Money Loans
Article updated on Apr 03, 2024
Here are the best personal loan options for those with a less-than-stellar credit score.
Why You Can Trust CNET Money
Our mission is to help you make informed financial decisions, and we hold ourselves to strict. This post may contain links to products from our partners, which may earn us a commission. Here’s a more detailed explanation of .
Our Experts
Written by Pallavi Kenkare Pallavi is an editor for CNET Money, covering topics from Gen Z to student loans. She's a graduate of Cornell University and hails from Atlanta, Georgia. When she's not editing, you can find her practicing bookbinding skills or running at a very low speed through the streets of Charlotte. Dori Zinn Contributing Writer Dori Zinn loves helping people learn and understand money. She's been covering personal finance for a decade and her writing has appeared in Wirecutter, Credit Karma, Huffington Post and more.
Edited by Raina He Editor Raina He is an editor at CNET Money. She writes and edits articles about personal finance, with a focus on credit cards, banking and loans. She graduated from the University of North Carolina at Chapel Hill with a B.A. in Media and Journalism. Before coming to CNET Money, she was an editor at NextAdvisor, a personal finance news site that shared a parent company with CNET Money.
CNET staff -- not advertisers, partners or business interests -- determine how we review the products and services we cover. If you buy through our links, we may get paid.
Reviews ethics statement-
Best overall
Upgrade
See at Upgrade
-
Best for those with a limited credit history
Upstart
See at Upstart
-
Best for credit card debt
Happy Money
See at Happy Money
-
Best for joint applicants
Lending Club
See at Lending Club
-
Best for next-day funding
LendingPoint
See at LendingPoint
Best overall
Our Experts
Written by Pallavi Kenkare Pallavi is an editor for CNET Money, covering topics from Gen Z to student loans. She's a graduate of Cornell University and hails from Atlanta, Georgia. When she's not editing, you can find her practicing bookbinding skills or running at a very low speed through the streets of Charlotte. Dori Zinn Contributing Writer Dori Zinn loves helping people learn and understand money. She's been covering personal finance for a decade and her writing has appeared in Wirecutter, Credit Karma, Huffington Post and more.
Edited by Raina He Editor Raina He is an editor at CNET Money. She writes and edits articles about personal finance, with a focus on credit cards, banking and loans. She graduated from the University of North Carolina at Chapel Hill with a B.A. in Media and Journalism. Before coming to CNET Money, she was an editor at NextAdvisor, a personal finance news site that shared a parent company with CNET Money.
CNET staff -- not advertisers, partners or business interests -- determine how we review the products and services we cover. If you buy through our links, we may get paid.
Reviews ethics statementWhy You Can Trust CNET Money
Our mission is to help you make informed financial decisions, and we hold ourselves to strict. This post may contain links to products from our partners, which may earn us a commission. Here’s a more detailed explanation of .
Table of Contents
- Best lenders for bad credit, compared
- How personal loans work for bad credit
- How to choose the best lender
- Types of bad credit loans
- Alternatives to a personal loan
- Should you take out a loan if you have bad credit?
- How to qualify and apply for a personal loan with bad credit
- FAQs
- Lenders reviewed
- More personal loan advice
If you want to consolidatehigh-interest credit card debtor secure financing for a large purchase, apersonal loancould help. As a lower-interest alternative to credit cards, personal loans come with fixed interest rates, set repayment terms and stable monthly payments. Even if yourcredit scoreis on the low end, you can get approved for a personal loan with a“bad” credit scoreor limited credit history.
We’ve evaluated major loan providers and highlighted the best personal loans for low credit below. We’ll update this list regularly as terms change and new loan products are released. Note that all of the startingannual percentage rates, or APRs, listed here are based on a high credit score of 800 or above.
Upgrade
Best overall
See at Upgrade
- APR:7.46% to 35.97%
- Loan amount:$1,000 to $50,000
- Loan terms: 24 to 84 months
- Time to receive funds: 1 business day
- Prequalification:Yes
- Origination fee: 1.85% to 8.99%
- Co-signer/joint applicant option:Joint applicant
- Prepayment penalty: No
- Minimum credit score:Not disclosed
Upgrade is a100% online lender that offers personal loans for credit card refinancing, debt consolidation, home improvement and major purchases. Upgrade might not have the lowest APR relative to other neolenders, but it does make loans available to those with poor credit history, and allows you to apply with another applicant. Upgrade also offers a 0.5% discount for users who opt for autopay.
Keep in mind that the majority of lower rates will go to users who want smaller loans under $25,000. Upgrade also charges late fees, and its origination fees are on the higher end (ranging up to 8%).
