There are plenty of reasons why a person might need to borrow money—which is consumers in the United States currently hold about 15.2 trillion worth...
While we typically talk about a credit score coming from one agency, multiple agencies publish credit scores. Each has slightly different criteria and range, and what’s considered poor credit at one might not be considered poor credit by the others. The four-credit agencies and their range for poor credit are as follows:
Credit Karma – A score of 300-600 is considered poor.
Equifax – A score of 280-559 is considered poor.
Experian – A score of 300-579 is considered poor.
Transunion – A score of 300-600 is considered very poor, while a score of 601-657 is still considered poor.
As you can see, in general, any score from the lower range of 280-300 to an upper range of 560-600 is going to be considered poor. Just above that is the range of fair credit, which begins as low as 560 and generally goes as high as 719, depending on the agency. So on average, a score of 600-660 can be considered fair.
There are several reasons you might have a poor credit score with any of these agencies. A recent bankruptcy will almost always result in poor credit for two or more years following. Other potential reasons for poor credit include late payments, charge-offs, defaulting on loans, or simply short credit history. Because lenders use credit scores to determine the interest rate charged, a poor credit score will inevitably lead to higher APRs from lenders. Those with poor credit looking to consolidate their debt will often find that a debt consolidation loan company can offer a better interest rate than payday loans or credit card companies.
When comparing lenders for bad credit score loans, the first thing you want to check is if there is a credit score minimum. You can save yourself time by only applying for loans that do not require any minimum. You also, ideally, want to select a lender that offers flexible terms, which include factors such as repayment fees, the length of the loan, and so on.
Other important qualifications lenders will sometimes consider when looking for a loan with a poor credit score include:
Another factor to consider is the actual terms of the loan. The more flexible these are, the better off you’ll often be when it comes to repaying the loan. Your loan terms include:
Don’t forget about the “small print”. Lenders may include additional terms that increase the cost of your loan. Watch out for:
Turn the loan to your advantage. Your bad credit loan doesn’t have to be a bad thing. Instead, it presents you with an excellent credit-building opportunity. There are two prominent reasons for this:
Additionally, it’s important to pay attention to the APR as opposed to the interest rate. APR will include any hidden fees that may be involved when securing a loan from a lender so you can have a better idea of what you’ll be paying.
This is where marketplace lenders come in handy. You only have to submit one form to view offers from multiple lenders, making it easy to compare rates and terms.
If you’re unsure where to start in your search for loans with no credit or loans with bad credit, there are many reputable lenders and marketplaces that cater specifically to those with poor credit or no credit at all. These lenders will view not only your credit score but your entire financial profile for the approval process. Determining creditworthiness includes your debt-to-income ratio, your income, job stability, and other factors.
LoansUnder36 is a free online loan marketplace that connects borrowers to lenders who offer loans under 36% ARP as fast as the next business day. They cater to those with all credit scores and loans ranging from $500 to $35,000.
Why LoansUnder36 is the best for repayment options: Because borrowers get to select from over 100 different lenders. This means the largest selection of repayment options becomes available. With so many lenders to choose from, borrowers will likely find exactly the repayment plan they need.
As its name suggests, Bad Credit Loans is an online lender offering loans up to $10,000 to those with bad credit. It’s safe and secure, has a fast online process, approves loans as soon as the next business day, and best of all, all credit types are welcome.
Why Bad Credit Loans is the best for small loans: At Bad Credit Loans, the focus is on smaller loans, with a maximum loan amount of $10,000. Because Bad Credit Loans specializes in smaller loans, they can also provide the best offers and loan approval processes for those who only need a small loan.
Monevo is another online marketplace lender that allows borrowers to quickly compare personal loan offers from lenders they qualify for with just one application and a soft credit pull. Similar to our other recommendations, Monevo is a great place to start when shopping for a personal loan with bad credit because they consider an applicant’s entire financial profile rather than just their credit score.
