Best Bad Credit Loans Of 2024

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, several lenders, like those on this list, are willing to loan funds to those with 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.

What Are Bad Credit Loans?

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.

Bad Credit Loan Interest Rates

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.

Bad Credit Loan Fees

Bad credit loans can be a good option when others are out of reach, but they can come with high fees. Before accepting one of these loans, understand the costs so you can manage your debt and make informed financial decisions. Common fees include:

  • Loan origination fees. Origination fees cover the costs of processing a new loan application. They typically range between 1% and 8% of the total loan amount.
  • Late payment fees. Lenders often charge a late fee when loan payments aren’t on time. The amount can vary widely, but it can be $15 to $25 or even 5% of the loan amount.
  • Prepayment penalties. Some lenders charge a fee if the borrower pays off the loan before the term ends. This fee usually is around 2% of the outstanding loan balance.
  • Non-sufficient funds (NSF) fees. If a borrower’s account lacks the funds to cover a payment, the lender may impose an NSF fee. The typical NSF fee ranges from $10 to $35 or more.

These amounts depend on the lender’s policies and the details of the loan agreement. Always read the loan agreement carefully to understand all possible costs associated with your bad credit loan.

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.
  1. Secured & Unsecured Bad Credit Personal Loans
    Traditional personal loans can either be secured or unsecured. Secured loans require you to provide something of value (also known as collateral), such as your car, savings account or home, to back (or secure) the loan. The lender can repossess the collateral if you fall behind on payments or default. This makes them less risky to a lender, which also means they tend to come with more favorable terms, like lower interest rates, and fewer qualification requirements.

Unsecured loans, on the other hand, are the more common of the two and don’t require any collateral. Because these loans don’t require collateral and therefore pose more risk to lenders, they typically come with more qualification requirements and higher interest rates. The loans on this list are all unsecured personal loans.

  1. Student Loans for Bad Credit
    If you’re trying to cover higher education expenses, a student loan for bad credit is likely the direction you want to look. Although private student loans typically require good credit, borrowers with bad credit can take out federal student loans, which don’t require a credit check. Federal loans also come with the most flexible repayment terms, including forgiveness if you work in public service or choose certain repayment plans.
  2. Auto Loans for Bad Credit
    An auto loan is a secured loan that uses your car as collateral, which means the lender can repossess your car if you fall behind on payments or default.

Similar to personal loans, auto loan qualification requirements vary for each lender and dealership. While we recommend a minimum credit score of 670 to receive the most favorable terms, you can still qualify for an auto loan with a lower score as long as you meet the debt-to-income (DTI) requirements and bring a larger down payment.

  1. Payday Loans for Bad Credit
    Payday loans are short-term, small-dollar loans (usually up to $500) that you repay once you receive your next paycheck, typically two to four weeks after you take out the loan. Many lenders don’t require a credit check, which is often enticing for people with bad credit. However, don’t get your hopes up. Payday loans come with a ton of their own risks and sky-high fees. Consider other alternatives first, like personal loans or borrowing money from friends and family.
  1. Home Equity Loans & HELOCs for Bad Credit
    If you have enough equity in your home—your home’s current market value minus your remaining mortgage balance—you may be able to get a home equity loan or home equity line of credit (HELOC). Both let you draw against your home, which means your home secures the transaction and the lender can repossess it if you fail to repay. However, home equity loans are disbursed as lump-sum amounts while HELOCs limit you to withdraw funds on an as-needed basis.

But it’s unlikely borrowers with bad credit scores can qualify for these loans. Most traditional lenders require minimum scores between 600 and 620. There might be a specialty lender or credit union that will make an exception, but it’s not common. People with scores less than 600 would have to go through hard money lenders, such as private investors or companies, not a bank. While hard money lenders are more flexible, they’re typically a more expensive route.

Where To Get a Loan With Bad Credit

There are many places you can get a bad credit loan, including:

Banks. If you have an existing relationship with a traditional bank, check to see if they’ll offer you a personal loan with your current credit score. More often than not, banks have more stringent qualification requirements than online lenders.

Online lenders. Online lenders typically have more flexible qualification requirements. However, it’s likely this will come at the expense of higher interest rates for bad-credit borrowers.

Credit unions. If you have a credit union in your area or are already a current member, consider the personal loans it offers. Many credit unions also offer special programs for people with bad credit, including payday alternative loans (PALs).

