Best bad credit loans: Nine lenders for borrowers with poor credit

Qualifying for a personal loan can be difficult if you have poor credit or a short credit history. But it’s possible to find loan providers that have flexible lending criteria and offer a good product.

Bad credit loans are available for borrowers with no credit, fair credit or poor credit. These loan providers often have a simple application process and quick funding timelines, and they cap their rates under 36%.

Best personal loans for bad credit

Our top recommendations for bad credit loans

PenFed Credit Union / Best for: Low APR

Low APR

Penfed Personal Loan Money

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Low APR

Penfed Personal Loan Money

APR

8.49% to 17.99%

Fees

Late fee of $29

Term

Up to 60 months

PenFed offers a lower APR range than many of its competitors. PenFed also charges no origination fee, further saving you money on the loan. These features can help you save money on both the upfront and long-term costs of the loan, though you should compare offers across multiple providers to make sure you’re getting the best deal.

Credit unions typically require consumers to become members before applying for financial products, and PenFed is no different. Non-members can check rates and apply for a personal loan, but you’ll need to become a member if you want to submit the official application. Membership is available to anyone who opens a savings account with at least $5.

PenFed has earned a strong reputation; it has an A+ grade from the Better Business Bureau and a Trustpilot score of 4.4 out of 5 stars.

Upstart: Best for borrowers with a thin credit file

Thin credit file

Upstart Personal Loans

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Thin credit file

Upstart Personal Loans

APR

6.40% to 35.99%

Fees

0% to 8%

Term

36 or 60 months

While Upstart does review your credit profile when making a lending decision, it’s possible to qualify for one of its personal loans with no credit history or poor credit. The company uses advanced underwriting software to review alternative data — like education, work experience and employment — to help qualify borrowers. However, you may have to pay a higher interest rate if you have a lower credit score.

Upstart earned a near-perfect 4.9 out of 5 stars on Trustpilot, where users overwhelmingly give positive reviews of the company. However, Upstart has collected more negative reviews on the Better Business Bureau’s website, where users cite problems like delays in applying payments to the loan.

Upgrade: Best for long repayment terms

Long repayment terms

Upgrade Personal Loans

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Long repayment terms

Upgrade Personal Loans

APR

8.49% to 35.99%

Fees

Origination fee, 1.85% - 9.99%

Term

24 to 84 months

Upgrade offers personal loan terms ranging from 24 to 84 months, which is the longest repayment term on this list. Loans with longer terms typically come with smaller monthly payments because those payments are stretched over a longer time frame. So this financial institution is a good fit if money is tight and you need the flexibility of a lower payment. Just keep in mind that long loan terms also mean you’ll typically pay more interest over the life of the loan compared to a shorter term.

Other features we like include strong Trustpilot reviews that point to a quick application and funding process. However, the origination fees can heavily eat into the amount you receive.

LendingPoint Best for: Rate drop

Rate drop

Lending Point Personal Loans

Rate drop

Lending Point Personal Loans

APR

7.99% to 35.99%

Fees

Up to 10% origination fee

Term

24 to 72 months

Some bad credit personal loans come with higher interest rates as a way to reduce the lender’s risk. But LendingPoint will review your account and potentially lower your rate if you’ve made on-time payments in full for at least six months. This feature can help you save money on interest costs if you qualify.

LendingPoint also looks at factors beyond your credit score when reviewing your application, which may help you qualify for a personal loan even when you have poor credit.

Customer service reviews for LendingPoint are mostly positive on third-party websites. The company earned a Trustpilot score of 4.8 out of 5 stars and an A+ grade with the Better Business Bureau. The company has welcomed back repeat borrowers who were satisfied with the timely process and strong customer service.

Happy Money: Best for paying off credit card debt

Paying off credit card debt

Happy Money

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Paying off credit card debt

Happy Money

APR

11.72% to 17.99%

Fees

Origination fee, 1.50% - 5.50%

Term

24 to 60 months

Happy Money’s loans are specifically designed for borrowers looking to pay off credit card balances, so it’s a good choice for borrowers with this type of debt. The provider’s interest rates are generally lower than what you may be paying on a credit card balance, which can help you save on interest costs.

