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If you’re looking for a personal loan but have less-than-perfect credit, it may be tough to find an affordable option.
That doesn’t mean you should give up. If you need the money for a true emergency expense or other use, you can find lenders that offer personal loans for bad credit. (For example, FICO defines a “poor” credit score as anything below 580.)
But beware: In some cases, personal loans targeting those with bad credit can have annual percentage rates, or APRs, that are much higher than the average personal loan, so you’ll want to be selective and compare multiple lenders whenever feasible.
And before you accept a personal loan, it’s important to compare offers for their APRs, fees, loan terms and monthly payments as well as for transparency. You deserve and need to know what you’re getting into.
The lenders we’ve picked as the best personal loans for bad credit either offer prequalification options that let you preview your estimated rate without a hard inquiry on your credit reports or don’t check your credit. If you officially apply, the lender may pull a hard inquiry at that time, and your final terms may change.
Also keep in mind that these loans are not necessarily available in all states.
Considering a personal loan?Check Approval Odds
- Best for auto-secured loans: OneMain Financial
- Best for co-signers: Mariner Finance
- Best payday loan alternative: OppLoans
- Best for building credit: MoneyLion
- Best for quick loans: Possible Finance
- Best for no-interest loans: Earnin
- Best for short-term loans: Afterpay
- Best for financial resources: NetCredit
- Things to know about personal loans with bad credit
- How to get the best personal loan for bad credit
- Our methodology: How we picked these loans
Best for auto-secured loans: OneMain Financial
Here’s why: Auto-secured loans from OneMain Financial typically have lower interest rates than the company’s unsecured loans. But they come with costs, including origination, late and insufficient funds fees that may increase the amount you have to repay. There’s no prepayment penalty for paying off your loan early.
Loan amounts range from $1,500 to $20,000, with repayment terms of two to five years.
Read reviews of OneMain Financial to learn more.
Best for co-signers: Mariner Finance
Here’s why: Mariner Finance allows you to get a personal loan with a co-signer. If your co-signer has a strong credit history, applying for a personal loan with them may help you qualify or snag a lower interest rate.
The company also considers applicants who have filed for bankruptcy, subject to underwriting requirements. Loan amounts range from $1,000 to $25,000. (Amounts and terms may differ on Credit Karma.)
Read reviews of Mariner Finance to learn more.
Best payday loan alternative: OppLoans
Here’s why: Payday loans have notoriously high rates and short repayment timelines — and they don’t contribute to your credit history. With a personal loan from OppLoans, the company reports your payments to the credit bureaus.
You don’t have to repay what you borrow on your next payday — repayment terms range from nine to 18 months. And interest rates are lower than payday lenders (but higher than traditional lenders).
OppLoans offers loans ranging from $500 to $4,000. (Terms may differ on Credit Karma.) There are no origination or prepayment fees, and the company uses factors other than your credit history to make lending decisions.
Read reviews of OppLoans to learn more.
Best for building credit: MoneyLion
Here’s why: MoneyLion offers credit-builder loans of up to $1,000. The company reports loan payments to the three main credit bureaus, helping you establish a positive payment history when you pay on time. You must pay a monthly subscription fee of $19.99 to get a credit-builder loan, but you can earn rewards to offset the fee.
With most credit-builder loans, you must wait until you make all your payments to get your money. With MoneyLion, you get a portion of your loan proceeds upfront, and the company puts the rest in a credit reserve account that you can access at the end of your loan term.
Read our full review of MoneyLion to learn more.
Best for quick loans: Possible Finance
Here’s why: Possible offers the option to borrow up to $500 “instantly” and pay back your loan in four installments. The lender says it usually disburses funds within just minutes (but that it may take up to five days).
Possible isn’t available in all states, so check if it’s offered where you live before you apply.
Read reviews of Possible Finance for more info.
