to banks or online lenders.

### FAQ

#### What is the loan minimum at Navy Federal Credit Union?

The loan minimum at Navy Federal Credit Union is just $250, this is very low compared to many lenders which often require you to borrow $2,500 or more.

#### How does Upstart help students with no credit?

Upstart can work with borrowers who have credit scores as low as 300. Importantly, even without a credit score, they can accept your loan application as long as you’re a student, enrolled or graduated from a certified school.

#### How does PenFed Credit Union help borrowers with poor credit?

Loans for borrowers with poor credit at PenFed Credit Union offer competitive rates and no origination fees. Applying with a co-borrower can be advantageous to access these lower rates if your credit scores are poor.PenFed Credit Union is an excellent loan option for individuals in the 50 states and D.C., as long as they are members of the credit union. Joining is straightforward, and you just need to open a savings account and deposit a minimum of $5. However, bear in mind that loan funds might take a few days to disburse and that the maximum repayment period is only 60 months.

Pros of using PenFed Credit Union include:
– Low rate options
– Acceptance of co-borrowers and cosigners
– The absence of origination fees
– Established branches in multiple states
– Nationwide availability

There are some cons, such as:
– You have to pay a small fee to join the credit union
– Funding may take longer than some others
– Credit requirements aren’t publicly disclosed
– No discounts for autopayments
– Repayment terms are shorter

Next up, Prosper is a great option for those interested in peer-to-peer loans. They have a quick turnover, disbursing funds as early as the next business day post-approval. However, because of the peer-to-peer system, approvals may take longer. Borrowers with credit scores as low as 560 can apply.

For Prosper, the advantages are:
– Accessible eligibility criteria
– Authorizes co-borrowers
– Rapid loan funding
– Provides pre-qualification queries

While the cons include:
– Origination fees may be charged
– Potential slow approval procedure
– Not accessible in Iowa or West Virginia
– Absence of autopay discounts

OneMain Financial could be a good choice for those in urgent need of funds, offering loan disbursements as quickly as an hour after approval. However, they do not state a minimum credit requirement. Also, borrowers could opt to secure their vehicle as collateral in case of repayment difficulties. Origination fees (of up to 10%) and high APRs are charged. Some could still face loan restrictions based on their location.

Their pros:
– No stated minimum credit score
– Rapid fund disbursement post-approval
– Provision for a secured loan option
– Pre-qualification availability

And the cons:
– Unavailable in Alaska, Arkansas, Connecticut, Massachusetts, Rhode Island, Vermont, D.C and U.S territories
– High origination fees and rates
– Limited loan amounts, especially for certain states
– No autopay discounts

### FAQ

#### How does PenFed Credit Union consumer loans work for cosigners and co-borrowers?
PenFed Credit Union allows the inclusion of both cosigners and co-borrowers on their consumer loans. The addition of a cosigner or co-borrower, especially one with good credit status, may assist the borrower in securing lower rates on their loan and avoid origination fees.

#### How Quickly Can I Get Approved for a Loan with Prosper?
The approval timeline varies with Prosper due to their peer-to-peer lending model. It could take up to 5 days to receive an approval decision. If approved, the funds can be disbursed as quickly as the next business day.

#### What is the eligibility criterion for OneMain Financial?
OneMain Financial does not specify a minimum credit score requirement, making it a feasible option for people with poor credit. However, borrowers should be mindful of OneMain Financial’s high APR and origination fees. Furthermore, it’s only available in select U.S states.

Top Choice for Debt Consolidation: LendingClub

LendingClub stands out for debt consolidation thanks to its direct payment to creditors. This process fast tracks debt consolidation and discourages misuse of loan funds. Despite requiring fair credit for approval, LendingClub might still offer loans to applicants with a creditworthy co-borrower. However, keep in mind that LendingClub can charge origination fees of up to 8%. Also, repayments typically range between two to five years, and APR could go as high as 35.99%.

– Direct payments to creditors
– Accepts co-borrowers
– Pre-qualification allowed

– Maximum APR is high
– Origination fees apply
– No discounts for auto-payments
– Limited term options

LendingClub is suitable for borrowers with high-interest credit card debt who could attain a lower APR, possibly with the help of a co-borrower.

Overview of Our Picks

*Rates as of May 7, 2024
**No minimum credit score for student borrowers

The Rationale for Bad Credit Loans

– Bad credit loans are useful for emergency expenses, e.g., car repairs or plumbing services.
– They can help consolidate high-interest debt, potentially saving you money and speeding up the debt repayment process.
– Regular timely payments can boost your credit scores over time.
– Personal loans offer larger amounts compared to credit cards, allowing for the finance of larger purchases.

