You can still get a loan on bad credit. However, you will need to be more selective and it could take more time to find a lender willing to work with you. Ultimately, you’re going to need a lender that won’t focus on your credit history while also being upfront about your rates and fees. Flexible terms couldn’t hurt but, again, we must stress diligence in finding the best bad credit loans.

For example, just because your credit isn’t good doesn’t mean you need to flock to payday lenders or title loans. In fact, you should avoid these avenues under any circumstances – bad credit or not. These and other questionable lenders could trap you in a cycle of debt. If you want to avoid common scams, check out our list and explore some more options via our compare tool!

Compare Loan Companies and Apply Online
Use the loan comparison tool below to view multiple loan options with no obligation.
Simply enter the purpose of the loan, the amount you need, your estimated credit score, and the state you reside in to instantly view loan companies available to accept your application online right now.

The Best Loans for People with Bad Credit

Bad credit means different things to different lenders. In some cases, a lender won’t consider an application from a borrower with a credit score below a certain number. For the purposes of this piece, I’m focusing on lenders who will make loans to customers with credit scores under 640. While this is considered “average” in some circles, lending criteria tightens below this mark.

The Best Bad Credit Loan Options

Best for Really Bad Credit: Bad Credit Loans

Get Started on BadCreditLoans.com’s secure website

When it comes to getting a loan with really, really bad credit, your options are limited. The loans that do exist are often of the “payday” variety: low-dollar, short-term, and high-interest loans. While a payday loan can provide much-needed cash in an emergency, high interest and fees can make it difficult to repay the loan in the short time period typically provided.

BadCreditLoans.com is not a lender itself, and instead attempts to connect borrowers with poor credit to a network of willing lenders. To apply online, you must be 18 years old, have a valid phone number and email address, provide proof of citizenship or legal residency, hold a checking account in your name, and have a regular income, whether from full-time or self employment, disability, or Social Security.

After putting in a request, you’ll wait to receive offers from their network of lenders. Keep in mind, though, that depending on your financial situation, you may not receive any offers. If you do, typical loan amounts range from $500 to $5,000 with an APR of anywhere from 5.99% to 35.99%, according to their website. The repayment terms generally range from 3 to 36 months. So, for instance, if you were to take out a $3,000 loan with a 35.99% interest rate and 24-month term, you can expect to pay $177 a month. Your principal would be around $3,173 with another $1,252 in interest — which isn’t ideal, but if you need cash fast with poor credit it is an option.

So, we’ll reiterate: Before accepting an unsavory loan offer, be sure that you have no other options, and that you can definitely pay back the entire loan when it’s due.

Reasons to Sign up

Reasons to Sign up

Reasons to Avoid

Reasons to Avoid

  • Borrowers with poor credit may still qualify for a loan of up to $1,000.
  • They will solicit offers on your behalf making it easy for you to choose the best terms.
  • Applying is free and there’s no obligation to accept any offers.
  • Most applicants can be pre-approved in as little as five minutes, according to the company.
  • There’s no guarantee you’ll receive an offer from one of their lenders.
  • Interest rates are high — up to 35.99%.
  • Bad-credit loans are generally limited to $1,000 or less.
  • Beware of renewing your loan and getting trapped in a cycle of debt.

Best Secured Bad Credit Loans: OneMain

Get Started on OneMain’s secure website

OneMain specializes in personal loans, but what makes them great for borrowers with poor credit is that they offer secured and unsecured loans. Generally, if your credit falls within the poor or bad range, you’ll need to either decrease the loan amount or look for a secured loan. Getting a secured loan means putting something up for collateral, such as a car, boat, truck, motorcycle, or more.

While loans for bad credit can range from $1,500 to $10,000, those with better credit could be eligible for loans as high as $30,000. APR also ranges from 9.99% to 35.99% and typical term lengths can be 24, 36, 38, or even 60 months. You can also visit one of their 1,600 branches in person or handle the entire application process online.

Reasons to Sign up

Reasons to Sign up

Reasons to Avoid

Reasons to Avoid

  • Ideal for borrowers with credit scores lower than 600.
  • They offer both secured and unsecured loans.
  • There are more than 1,600 branches if you’re looking for a face-to-face.
  • Received an A+ rating from the Better Business Bureau.
  • It might be difficult to nail down specific APRs and loan amounts online.
  • They only have branches in 44 states which might limit you to online correspondence.