Best for no-interest loans: Earnin
Here’s why: Earnin is an app that provides interest- and fee-free cash advances of up to $750 per pay period, using your next paycheck as collateral. Using Earnin doesn’t affect your credit, but to use the app you need a steady paycheck, direct deposit into a checking account and a fixed work location.
If approved, you may be able to get your money on the same day. Otherwise, it’ll be available in one to three business days. The amount you borrow is automatically deducted from your checking account on your next payday.
Read our full review of Earnin to learn more.
Best for short-term loans: Afterpay
Here’s why: Afterpay is a buy-now, pay-later app that lets you buy items in stores and online and pay for them in four interest-free installments over six weeks.
Afterpay may conduct a soft credit check, but it won’t affect your credit scores. The app doesn’t charge interest when you select the pay-in-four option, and there are no fees if you pay on time. If your payment is late, you may be charged a late fee of up to 25% of the order value.
The amount you can spend with Afterpay varies based on multiple factors, including how long you’ve been an Afterpay user, how often you use the app, your app payment history and more.
Read our full review of Afterpay to learn more.
Best for financial resources: NetCredit
Here’s why: NetCredit provides a variety of resources to help you take control of your personal finances and reach your financial goals.
NetCredit loans range from $1,000 to $10,000 with repayment terms of six to 60 months. There are no application, prepayment or insufficient funds fees. But the company charges late fees, and you may have to pay an origination fee, depending on your state.
Read reviews of NetCredit to learn more.
Considering a personal loan?Check Approval Odds
Things to know about personal loans with bad credit
Whether you want to consolidate high-interest debt, finance a home improvement or take care of an emergency cost, a personal loan may help. Here are some things to know if you’re considering applying for a personal loan with bad credit.
Compare loan terms
If you have bad credit, a personal loan may cost you more because lenders may see you as a greater credit risk. Since personal loans for people with bad credit can be more expensive, it’s especially important to compare loan terms to find the best deal. Here are a few basic terms to pay attention to.
- Annual percentage rate: APR is the total cost you pay each year to borrow the money, including interest and certain fees. A lower APR means the loan will typically cost you less. A personal loan for someone with bad credit will likely have a higher APR.
- Loan repayment terms:Your loan repayment period is the time frame in which you’ll have to repay the loan. Most personal loans require you to make fixed monthly payments for a set period of time. The longer the repayment period, the more interest you’ll likely pay, and the more the loan is likely to cost you.
- Monthly payments:Monthly payments are largely determined by the amount you borrow, your interest rate and your loan term. Make sure the payments are affordable for your budget.
- Loan minimum and maximum:Lenders usually establish a minimum amount and maximum amount they’re willing to lend. A lender may not be a good fit for you if it won’t loan you enough money or if it will require you to borrow more than you want.
- Loan fees:See if the lender charges aloan origination feeto process the loan, a prepayment penalty or a late payment fee.
Also consider the lender’s reputation, especially if you’ll be borrowing from a lender that’s marketing loans for bad credit.
TheBetter Business Bureau has information about many lenders, and you can check theconsumer complaint databasemaintained by the Consumer Financial Protection Bureau to find out if people have filed complaints against a lender you’re considering.
Should you take out a personal loan if you have bad credit?
While qualifying for a personal loan can be challenging and expensive for someone with bad credit, borrowing may make sense in certain situations.
A key question Is whether the loan option will not only help you now — but won’t hurt you financially in the long term. This can depend upon the loan terms and the loan amount, as well as what you’ll use the loan for. For example, a personal loan for someone with bad credit could be helpful if …
- You have high-interest credit card debt.You could use a personal loan to pay it off. If the personal loan can help you reduce the amount of interest you’ll pay on the debt, it could save you money in the long run. Plus, it could consolidate multiple payments from different credit card issuers into a simpler single payment to one lender.
- You have unforeseen expenses.A personal loan could be a less expensive way to borrow compared to a credit card or payday loan.
In each case, the cost of borrowing can determine whether a personal loan makes sense. With a high-interest personal loan, consolidating may not be worth it if the loan doesn’t actually provide any savings.