Upstart
Best for those with a limited credit history
See at Upstart
- APR: 6.5% to 35.99%
- Loan amount:$1,000 to $50,000
- Loan terms:36 to 60 months
- Time to receive funds: 1 business day
- Prequalification: Yes
- Origination fee:0% to 10%
- Co-signer/joint applicant option:No
- Prepayment penalty: No
- Minimum credit score:No minimum requirement
Upstart is an artificial intelligence lending platform that offers loans online -- and is one of the few lenders to make loans available to those with limited credit history. Instead, Upstart considers alternative factors such as job history and requires proof of a regular source of income.
Upstart charges late fees and relatively high origination fees, in addition to a $10 fee for every requested paper copy of your loan agreement. Upstart does not offer loans to West Virginia or Iowa residents.
Happy Money
Best for credit card debt
See at Happy Money
- APR: 8.99% to 29.99%
- Loan amount:$5,000 to $40,000
- Loan terms:24 to 60 months
- Time to receive funds: 2 to 5 days
- Prequalification:Yes
- Origination fee:0% to 5%
- Co-signer/joint applicant option:No
- Prepayment penalty: No
- Minimum credit score: 640
Happy Money’s Payoff Loan is specifically for credit card debt. With a minimum credit score requirement of 550, it’s a good option for those with lower credit. Happy Money will also consider your debt-to-income ratio, age of credit history, lines of credit opened and credit utilization while deciding your rates. Happy Money does not offer loans in Massachusetts or Nevada.
Lending Club
Best for joint applicants
See at Lending Club
- APR: 8.95% to 36.00%
- Loan amount:$1,000 to $40,000
- Loan terms:36 to 60 months
- Time to receive funds: 1-2 days
- Prequalification:Yes
- Origination fee:3% to 6%
- Co-signer/joint applicant option:Joint applicant
- Prepayment penalty: No
- Minimum credit score: 600
LendingClub is a digital lender that offers credit card consolidation loans, balance transfer loans, debt consolidation loans and home improvement loans. It has a minimum credit score requirement of 600, making its loans accessible to those with below-average credit. LendingClub does charge late fees.
LendingClub is a great option for those who want to apply with a joint applicant: If you don’t have longstanding credit history, or if your credit score is too low for you to apply, you can ask someone with good or excellent credit history to act as a coborrower. As a coborrower, they would hold equal ownership of the loan and equal responsibility for paying back the loan.
LendingPoint
Best for next-day funding
See at LendingPoint
- APR: 7.99% to 35.99%
- Loan amount:$2,000 to $36,500
- Loan terms:24 to 72 months
- Time to receive funds:1 business day
- Prequalification:Yes
- Origination fee:3% to 6%
- Co-signer/joint applicant option:No
- Prepayment penalty: No
- Minimum credit score:Not disclosed
LendingPoint is open to borrowers with fair credit. It also requires a minimum annual income of $25,000. It’s a great option for borrowers who need funds fast but don’t want to apply for a payday loan. LendingPoint may charge late fees.
Best lenders for bad credit, compared
| Lender | Best for | APR | Loan amount | Term lengths |
|---|---|---|---|---|
| Upgrade | Best overall | 7.96% to 35.97% | $1,000 to $50,000 | 24 to 84 months |
| Upstart | Borrowers with limited credit history | 6.5% to 35.99% | $1,000 to $50,000 | 36 to 60 months |
| Happy Money | Borrowers with credit card debt | 8.99% to 29.99% | $5,000 to $40,000 | 24 to 60 months |
| LendingClub | Joint applicants | 8.05% to 36.00% | $1,000 to $40,000 | 36 to 60 months |
| Lending Point | Next-day funding | 7.99% to 35.99% | $2,000 to $36,500 | 24 to 72 months |
How personal loans work for bad credit
Bad-credit personal loans work much like personal loans for borrowers with fair, good or excellent credit. You’ll complete an application and, if approved, receive your funds and start repayment.
Personal loans for those with lower credit scores tend to charge higher interest rates and fees than those geared toward borrowers with good credit, as they’re riskier for the lender. Many of the lenders on this list have a maximum interest rate of around 36%. That’s considerably higher than the 5% to 6% personal loan rates that can be locked in by borrowers with excellent credit.
While getting a bad-credit personal loan can get you the money you need, it’s important to consider the additional costs you’ll face, like higher fees.