Understanding Bad Credit Loans

Bad credit loans are a type of personal loan targeting borrowers with poor credit, generally lower than 580 according to FICO. Although bad credit lenders usually require scores of at least 600, they often accept applications with a cosigner or co-borrower.

What is a Bad Credit Score?

According to FICO, a credit score between 300 and 579 is considered bad.

Personal Loan Interest Rates Based on Credit Score

Credit scores impact your ability to get a loan as they indicate your creditworthiness. Those with past credit issues are seen as risky borrowers and often face higher interest rates.

Is it Possible to Get a Loan with a 500 Credit Score?

Yes, it is possible, but options are limited and costs can be high. A lower credit score often results in a higher APR. Furthermore, some lenders may require collateral, like a car or savings account.

Where Can You Find Personal Loans with Bad Credit?

You can find bad credit loans from several sources, including banks, credit unions, and online lenders.

– Banks often have higher maximum loans and stricter requirements.
– Credit unions often offer lower rates and fees.
– Online lenders are often more flexible and have faster application processes.

**Frequently Asked Questions**

Please look below for more in-depth answers.

Question 1: Who Qualifies for a LendingClub Loan?

Answer: Generally, applicants with fair credit or a creditworthy co-borrower can qualify.

Question 2: Why Would I Prefer a Personal Loan over a Credit Card?

Answer: Personal loans offer a lump sum for purchases that your credit card may not have the limit for, depending on your credit score.

Question 3: What Lenders Accept Borrowers with Low Credit Scores?

Answer: Although lenders generally require a credit score of at least 600, some will accept borrowers with lower scores, particularly with a co-borrower or cosigner.
In case of quick cash requirement, a personal loan may be handy, but keep in mind that the interest rates and fees may vary a lot across lenders.

Should the urgency be with low credit scores, certain personal loan lenders accept borrowers with unpleasant financial history. They evaluate alternative credit data like payments for utilities and savings account balances. Also, punctual and full payments will gradually enhance your credit scores and help you secure better loan deals in the future.

However, some repercussions exist. Lenders tend to accommodate terms with steep interest rates and greater fees since they’re making riskier deals. This results in higher repayment costs. Plus, a challenging situation if you’re asked to apply with a cosigner, as some might not be able to meet this requirement. Furthermore, avoid lenders making assuring claims about your loan approval regardless of your credit score, or those who are aloof about their rates and fees.

Consider secured personal loans for lower interest rates – they’re established against collateral like your car. On the contrary, unsecured personal loans judge eligibility based on credit history and income. These work best for good to excellent credit scores. Secure a higher approval rate of joint personal loans by applying with someone with good credit, for instance, a relative or partner. Lastly, use buy now, pay later and cash advance for small purchases and amounts of quick cash respectively, despite their high interest rates.

Steer clear of payday, title and guaranteed loans due to their excessive annual percentage rates. Payday loans are particularly dangerous as they can trap you in a cycle of debt.

Applying for a personal loan with bad credit is a six-step process: checking your credit scores, assessing your budget, pre-qualifying with various lenders, considering a cosigner or co-borrower, gathering financial documents and finalizing the loan application.

#### Frequently Asked Questions

**What is the process to apply for a bad credit loan?**
The steps are similar to a standard loan application. Here the focus is to demonstrate that you can afford the repayments.

**What is considered a bad credit score?**
Your credit score can fall into the range of 300-850. A bad credit score is generally in the range of 300-579.

**What are alternatives to bad credit loans?**
Some alternatives to bad credit loans are credit builder loans, peer-to-peer lending, and home equity loans.
Ensure you have these documents ready before starting your loan application process:

– Your Social Security number
– Proof of income, like recent pay stubs or W-2s
– Proof of residence, like mortgage statements or rental agreement
– Your driver’s license or another government-issued ID
– A list of your current balances and creditors if you are consolidating debt
– Your bank account and routing numbers

## Submitting Your Application

You can apply for most personal loans online. It takes a few minutes to apply and requires a hard credit pull, which may affect your credit temporarily. Some lenders provide instant loan decisions, but others need more time to review your application and may require additional information. The duration to receive your loan also varies by lender and depends on your bank’s processing speed.