Best Peer-to-Peer Loans: Peerform

Get Started on Peerform’s secure website

For anyone whose credit score isn’t good, but not severe, PeerForm is a peer-to-peer lender that you may want to consider. As part of their process, any application with a credit score below 600 is declined (so if you have some time, it may be worth working to raise your credit score). Because of their credit score restrictions, they’re able to offer loans ranging from $4,000 to $25,000 to potential borrowers with APRs from 5.99% to 29.99%.

One of the downsides to using Peerform, though, is that it can take up to two weeks to receive funding. So, if you need cash fast, this may not be the best platform for you. Additionally, there are fees associated with the loans, such as a 1-5% origination fee, and loans are only available to residents of 42 states.

Reasons to Sign up

Reasons to Sign up

Reasons to Avoid

Reasons to Avoid

  • APRs as low as 5.99% to 29.99%.
  • Borrowing limit up to $25,000.
  • Straightforward online information on potential APRs, loan amounts, and fees.
  • Received an A rating from the Better Business Bureau
  • You’ll need credit of 600+.
  • There is no option for secured loans.
  • You might have to wait a while for loan funding.
  • There are several fees to consider including an origination fee up to 5%.

Best Unsecured Loans: Avant

Get Started on Avant’s secure website

Avant focuses on loans for “in between” borrowers — most customers who receive loans have a credit score between 600 and 700. Unlike many online loan startups, it is not a peer-to-peer lender that relies on individual investors to fund loans, instead Avant offers access to loans through its lending platform. That’s good news if you need your funds quickly — you may even have your loan the next business day after you apply.

Loans can range from $2,000 to $35,000 with APRs between 9.95% and 35.99%. Furthermore, the loan terms offered can range from 24 to 60 months. You should also be aware of an administration fee that can range from 1.50% to 4.75%.

Reasons to Sign up

Reasons to Sign up

Reasons to Avoid

Reasons to Avoid

  • Rates range from 9.95% – 35.99% APR.
  • Loans are available in 46 states including the District of Columbia.
  • Turnaround of one business day to receive loan funding.
  • Loan amounts can range from $2,000 to $35,000.
  • Payment terms as short as two years or as long as five years are available.
  • Received A+ rating from the Better Business Bureau.
  • No option for secured loans.
  • You will need a credit score higher than 580.
  • Residents of Colorado, Iowa, Vermont, or West Virginia are out of luck.

Runners-up


The takeaways:

  • They accept applications with credit scores as low as 550
  • Loans range from $1,000 to $10,000
  • APRs start around 34% and get as high as 155%

The good thing about NetCredit is they look beyond just your credit score (sometimes accepting applications with scores as low as 550); however, that does come with a cost. Their loans range from $1,000 to $10,000 with APRs starting around 34% — and in some cases ranging as high as 155%. If your offer comes with an extremely high APR, look into other options, such as a secured loan or using a cosigner.


The takeaways:

  • Refers you to multiple lenders after just one application
  • Loans can top out at $35,000
  • Competitive APRs with several loan types

PersonalLoans.com allows multiple lenders to solicit your business after you fill out just one application. APRs are competitive and there are several types of loans, which top out at a generous $35,000. Of course, this is a referral site, so your terms, fees, and APRs will vary depending on the lenders who contact you. This kind of information can be easier to determine with a direct lender.

Bad Credit Loans: Minimum FICO Scores

Getting a loan isn’t easy when you have bad credit. Fortunately, a number of lenders offer bad credit loans to borrowers with FICO scores of 600 or lower. The Simple Dollar’s best loans for bad credit include the following lenders:

Company Credit score as low as …
1 BadCreditLoans.com 600 or below
2 OneMain 600
3 Peerform 600
4 Avant 580
5 NetCredit 550
6 PersonalLoans.com 500 or below

How Can I Fix My Bad Credit to Get a Better Loan?

  • Get to know your credit report. If you haven’t already done so, pull a free credit report. This will also let you verify that there aren’t any errors or fraudulent activity keeping your credit in the dumps.
  • Make more payments, and do it on time. Making smaller payments more frequently can help your credit score because it can show you’re using less of your available credit — a good thing for your credit score.
  • Don’t use most of your available credit, even if you pay it off on time. Your credit utilization ratio — your outstanding balance vs. your total credit limit — should be no more than 30%, but 10% or less is ideal, experts say.
  • Resist the urge to close accounts. Having credit that you actually don’t use is good for your score. Keep the account active by using it to pay a small bill from time to time. Having the same account open for several years also lengthens your credit history.
  • Take advantage of credit-building tools: Secured credit cards, for example, provide a safe way to make monthly payments. If you need to take out a loan, ask someone with good credit that you trust to become a cosigner.