Online Personal Loans for Bad Credit

The unfortunate truth is that if you have bad credit, you may be denied for a loan from many brick-and-mortar banks and lenders. That doesn’t mean it’s not worth getting prequalified with these lenders, but you might have more success with an online personal loan for bad credit.

If you choose to go the online loan route, remember to prequalify with multiple lenders. The more lenders you check your rates with, the better your odds of finding the best loan. Since you have bad credit, this step is especially important, because you’ll likely pay a higher rate anyway. Shopping around is one of the best things you can do to get the lowest rate possible.

In-person Lenders for Bad Credit Loans

Many lenders won’t work with you if you have bad credit. Online lenders often specialize in bad credit loans, but if you need money now, in person, you’re even more limited. Here are a few places you may be able to find bad credit loans in person:

Credit unions. Credit unions are community-oriented not-for-profits that are more tolerant of bad credit and offer lower rates, although you may need to meet membership requirements to join.

Banks. It can be harder to qualify for a loan with traditional banks, but you may be able to find one in your community that will offer you a loan.

Nonprofits. Some local nonprofit organizations offer need-based loans to people with bad credit. You can search for these online or get free help finding these resources, if available, by calling 211 or visiting 211.org.
Many people turn to payday loans, auto title loans and pawn shop loans when they need to borrow cash immediately but don’t qualify for a better loan. However, it’s best to avoid these options because they often charge extraordinarily high rates that can make repayment incredibly difficult.

How To Qualify for a Loan With Bad Credit

Getting a loan if you have bad credit isn’t impossible, but it can be more difficult. Here’s what you can do to boost your chances of getting approved:

Check your credit. Check your credit reports and dispute any errors with the credit bureaus. Also, check your credit score to know which lenders could offer you a loan.

Decide if you need the loan now. If you can wait a few weeks or months, you can work to put yourself in a better position to take out a loan. Over that period, you can improve your credit.

Shop for rates and get preapproved. Check with as many lenders as possible to get preapproved for a loan. That will tell you what sort of loan you’ll qualify for and how much it’ll cost you.

Use collateral. Offering collateral, such as a car, jewelry or your savings account balance, can be a good way to boost your odds of approval if your lender accepts it. Be aware, if you default, the lender can take possession of it.

Try credit unions. Many local credit unions offer better approval odds and rates for applicants with bad credit.
How to Identify Bad Credit Loan Scams

Scammers are more likely to target borrowers with bad credit because they know they have limited options. That’s why it’s crucial to protect yourself.

Here are some warning signs of a loan scam:

  • Require you to pay fees before getting the loan
  • Advertisements for “no credit check!” or “bad credit is OK!”
  • Unsolicited phone calls from someone offering you a loan
  • Fees are undisclosed before you apply
  • Lack of reviews available online or reviews that look staged or faked
  • Lender is unable to show you their license
  • Names or correspondence with grammar errors or copied logos, such as “Wells-Fargo” or “WellsFargo” instead of the actual bank “Wells Fargo”

Alternatives to Personal Loans for Bad Credit

If you have poor credit, getting a personal loan can be challenging, and the fees may worsen your financial struggles. That said, there are alternatives to personal loans for bad credit that are worth considering. These options can offer lower rates, better terms or more flexible requirements, making them better suited for borrowers with less-than-ideal credit scores.

Credit Union Loans

Credit unions are member-owned financial institutions that often provide more favorable lending conditions than banks. They’re known for their community-focused approach and can have less-strict qualification requirements for loans. In most cases, you’ll need to be a member before you can take out a credit union loan, and membership can be limited to certain groups.

Secured Loans

A secured loan requires you to provide collateral, such as your home or car, which the lender can seize if you fail to repay the loan. The risk to the lender is lower with secured loans, which can make these loans easier to qualify for. However, the risk for the borrower is higher because failure to repay could result in the loss of the collateral.

Co-Signed Loans

If you have a trusted person with good credit willing to co-sign a loan, this can be an effective way to bypass your bad credit. With a co-signed loan, the co-signer is equally responsible for repayment. If you fail to make payments, the co-signer is also liable. This can be a good way to qualify for a loan with better terms, but it puts the co-signer at financial risk.

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.

Where appropriate, we awarded partial points depending on how well a lender met each criterion.

To learn more about how Forbes Advisor rates lenders, and our editorial process, check out our Loans Rating & Review Methodology.

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