Why Monevo is the best for limited credit history: Monevo is a great place to start when shopping for a personal loan with bad credit because they consider an applicant’s entire financial profile rather than just their credit score. This is ideal for those with a limited credit history since it allows other factors to help determine loan approval.
Upgrade is an online lender offering loans up to $50,000. There’s no credit score minimum to apply and submitting a quick pre-approval form won’t impact your credit score. You can get a decision in seconds and have money sent to your bank account within a day.
Why Upgrade is the best for poor credit scores: At Upgrade, there’s no minimum credit score needed to apply, making it a poor credit score borrower’s best choice when looking for a debt consolidation loan. With loans on offer up to $50,000 and cash delivered to your account within one business day, Upgrade really does upgrade the poor credit lending process.
Lender | APR | Min Credit Score |
Loan Term (Months)
|
Lendingtree | 2.49-35.99% | 300 | 1-180 |
Bestegg | 5.99-29.99% | 600 | 36, 60 |
LoansUnder36 | 5.99-35.99% | 300 | 3-72 |
Even with bad credit, you can still qualify for all kinds of loans — personal loans or otherwise. Just be prepared to spend more time researching so you aren’t stuck at the bottom of the barrel when it comes to loan terms and rates.
Most of the time, those with bad credit wouldn’t be taking out new personal loans. However, there are some situations where someone might be compelled to do so. Taking a personal loan for financing medical expenses is one common example since your health is irreplaceable.
Most people wouldn’t want to get extravagant with personal bad credit loans though. They might take a car financing personal loan if they need that vehicle for work but doesn’t make good financial sense to finance a car as a luxury.
Another possibility is taking an emergency household loan. But again, one should make sure that it’s necessary and that they had exhausted all other possibilities before considering a personal loan.
Several types of personal loans are accessible, even when you have a poor credit score. Among these are both secured and unsecured loans, credit cards, and cash advances. If you have no alternative to high-interest rate bad credit loans, then these are the various loans you might consider:
Cash advances: Credit card issuers will often offer cash advances when you need a small number of funds quickly. Another alternative for cash advances is payday lenders; however, these loans can have extremely high-interest rates. Often they need to be repaid within weeks, if not days. In general, any type of cash advance loan will be the most expensive option for a bad credit borrower.
The system of credit scores is designed to measure a borrower’s ability to pay back loans over time and ensure that borrowers don’t exceed a set percentage of their income in terms of the amount borrowed and their monthly payments. Higher credit scores indicate a borrower who is more likely to repay their loans. Lenders prefer to work with customers who have a proven track record of paying their bills on time and earning enough money to stay on top of their debt while honoring all terms and agreements. That said, lenders make their money by charging interest on loans and will accept additional risk, in the form of a risky borrower, in exchange for higher interest rates on the loan.
Credit scores are determined by the four credit reporting agencies, and each has its own methodology for calculating credit scores. Factors included are payment history, amounts owed, length of credit history, new credit, and credit mix. Typically, any score under 600 will be considered “poor” credit and will impact the ability to secure a loan.
A credit score under 600 likely won’t completely disqualify one for a loan. Still, it will increase the interest rate and, by extension, the total amount paid on the loan over time.
One example of a bad credit loan to avoid is a payday loan. This is a short-term, small amount loan that provides quick cash but incredibly high-interest rates — sometimes as high as 400%. This option can be tempting because virtually anyone can get approved, including those with the lowest of credit scores.
It’s highly advisable to pass on these types of predatory loans, as there are plenty of loans available from reputable lenders with more reasonable interest rates. Sure, with bad credit your APR may be higher than if you had good credit, but it will not be as high as the APR one would pay on a payday loan or similar cash advance loan.