Because even the most sympathetic lender won’t give you a great APR if you have bad credit, we recommend making every effort to give your credit a boost before resorting to a bad credit loan. It’s not a quick process, but the effort will be more than worth it in the long run.

What kind of loans can you get with bad credit?

Bad credit loans range from conventional personal, auto, and home loans with less-favorable terms to short-term, no-credit-check loans like payday and auto title loans. All have pros and cons, but some are a much wiser choice than others — and some should be avoided entirely.

Personal loans

Personal loans for bad credit, available through brick-and-mortar banks, credit unions, and online lenders including those profiled above, are loans made for any purpose. The amount the lender will be willing to part with varies widely based on your credit and whether the loan is secured (backed with collateral that your lender can seize if you cannot pay back the loan) or unsecured (no collateral required).

If you want to do business locally, credit unions can be a particularly good choice because they might be more flexible with their lending criteria than bigger banks – especially if you’re a longtime customer.

Experts warn against borrowing from lenders who don’t thoroughly check your credit history, repayment ability, and other financial circumstances. You should also be wary of expensive insurance add-ons that ensure the loan will be paid back if you die or become disabled.

If you have very bad credit, secured loans can be a viable option — it will be easier to qualify and you’ll receive more favorable terms, such as a higher loan amount and a lower APR. However, you must be absolutely sure you can repay your loan on time or you could lose whatever collateral you’ve agreed to use — typically, your home, car, or savings account.

Another option is getting a co-signer with better credit to sign for a loan with you. The lender will then use the co-signer’s credit to determine the terms. Of course, doing so puts the co-signer at huge risk. He or she is equally responsible for payments if you suddenly can’t afford them. If you think there’s any chance you will default, save your friend or family member the trouble of becoming a co-signer or you’ll risk their finances — and your relationship — too.

Compare Loan Companies and Apply Online
Use the loan comparison tool below to view multiple loan options with no obligation.
Simply enter the purpose of the loan, the amount you need, your estimated credit score, and the state you reside in to instantly view loan companies available to accept your application online right now.

Can you get a mortgage with bad credit?

Even after the subprime mortgage crisis, it’s still possible to get a mortgage with bad credit. Of course, your choices will be more limited. Experts say it’s wise to work with mortgage brokers who can help you evaluate your options. One of them is an adjustable-rate mortgage, which can be easier to qualify for than conventional fixed-rate loans.

One of the best places to look is the Federal Housing Administration’s loan program. Because the government backs these loans, lenders can still offer competitive interest rates while accommodating borrowers with credit scores of 580 and above. You’ll need a down payment of at least 3.5% — far less than the typical 20% required for conventional mortgages. The major downside is that you’ll pay fairly high mortgage insurance payments over the life of your loan.

Experts say one related kind of loan to avoid is a mobile-home loan. High interest rates are very common, and even if you can get one with terms comparable to those of a regular subprime mortgage, mobile homes depreciate so quickly that refinancing is difficult.

Bad credit auto loans

Bad credit auto loans are simply loans for car buyers with bad credit that have less favorable terms — generally a higher APR and a lower loan amount — than auto loans made to buyers with good credit.

There are reputable lenders who focus on bad credit auto loans that I detail in a separate post on the Best Bad Credit Auto Loans. However, beware: Unscrupulous dealers may take advantage of bad-credit customers with shady tactics including leading you to believe your credit is even worse than it is or requiring you to buy add-ons in order to get financing. In general, you also shouldn’t pay interest rates in the high double digits or sign for a loan with terms longer than five years.

Payday loans

Payday loans might be the most ubiquitous loan for people with bad credit. Unfortunately, they’re also almost always a bad deal for you.

Payday loans are typically small, usually $500 or less, and made for a short period of just a week or two before repayment is required on your next payday. They’re easy to get as long as you provide proof of income. The lender usually requires you to write a check for the loan amount plus interest that can be used for repayment. You may even give the payday lender electronic access to your account.

The main problem with payday loans is the astronomical finance charges. According to the Consumer Financial Protection Bureau (CFPB), you may pay $10 to $30 to borrow $100. If you pay $15 to borrow $100 for two weeks, that’s an APR of a whopping 400%. Many lenders allow you to pay only the interest and roll over the loan. This tempting scenario traps many low-income borrowers in a cycle of debt since they can only afford to pay back the interest.

In fact, the CFPB has found that more than a third of borrowers take out between 11 and 19 payday loans over the course of a year. A quarter owe money to payday lenders for more than 80% of the year.