Should you take out a loan to pay off credit card debt?
Should you consider a payday loan?
If you need money right away, need a small loan or have been denied a personal loan because of your credit, you may be tempted to try apayday loan.
A payday loan is a short-term loan for a small amount, usually $100 to $500. With payday loans, you typically give the lender a post-dated check or electronic access to automatically withdraw money from your bank account. And the loan is usually due on your next pay date, along with fees.
Depending on the state, payday lenders may charge from $10 to $30 per $100 you borrow.
A payday lender won’t necessarily perform a credit check with the major credit bureaus when you apply for a loan. While that may make it easier to get a payday loan when you have bad credit, the high cost could make it difficult to repay.
High-cost payday lending is prohibited in some states. Other states set limits on how much payday lenders can loan, maximum loan terms and finance charges.
Before applying for a payday loan, explore all other alternatives first, such as borrowing from a credit union, signing up for overdraft protection on your bank account or working with a consumer credit counseling service to work out a payment plan with creditors.
What can you do if you’re denied a personal loan?
If you’re denied a personal loan with bad credit, you have some options.
- Look for borrowing alternatives.If a national bank has denied you, an online lender or credit union may be willing to offer you financing. If you can qualify for a credit card, look for a card with low promotional rates.
- Build your credit.Your scores can go up over time if you pay at least the minimum on your monthly bills on time, establish a positive payment history and pay down your debts so that yourcredit utilization rateimproves. You should also check your credit reports for potential errors since a mistake on your credit reports could affect your scores.
If you’re denied credit because of information in your credit reports, you should receive what’s called anadverse action noticefrom the lender, giving you an explanation. This can help you understand why you were denied and inspire you to comb through your credit reports and see where your credit stands.
How to get the best personal loan for bad credit
Getting a personal loan when you have bad credit is possible, but you may have fewer options and receive less favorable terms than someone with good credit. So it’s essential to weigh your choices carefully. Here are a few things to know about your options.
What kind of personal loan can you get with bad credit?
It depends. Some options include personal installment loans, cash advances, payday loans and buy-now, pay-later apps. But many factors affect the type of loan you qualify for, including your credit score, income, employment history, outstanding debt, collateral, loan purpose and loan term.
Because different lenders have different eligibility requirements, the only way to know what type of loan you can qualify for is to apply.
Can I get a personal loan with a 500 credit score?
Generally, it’s easier for people with higher credit scores to qualify for a loan. But you may be able to get a personal loan even if you have poor credit. Applying with a co-signer who has good credit or a lender that markets to people with bad credit may improve your chances of qualifying.
What is the easiest type of loan to get with bad credit?
It depends on your finances and the lender. Here are a few loan types to consider if you have bad credit.
- Installment loan — Some personal loan lenders offer installment loans to people with bad credit. If you qualify, you’ll likely pay higher interest rates than someone with good credit — but it’ll probably still be less than you’d pay with a payday loan.
- Cash advance — Getting a cash advance through an app like Earnin or Dave may be a good option if you only need a small sum to tide you over until your next paycheck. These companies don’t check your credit, but you must meet the eligibility requirements to use the apps.
- Buy-now, pay-later apps — If you qualify, you can use a BNPL app to purchase items you need and pay for them over time. Since you’re taking on additional debt, it’s best to use these apps only for must-have purchases.
- Payday loans — Payday loans may be attractive because lenders don’t check your credit history, but they’re expensive. A typical payday loan may have an APR of 400%, and the short repayment timeline often traps borrowers in a cycle of debt that’s difficult to escape.
Our methodology: How we picked these loans
When we looked for the best personal loans for bad credit we considered factors such as ease of the loan application process, interest rates, fees, loan amounts offered, loan terms and lender transparency.
Considering a personal loan?Check Approval Odds
About the author: Jennifer Brozic is a freelance financial services writer with a bachelor’s degree in journalism from the University of Maryland and a master’s degree in communication management from Towson University. She’s committed… Read more.