Whenever money is involved, you can be sure there are unsavory characters looking to scam honest people. Unfortunately, the bad credit loan industry isn’t immune to this, so consumers need to keep their eyes open for potential scams. There are several ‘red flags’ one can look for to avoid potential scams. Such red flags include:
Guarantees before assessing application – Lender approval is always based on factors that include the borrower’s credit history, employment status, debt-to-income ratio and other factors. If a lender offers guaranteed approval before assessing these factors, it’s almost surely a scam.
Missing state license/registration by the Federal Trade Commission – Lenders and loan brokers must be registered in the states where they are doing business. So if you can’t find a state registration or license for the lender or loan broker, it’s a certain red flag that you’re being scammed.
Pressure for immediate action without due consideration – Reputable lenders do not have constantly changing loan conditions. Therefore, they will not pressure you into accepting a loan based on some deadline. Instead, the reputable lender would be more likely to delay as they take time to research your credit history fully.
Prepayment (outside of reasonable processing fees) – These are also known as “advance-fee loan scams”. The scammer lures borrowers in by offering low-interest rate bad credit loans and then asks for fees in the form of applications, processing, or documentation. Remember that legitimate lenders always disclose all their fees and often roll those fees into the loan itself rather than asking for prepayment.
Unsecured website – Lenders handle huge amounts of personal information, including social security numbers, birth dates, and login credentials. This means they need extremely secure websites to protect their customers. When dealing with websites, this means having a Secure Sockets Layer (SSL) certification. You can check for this by looking at the URL of the website. If it begins with “HTTPS”, it is secure, but you should avoid it as a potential scam if it only has the “HTTP” prefix.
Lack of a physical address – A reputable lender will always have a physical address where they conduct business and receive mail. Even lenders who work exclusively online will have a physical location as their headquarters. A physical location means customers can visit the business. It also provides accountability for the business to be contacted in the event of some legal action. Any lender without a physical address should be considered a potential scam. Even lenders with a P.O. box should be handled with care.
A bad credit score doesn’t have to stand in your way if you need a personal loan to cover an emergency or other expenses. Getting a personal loan with a low credit score doesn’t have to be complicated either. Just follow these five steps:
So how do you get a personal loan with bad credit or get a loan with no credit at all? The key is to put in the time to research your options. Gone are the days when consumers were limited to traditional brick-and-mortar banks and credit unions.
In today’s digital age, there’s a wealth of online lenders to choose from when it comes to finding and comparing loans. Just prepare yourself—having poor credit means you won’t qualify for all of them, and those you do qualify for will come with a higher APR.
If you’re having trouble getting approved or finding a comfortable interest rate, here are a few ways you can get approved for loans with bad credit:
If you have a friend, spouse, or close family member with good credit, having them cosign on your loan can make a difference in whether or not you get approved. Additionally, having a trustworthy cosigner can also snag you a better interest rate on your loan.
Try using an online personal loan marketplace like LendingTree or Monevo. These platforms are free to use and they work with reputable lenders. You can see if you qualify for a loan in a matter of minutes after providing a few details about yourself and your financial profile. From there, they’ll run a soft credit check which won’t harm your credit score, and you can then compare rates from lenders you qualify for.
If you aren’t satisfied with the bad credit loan terms you’re receiving from lenders you qualify for, it’s time to start working on improving your credit score. Even if you need a loan fast and ultimately decide to opt for a high-interest loan today, getting started on boosting your credit score now can help you earn better loan rates or even refinance your loan in the future.
Here are a few ways you can improve your credit score:
Searching for the best personal loan with satisfactory rates and loan terms will always require work, whether you have excellent credit or bad credit. If you have a little time on your side, start researching the various lenders out there—whether it’s a traditional bank, credit union, or online lender. While many lending institutions place a heavy emphasis on one’s credit score, there are just as many who look at other factors when making a decision.
If you need a loan fast but aren’t happy with the rates you’re seeing, try adding a cosigner to give you a boost, or even applying for a secured loan if you have a valuable asset to back it up. And remember, it’s never too late to start improving your credit score. You can build it up faster than you think, and doing so will open the doors to much better loan rates in the future.