## How to Qualify for a Loan if You Have Bad Credit

1. Improve your credit: Work on improving your credit scores before you apply for a loan. Make timely payments and try to pay down revolving credit as much as you can. Review your credit reports and contest any errors you find with the bureau.
2. Shop around: Not all lenders offer the same interest rates. So check out multiple lenders to find the best rates. Avoid multiple hard credit inquiries by getting pre-qualified with those most likely to approve you.
3. Consider a secured loan: These loans, which are backed by collateral, are easier to qualify for and have lower interest rates than unsecured loans.
4. Try applying with a second person: Having a cosigner or co-borrower improves your chances of approval. But remember, they will also be responsible for the loan payments.
5. Borrow only what you need: Smaller loans are easier to qualify for, which increases your chances of approval.
6. Consider credit unions: Credit unions typically have relaxed eligibility criteria and lower rates.
7. Become an authorized user: If possible, gain access to a trusted family member’s credit card. Their repayment history will boost your credit scores. But be careful, as their negative actions can affect your scores too.

## Tips to Spot Bad Credit Loan Scams

Beware of scams targeting borrowers with bad credit. Be cautious if you encounter these red flags while reviewing a loan offer:

– Guaranteed approval: Any lender offering guaranteed approvals is likely not reputable.
– Requires payment upfront: Legitimate lenders don’t demand upfront payments.
– Pressure to act immediately: Scammers tend to rush borrowers, so if you feel pressured to act immediately, it’s likely a scam.

## Frequently Asked Questions

1. **What documents do I need for a loan application?**

You will need your Social Security number, proof of income, proof of residence, a government-issued ID, a list of your current balances and creditors if you’re consolidating debt, and your bank account and routing numbers.

2. **What should I do if I have bad credit and need a loan?**

Work on improving your credit scores, shop around for the best rates, consider a secured loan, apply with a cosigner or co-borrower if possible, borrow only what you need, consider credit unions, and try becoming an authorized user on a family member’s credit card.

3. **How can I spot a bad credit loan scam?**

Scams usually offer guaranteed approval, require upfront payments, and pressure you to act immediately.Paying heed to these red flags can save you from possible loan scams:

– Hasty Decision Pressure: Genuine lenders would not rush you to make hasty decision. Avoid lenders who insist on immediate loan approvals.

– Unregistered Lenders: Legitimate lenders should be registered as per FTC standards. Reject loan offers from unregistered or unlicensed lenders.

– Phone or Doorstep offers: FTC disapproves of loans offered over calls or through house visits. Consider it a warning sign if a lender contacts you directly.

– Lack of transparency: Analyze the terms and conditions of the loan thoroughly before signing up. Dodge those lenders that don’t divulge basic details like interest rates or penalties.

If you fall prey to fraud, remember to [report it to the FTC](https://reportfraud.ftc.gov/#).

## Other options to personal loans for bad credit

It’s true that bad credit loans carry more fees and higher rates. However, before you go for these loans, take time to consider alternatives.

## How this list came about – Our Methodology

Our team of editors and data researchers aimed to maintain the highest objectivity level when identifying the finest lenders for bad credit loans. We developed an unbiased comparative matrix and collected data from several sources, including lender websites and other industry-related sources, which finalized our five-star rating. Their research contributed to:

– ***Loan cost*** (25%): We aimed at lenders who provided affordable interest rates, even for individuals with low credit scores. We also considered lenders offering rate discounts for autopay or lenders allowing rate checks without altering the credit score.

– ***Loan details*** (20%): Studied the essentials of each lender’s offerings including loan amounts and funding timelines.

– ***Eligibility and loan availability*** (30%): Examined key elements like lender’s minimum salary requirements and loan availability nationwide.

– ***Repayment*** (15%): Essential factors like loan term length options and assistance for financial difficulty were prioritized here.

– ***Customer experience*** (10%): Gave importance to the seamless post-disbursement experience and lender’s customer service options.

## Frequently Asked Questions (FAQs)

### How much money can I borrow with a bad credit loan?
Depending on the lender, you can borrow from $250 up to $50k even with bad credit scores.

### How can I improve my credit for a better loan?
Bettering your credit needs time and effort. Start by analyzing your credit reports and make sure all your financial details are correctly listed. Making timely payments, reducing debt, and limiting credit applications can all improve your scores.

### Does applying for a bad credit loan influences my credit scores?
Yes, credit scores might decrease by five points because of the hard credit check cause by loan application. A new loan can increase your debt and this too can cause your scores to dip. However, regular and on-time payments can make them bounce back.