Some states have cracked down on payday lenders by capping interest rates, but 32 still allow the practice unabated. Bottom line? You’re best off avoiding payday lenders if you need a bad credit loan.

Auto title loans

Do not confuse auto loans that are meant for car buyers with auto title loans. Auto title loans require you to use your car as collateral in order to get a loan that can be used for any purpose. The amount of these loans varies, but it’s usually for much less than your car is actually worth. You usually won’t need a credit check to get an auto title loan.

According to the FTC, auto title loans typically last for 15 or 30 days and have a triple-digit APR. These kinds of loans can easily trap borrowers who can’t afford to repay the loan in a cycle of debt as they continually renew the loan with interest-only payments. The CRL and Consumer Federation of America found that a borrower of a $951 auto title loan pays more than $2,000 in interest on a loan he or she renews eight times.

Many lawmakers have cracked down on auto title loans, which are now illegal in 23 states. If auto title loans are still legal in your state, beware. Like payday loans, they simply aren’t a smart choice for those with bad credit.

What is collateral, and do I need it?

Collateral is an asset a borrower owns, such as a house, car, or personal valuables, that is put up to reassure payment of a loan. If a borrower fails to pay their loan, the lender is allowed to repossess the collateral and sell it in order to make their money back.

There are two types of loans available to borrowers — secured and unsecured.

Secured is named because each loan is secured by a borrower’s collateral. Usually the item put up for collateral is specified when the loan begins. Other types of collateral are required by the type of loan. (Mortgages, for example, are always secured using the borrower’s home as collateral.)

From a lender’s perspective, loans secured by collateral are less risky. Borrowers are more likely to pay if their personal property is at stake. As a result, secured loans tend to come with lower interest rates. And borrowers are usually able to take out higher amounts of money with a secured loan.

Unsecured loans do not require any collateral. Borrowers are essentially promising lenders that they’ll be able to repay their loan in full. Lenders tend to see unsecured loans as riskier investments, so unsecured loans tend to come with higher interest rates.

Can I take out an unsecured loan with bad credit?

It is possible to take out an unsecured loan with bad credit, although your interest rates may be considerably higher than with a secured loan.

You should only consider a secured loan if you’re positive in your ability to repay. You don’t want to risk your car or your home for the sake of a loan.

Can I get a loan if I’m unemployed?

You can get certain types of loans even if you’re unemployed, but we strongly advise against considering them. Borrowing money while unemployed carries risks, and you’d probably be better off taking proactive steps to improve your credit score and generally shape up your financial situation.

There are generally three types of loans available to unemployed borrowers:

  • Unsecured loans with high interest rates
  • Secured loans with high interest rates
  • Payday loans

None of the above is a good option. If you borrow without the ability to repay, you’re putting both your financial and professional future at risk. Some organizations require a credit check as part of their hiring process. A bad or poor credit score may prevent you from getting a job.

If you’re unemployed with existing debts, you still have a few steps you can take:

  • Examine and prioritize your debts
  • Negotiate with your creditors
  • See if you qualify for unemployment insurance
  • Consider freelance or part-time work

If you’re newly unemployed, you might qualify for unemployment insurance. Click here to check out unemployment benefits by state. For more information and advice on finding employment, you can check out our guide here.

Can I get a bad credit loan with no checking account?

Many lenders require borrowers to have at least a checking account in order to receive funds. Both installment and lump-sum lenders prefer to deposit funds directly into a checking account.

If you have bad credit and don’t have a checking account, it might be tempting to turn to alternative loans — payday lenders or credit card advances. But even now, you have other alternatives that can help you receive a loan and build credit.

Joining a credit union with bad credit

Larger banks usually examine your credit history closely when you’re applying for a new account. If your credit score needs work, it’s less likely that you’ll be able to open an account. But instead of just considering your financial history, credit unions will consider your overall financial situation.

Credit unions are nonprofits, offering their members lower borrower rates and annual fees. But to join a credit union, you often have to be a member of a specific group or live in a specific area. Luckily, a number of credit unions have more relaxed membership requirements. To join, you may just have to donate $5 -$20 to a charity with a relationship to the credit union.

Getting a second chance checking account with bad credit

Second chance checking accounts are like secured credit cards — they give those with bad credit another shot at traditional banking.

Many second chance banking accounts come with required monthly fees as collateral. Second chance accounts often restrict an account holder’s ability to overdraft. You won’t be able to take out more than you have.

Second chance accounts give account holders the opportunity to pay bills and write checks from their account. Holders can access debit cards that pull directly from their account.