How to choose the best lender
When choosing a bad-credit personal loan lender, be sure to consider the following factors:
- Interest rate:Most lenders will give you a personalized rate quote if you submit some personal information. Look at that number, not a lender’s full APR range, when comparing lenders. Expect a higher interest rate if you have a lower credit score, but watch out for unreasonable rates. Rates that exceed36% APRcould fall into predatory lending territory, and may be more difficult to repay.
- Fees:In addition to the interest rate, look out for fees -- including origination fees, application fees, late fees and prepayment fees -- which can increase the cost of borrowing.
- Loan term:The longer your repayment term, the lower your monthly payment -- but the more you’ll pay in interest in the long run. It’s generally a good idea to take the shortest loan term you can afford.
- Minimum and maximum loan amount:Most lenders will limit the maximum amount you can borrow, but some may also have a minimum threshold. Before choosing a lender, make sure it offers your desired loan amount. Keep in mind that the loan amount you qualify for based on your creditworthiness may be lower than a lender’s maximum loan amount.
Types of bad credit loans
Secured loans
Some lenders offer secured loans that require you to put up an asset -- such as a car or house -- as collateral, which the lender can seize if you default. Most personal loans are not secured, which means they are based on your income and credit history and do not require collateral.
Since the lender has an asset it can use to recoup all or some of its money, secured loans are considered less risky for the lender than unsecured loans. For this reason, they may be easier to qualify for than unsecured loans or you may qualify for a lower rate -- even if you have lower credit. But, you risk losing your collateral if you can’t make payments.
Cash advances
You can get a cash advance from your credit card issuer to withdraw money directly from your credit line rather than charging purchases to your card. These advances usually come with a high interest rate, fees and limitations on how much you can borrow. A personal loan is typically more affordable than a cash advance.
Payday loans
Payday loans are predatory loans that do not require a credit check. They’re usually small loans -- about $500 or less -- that require you to repay the loan within a couple of weeks or roll it over to a new loan for a fee. While payday loans may seem enticing if you have a low credit score, their high APRs -- typically upward of 400% -- and fees can lock you into a cycle of debt.
Credit union payday alternative loans
Payday alternative loans, or PALs, are small personal loans offered by some federal credit unions for those with limited or lower credit. Amounts range from $200 to $1,000 and terms span up to six months. These loans typically charge much lower interest rates and fees than payday loans but are generally only available to existing members of a credit union. If you need a small loan quickly, it may be worth checking if your local credit union offers this type of loan.
Alternatives to a personal loan
If you don’t qualify for a personal loan because of your credit, you have a few options:
- Getting a cosigner.A cosigner is someone who contractually agrees to repay your loan if you don’t. If you can’t qualify for a personal loan on your own, having a cosigner with good credit might shift the odds in your favor. However, cosigning a loan has its own risks and drawbacks both parties should be aware of.
- Using a credit card.It’s a good idea to pay off your credit card balance in full each month, but if you have a credit card, need money fast and can’t get a loan, you can use your credit card to access a line of credit. If you can, try to charge purchases directly to your card rather than taking a cash advance, as you’ll pay less in interest and fees that way. Because credit cards have high APRs, try to pay off your balance as soon as possible.
- Asking family and friends.If relatives or friends can lend you money to cover the costs you need, you could avoid a loan altogether. Borrowing from friends and family isn’t always the best course of action and can cause relationship issues -- but if you have loved ones who are willing to help, it may be your most affordable option.
Should you take out a loan if you have bad credit?
Having bad credit doesn’t necessarily mean you can’t or shouldn’t get a loan, but you’ll likely face greater approval challenges and higher interest rates. Because of this, you should only take out a loan if:
- You can pay it back.Before taking out a loan, make sure you can afford the monthly payments. Missing payments or defaulting on a loan can seriously hurt your credit and may result in legal consequences.
- You qualify for a reasonable APR.Borrowers with bad credit should expect to pay more in interest and fees, but some loans have APRs that are so high they can trap you in a cycle of debt. A good benchmark for the maximum reasonable APR is 36%, according to theNational Consumer Law Center. If you’re offered a higher APR, consider if the loan is affordable and worth the cost.
- You truly need the money.Before taking out a loan, make sure you have a plan for using the funds. We don’t recommend taking on debt for nonessential expenses like a wedding or vacation.
How to qualify and apply for a personal loan with bad credit
Qualifying for a personal loan
When you apply for a loan, these are some of the factors a lender will look at to determine if you qualify:
- Credit score and credit history.Even lenders that cater specifically to lower-credit borrowers will still look at your credit score. Every lender has a different threshold for what credit scores it’ll accept, but expect higher rates and fewer options if you have a below-average credit score. Lenders might also look at your credit history for red flags, such as recent bankruptcies or defaulted loans.