But there are a few downsides to working with this company. It may take up to six business days to receive your funds if approved, and the company has received average reviews on third-party websites like Trustpilot. Some users say it’s difficult to make additional payments toward the loan principal.

Avant: Best for early repayment

Early repayment

Avant

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Early repayment

Avant

APR

9.95% - 35.99%

Fees

Administration fee, 4.75%

Term

12 to 60 months

While Avant charges an administration fee of up to 9.99%, it’s possible to get some of the fee back in your pocket. Avant says fees that exceed 5% of the initial loan amount may be refundable on a prorated basis if you repay the loan in full earlier than scheduled. (There are no prepayment penalties, either, so you won’t get dinged for early repayment.) This feature can help motivate you to pay off the loan ahead of schedule and therefore save money on interest.

However, Avant isn’t available in all states and won’t allow co-signers or co-borrowers on the loan.

The company earned an A grade with the Better Business Bureau and a Trustpilot score of 4.6 out of 5 stars.

LightStream: Best for its “Rate Beat Program”

Rate beat program

LightStream

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Rate beat program

LightStream

APR

7.49% - 25.49%

Fees

None

Term

24 to 144 months

High minimum loan amount.

LightStream has a Rate Beat Program that promises to beat a competitor’s interest rate by 0.1 percentage points if you can show you were recently approved for a similar loan with that financial institution. Though it’s a relatively small discount, the rate beat program can help you save money on interest over the life of the loan — especially for large amounts with a high interest rate. LightStream also offers some of the longest repayment terms in the industry — up to 144 months — although only on some of its personal loans.

If you check third-party review websites, you’ll notice a high volume of negative feedback. Some of those reviews mention scammers impersonating the company, which isn’t a reflection on LightStream. But some Trustpilot users mention difficulties getting approved for a loan even with good credit or getting prequalified and then having their official loan application rejected.

LendingClub: Best for co-borrowers

Co-borrowers

Lending Club Personal Loan

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Co-borrowers

Lending Club Personal Loan

APR

9.57% to 35.99%

Fees

3% - 8% origination fee; late fee

Term

24 to 60 months

LendingClub allows you to apply with a co-borrower, which may improve your chances of qualifying for a personal loan if you have poor credit. A joint application may also help you receive a lower APR and potentially pay a lower origination fee.

But you’ll need to pay attention to LendingClub’s restrictions on how you can use the loan funds. You can’t use the personal loan to pay for higher education, investments or (unsurprisingly) any illegal activity.

LendingClub earned an A+ grade with the BBB and a Trustpilot score of 4.7 out of 5 stars.

OneMain Financial: Best for secured loans

Secured loans

OneMain Financial Personal Loans

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Secured loans

OneMain Financial Personal Loans

APR

18.00% - 35.99%

Fees

Late fee; origination fee of either $25 - $500 or 1% - 10% of the loan amount

Term

2 to 5 years

OneMain Financial offers both unsecured and secured personal loans, which gives you more options when you have a spotty credit history. Putting up collateral improves your chances of qualifying and may give you access to lower rates, lower payments or larger loan amounts. OneMain says borrowers can receive their funds within an hour of closing on the loan, as long as the applicant uses a special bank-issued debit card.

The loan provider has also received thousands of positive Trustpilot reviews that cite professionalism across the entire application and funding process. It received a score of 4.8 out of 5 stars based on an eye-popping 62,000 reviews.

How we chose the best bad credit loan providers

Qualifying for a personal loan can be difficult if you have poor credit or a short credit history. So we chose loan providers that offer flexible lending criteria and offer a good product. The financial institutions on this list:

• Either have no minimum credit score requirement or accept applicants with credit scores in the poor to fair range.
• Cap their APRs under 36%, keeping the loans relatively affordable.
• Offer several loan term options.
• Set medium-high loan limits, which ensures you can borrow enough for your expenses but won’t go too far into debt with the loan.
• Have a strong reputation for customer service.
• Fund their loans quickly.