Second chance accounts can be transitioned into traditional accounts after 6 months to a year as a result of good financial practices.

Spotting Bad Credit Loan Scams

Bad credit puts you in a vulnerable position when you’re searching for a loan. But just because your terms won’t be as favorable as they would be with excellent credit doesn’t mean you should accept any old offer. Keep your eyes peeled for these red flags while searching for the best bad credit loans:

  • Guarantees. Legitimate lenders won’t tell you that you can get a loan without knowing your income, credit score, and other personal information. Any lender who guarantees that you’ll qualify before evaluating your information is probably bad news.
  • Upfront fees. It’s against the law for lenders to charge you simply for filling out an application.
  • Lots of uninitiated contact. Be careful if you’re getting constant mailings or calls from a certain company. Legitimate lenders don’t need to hound potential customers.
  • Fishy-sounding names. Some unscrupulous companies will closely copy the names of legitimate lenders to profit from their better reputations. Make sure you’re really doing business with the right company.
  • Pushy requests for personal information. You should only provide personal information to a company you trust once you know what kind of loan you’re applying for. Be particularly cautious about giving out information over the phone, especially if you didn’t initiate the call.
  • Scare tactics. It’s common to shop around for the best deal and wise to take time to evaluate how much you can safely borrow. Your lender shouldn’t pressure you to make a deal before you’ve considered your options.

Above all else, take a few minutes to check up on a lender yourself. Look at online reviews and the company’s Better Business Bureau profile. Be suspicious of consistently positive or negative reviews — the truth is probably somewhere in between. Double-check a company’s address, too. Being proactive at the beginning of your search can save you a lot of trouble down the road.

How I Picked the Best Bad Credit Loans

Interest rates are a big consideration when you’re searching for a loan with bad credit, but there are other factors to consider. Here are the criteria I focused on in my search for the best loans for bad credit:

  • Higher loan limits: While it’s common for some lenders to cap loans for bad credit at low amounts such as $1,000, the best lenders allow larger loans for those who need them.
  • Reasonable APRs: Unfortunately, you’re not going to land a low interest rate with a bad credit score. Exorbitant APRs are out there, especially if you have very bad credit and are trying to get a loan without collateral. The best lenders still keep their interest rates competitive relative to your credit score.
  • Reasonable fees: Common fees include charges for loan originations, late payments, prepayments, and unsuccessful payments. Some lenders charge most or all of these; others don’t charge any fees at all. The best lenders keep fees to a minimum and charge a reasonable amount for those they do require.
  • Flexible terms: You may want to pay off a loan as quickly as possible to save on interest, or you might want a longer term to keep your payments low. The best lenders don’t lock you into one or two predetermined terms, such as three or five years.
  • Easy-to-find specifics: The best lenders understand that potential borrowers want to know potential APRs, loan amounts, terms, and fees before they start an application and include that information on easy-to-find pages on their websites.
  • Extensive reach: Different state regulations mean lenders may operate only in certain states. The best lenders have a wider reach.
  • Reputation: I considered each lender’s online reviews and status with the Better Business Bureau. BBB accreditation isn’t a necessity, especially for newer companies, but it is a plus. I also considered how long the company has been in business. I gave the least weight to individual reviews, as it’s common for prospective borrowers to give negative reviews for reasons such as being denied a loan.

Finding the Best Loan When You Have Bad Credit

Be sure to evaluate a range of choices when you’re searching for the best bad credit loans. You’ll want to find a lender who knows your credit score is just one part of a bigger picture, and you’ll need to make sure you understand what kind of loan you need, what kinds of loans to avoid, and how to avoid scams. You’ll want to consider all of your options to find the best loans for bad credit that work well with your unique situation. A great place to start is to compare multiple loan companies using our free loan search below.

Compare Loan Companies and Apply Online
Use the loan comparison tool below to view multiple loan options with no obligation.
Simply enter the purpose of the loan, the amount you need, your estimated credit score, and the state you reside in to instantly view loan companies available to accept your application online right now.

I also particularly recommend Avant for unsecured loans, OneMain for secured loans, and Peerform for peer-to-peer loans. All are reputable lenders willing to work with borrowers who have less-than-perfect credit. Remember to keep your expectations realistic, however. You will undoubtedly receive higher interest rates than borrowers with good credit. And if your APR is truly sky-high, don’t be afraid to think outside the loan box about other ways to get the cash you need.

If your bad credit is symptomatic of deeper debt problems, you may also want to check out our series on debt management: the Best Debt Management Companies, the Best Debt Settlement Companies, and the Best Debt Consolidation Loans.