- Income.Lenders want to make sure you make enough money to pay the loan back. Be prepared to provide proof of income like pay stubs, bank statements and tax returns.
- Debt-to-income ratio.Your debt-to-income ratio, or DTI, represents how much of your monthly gross income is going toward debt payments. If your DTI is too high, a lender might see you as a risky borrower because your debt load is already large and you may not be able to handle another debt.
- Cosigner.If you add a cosigner to your application, your lender will also look at your cosigner’s credit score, income and overall financial profile.
Applying for a personal loan
Here are the steps to apply for a personal loan:
- Check your credit score and credit report.If you know your credit score, you can save time by only looking at lenders whose minimum credit score requirements match your profile. Checking your credit report can help you spot and remove errors that may be dragging down your credit score.
- Compare lenders.While you might not have as many options as borrowers with good credit, you can still shop around to find the best rate. Many lenders will give you a personalized rate quote without requiring a full application. Compare fees, loan terms and rates across multiple lenders.
- Complete an application.Once you’ve found the right lender, complete a loan application. You’ll need some important documents handy, like tax returns, pay stubs and bank account information. You’ll also need to consent to a hard credit check from the lender. Once approved, you’ll typically receive your money anywhere from within 24 hours to a few days, depending on your lender.
FAQs
Apersonal loanconsists of funds usable for any purpose except educational expenses or investments. They’re mostly to consolidate debt, finance home improvements or pay for family-related expenses or emergencies.
There are two types of personal loans: An unsecured loan allows you to borrow money and pay it back at regular intervals at a fixed interest rate. A secured personal loan requires you use an asset as collateral in order to access funding. Unsecured loans are viewed as riskier, and so will likely have a higher interest rate. Personal loans are generally unsecured.
An origination fee is a one-time, loan processing fee some -- but not all -- lenders charge. It’s typically a percentage of your total loan amount and deducted from your loan funds. For example, if you take out a $10,000 loan with a 5% origination fee, you’ll only receive $9,500 but will still be responsible for repaying the full $10,000, plus interest.
The factors that determine your origination fee amount and APR are the same that determine your eligibility for a personal loan. Your credit score, credit history, income, loan amount, loan terms and status as a single applicant or co-applicant will likely have an impact. Applicants with higher credit scores and established credit histories will qualify for the lowest rates and fees. Shorter loan terms and larger loan amounts tend to have lower rates.
There are a few different creditscoring models. FICO scores dictate that a “very poor” score is in between 300 and 579 and a “fair” score is between 580 to 669, while VantageScore dictates that a “very poor” score is between 300 and 499, a “poor” score is between 500 and 600 and a “fair” score is between 601 and 660.
Though exact requirements vary between companies, many lenders set their minimum credit score requirements between 600 and 640. Even if a lender doesn’t list a hard cutoff, it will still take your credit score, among other factors, into consideration when deciding whether to approve you for a loan.
Prequalification is offered by many lenders to allow potential applicants to view their payment plan, interest rates and monthly payment prior to actually submitting an application for the loan. Prequalification requires a soft credit pull, through which lenders view a limited portion of your credit history. Notably, a soft credit pull will not have any impact upon your credit score.
If you fall behind on payments, you’ll see an impact on your credit. Even a single missed payment can lower your credit score. Depending on the terms of your loan agreement, your lender may also charge you late fees. If you keep missing payments, your loan will eventually go into default and your lender might send your account to collections or take legal action against you.
It’s a good idea to talk to your lender if you’re unable to make a payment due to financial difficulty. Most lenders would rather work with you to find a solution rather than let the loan go into default. Your lender may let you defer a payment to a future date, or change the terms of your loan to accommodate a smaller monthly payment.
When you get a loan with a cosigner, it will affect both of your credit scores. If you miss payments, pay late or default on the loan, both your credit score and your cosigner’s credit score will drop. But if you make on-time payments and manage your loan responsibly, your credit score could go up -- along with your cosigner’s.
Lenders reviewed
- Avant
- Best Egg
- Happy Money (formerly Payoff)
- LendingClub
- Lending Point
- Prosper
- One Main Financial
- Upgrade
- Upstart
More personal loan advice
- Best Personal Loans
- Best Debt Consolidation Loans
- Best Car Loans and Lenders
Written by
Pallavi Kenkare
Read more from Pallavi
Pallavi is an editor for CNET Money, covering topics from Gen Z to student loans. She's a graduate of Cornell University and hails from Atlanta, Georgia. When she's not editing, you can find her practicing bookbinding skills or running at a very low speed through the streets of Charlotte.