Choosing the best loan provider: Where to begin

Your loan provider is an important piece of the puzzle when you’re looking to take out a personal loan. Here are a few steps you can take to find one that meets your needs:

• Check the provider’s reputation: Third-party review websites like Trustpilot can tell you a lot about how the company handles complaints and whether users are generally satisfied.
• Look through the lender’s offerings: Visit the company’s website to check loan limits, APR range and loan terms to see if the lender has what you need. Also, check whether the lender restricts how you can use the loan and whether it charges fees — and which ones may apply to you.
• Do a prequalification: It’s helpful to know whether you fit the lender’s general qualifications before you apply for the loan. Look for an online prequalification tool where you enter a few pieces of information and consent to a soft credit pull that won’t affect your credit. The lender uses this information to determine your offers.

Pros and cons of personal loans for bad credit

Pros:

• More flexible lending criteria: Some personal loans have strict eligibility requirements, like good to excellent credit and a minimum income. But bad credit loans are designed for people with fair to poor credit. The financial institution may consider other factors, like your employment status or education history, to make a lending decision.
• Relatively affordable: Interest rates on the best bad credit loans often top out around 36%. While still a high APR, it’s generally accepted as the maximum limit for an affordable rate, according to the National Consumer Law Center. Other options for people with poor credit, such as payday loans, may charge triple-digit APRs.
• May help you improve your credit: Making timely payments on your personal loan may help boost your credit score, since a portion of it is based on payment history. The loan can also improve your credit mix and therefore strengthen your credit.

Cons:

• Higher fees and interest rates: Financial institutions take on more risk when they provide bad credit loans, so they’ll typically charge origination fees, prepayment penalties and higher APRs compared to traditional loans. These features can increase your borrowing costs over time.
• Collateral requirements: Some bad credit personal loans require you to post collateral to secure the loan. While this feature may help you qualify for the loan and receive a lower interest rate, you risk losing the collateral if you default on the loan.
• Lower loan limits: While some traditional personal loans may stretch up to $100,000, most bad credit loans limit borrowing amounts to $50,000 or less. This is to reduce a lender’s risk.

Types of loans for bad credit

In addition to bad credit personal loans, you may have other options for borrowing money:

• No-credit-check loans: True to its name, a no-credit-check loan doesn’t include a hard credit check as part of the application process. The financial institution may look at other factors such as proof of income to verify your ability to repay the funds. There are different types of no-credit-check loans, and some come with predatory terms such as high APRs and short repayment terms.
• Payday loans: A payday loan is one type of no-credit-check loan. These are generally small-dollar loans with very short repayment terms and one big payment due on your next payday. They typically charge triple-digit APRs and allow borrowers to delay repayment in exchange for a fee.
• Payday alternative loans: These small-dollar loans come with several borrower protections, including a maximum APR of 28%, terms of up to 12 months, and a prohibition against rollovers. They’re available at some federal credit unions.
• Credit card cash advances: Some credit cards allow you to withdraw cash against your line of credit. You may be able to get one without a credit check, but cash advances often come with a higher APR and a fee.
• Pawn shop loans: You may be able to take a valuable item to a pawn shop and get a short-term, small-dollar loan secured by the item. You’ll then repay the loan and get your pawned item back.

How to get a personal loan for bad credit

Once you’ve found a loan provider that meets your needs, follow these steps to get a personal loan:

• Submit an application: This process usually takes a few minutes. You may need to provide your Social Security number, personal details and a reason for taking out the loan.
• Upload documents: Some loan providers need proof of income, such as a paystub, and a copy of your driver’s license to verify your identity.
• Wait for a decision: The financial institution will review your application, go over your documents and check your credit profile, then determine whether you qualify.
• Receive the funds: If you’re approved, the lender may either deposit the funds in your bank account or send the money to creditors if you’re paying off debt.

Frequently asked questions (FAQs)

What's the easiest loan to get with bad credit?

When you have bad credit, it’s often easiest to get a “no credit check” loan, such as a payday loan or pawn shop loan. But these often come with triple-digit APRs, short terms and low loan limits.

Can I borrow money with a 500 credit score?

It depends. Some loan providers have flexible criteria and may approve borrowers with a 500 credit score. For instance, Upstart may accept applicants with poor credit or no credit history.

Can you get a personal loan with bad credit?

Yes, it is possible to get a personal loan with bad credit. The financial institutions on this list accept fair or poor credit, and a few of them don’t have minimum credit scores at all.

What are the risks of a bad credit loan?

A bad credit loan may come with higher interest rates, shorter loan terms and lower loan limits compared to traditional personal loans. All of these features help lower the risk to the lender.