The best personal loans for bad credit of January 2022

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The best personal loan lenders for bad credit of January 2022

You might think about taking out a personal loan if you need fast cash for expenses like moving costs or vacations. A personal loan is a fixed-rate loan, usually paid off in monthly installments with several different options for term lengths.

Even if you have bad credit, you still have options for taking out a personal loan. We’ve gathered a list of lenders that are more lenient on credit score requirements. 

But be careful — even though you may qualify for a loan with these lenders, with a poor credit history you will likely receive a high interest rate. You may be able to get a lower rate with other options, such as a credit card.

Of our top picks, Upgrade Personal Loan offers the lowest minimum APR. But you’ll likely pay a higher rate if your credit isn’t in good shape. With a poor credit history, you may end up paying an APR closer to 35.97%. 

You’ll pay an origination fee between 2.90% and 8% with Upgrade, which will be taken from your loan proceeds. Upstart may also charge you a fee for late payments. However, you won’t pay any prepayment penalties with this lender. Once you accept your loan offer, you should get your funds as soon as the next day.

Upgrade Personal Loan

Avant is one of the easier lenders to qualify for on our list. Its minimum credit is just a guideline, not a requirement, but most Avant borrowers have a credit score between 600 and 700. Avant funds loans quickly — if the company approves your loan by 4:30 p.m. CT Monday through Friday, funds are often put into your account by the next business day.

Avant has excellent customer service hours, with its phone line open at least 13 hours every day of the week. The lender also has a strong mobile app. 

Avant Personal Loans

The minimum credit requirement for Upstart Personal Loans is 600, but if your credit score is low, you might end up paying a high APR.

Upstart’s loan repayment term options are fairly limited — you can choose between a three-year or five-year term. On the bright side, the company usually funds loans within one business day, which is useful if you need your money fast. There are no prepayment penalties with this lender. 

Upstart Personal Loans

While OneMain Financial personal loans minimum APR is higher than every other lender on our top picks, there is no minimum credit score required to apply. That said, if your credit is in particularly rough shape, it may be easier to qualify for a loan with this lender. You may also be able to get your money the same day you apply.

OneMain’s standout feature is that it offers secured personal loans (loans backed by collateral such as a house or a car) as well as unsecured personal loans. This is uncommon among personal loan lenders.

OneMain Financial personal loans

Personal Loans allows you to add a co-borrower to your loan application. So if you’re worried about not qualifying for a loan or paying a higher interest rate than you can afford, you may consider this option. The company offers loans for as low as $1,000 — the lowest on our list.

However, it will take you two to four business days to get your money, which is longer than most of the other lenders on our list. You’ll also pay an origination fee between 1% to 6% of your total loan amount, and which will be deducted from your loan proceeds. 

Personal Loans

Personal Loans has the lowest minimum credit score requirement of any of our top picks, making it a good option if you can’t qualify for other lenders with your credit score. LendingPoint has a quick application process. and you may be approved the same day you apply. You can often get your funds the next business day after approval.  

Unfortunately, you’re not able to take out a loan if you live in Nevada or West Virginia. You also might pay an origination fee of up to 6%, depending on the state you live in. 

Personal Loans

Credit score requirements

upgrade bank logo

Upgrade

620Upgrade Personal Loan
600Avant Personal Loans
Upstart logo

Upstart

600Upstart Personal Loans
OneMain Financial Logo

OneMain Financial

NoneOneMain Financial personal loans
LendingClub Logo

LendingClub

UnspecifiedPersonal Loans
LendingPoint Logo

LendingPoint

580Personal Loans

Each lender sets its own credit score requirements to qualify for a loan, though you’ll probably be eligible for a better rate with a higher score. For our top picks, we’ve chosen lenders that either list low minimum credit scores or have unspecified minimums but are known to accept borrowers with poor credit.

You can find your credit report for free on from any of the three major credit bureaus weekly through April 20, 2022. While this report won’t give you your credit score, it will show you information about your credit and payment history, which lenders use to decide whether to give you a loan. Reviewing your credit report can help you know what you need to improve. 

You can find your score at no cost on your credit card statement or online account. You can also pay for it from a credit reporting agency. 

Credit scores range from 300 to 850. Here’s how scores break down, according to FICO: 

  • Very poor: 300 to 579
  • Fair: 580 to 669
  • Good: 670 to 739 
  • Very good: 740 to 799 
  • Exceptional: 800 to 850

When you check your rates with many companies, your credit score won’t be impacted because most lenders will only generate a soft credit inquiry when displaying personalized rates. However, if you accept a loan, lenders will likely perform a hard credit inquiry, which may negatively affect your credit score. A hard inquiry gives a lender a full look at your credit history.

If you don’t qualify for a loan with the lender you prefer or are being offered a higher APR than you can afford, here are some tips you might think about to improve your credit score: 

  • Create a system for paying bills on time. Your payment history makes up a significant percentage of your credit score, and lenders prefer to see consistent and reliable past payments. Design calendar reminders or automatic payments so you don’t fall behind.

Other personal loans we considered

  • Payoff loan. Payoff offers great minimum APRs to those with good credit scores, but its minimum requirement of 640 is higher than all of our top picks. 

Which lender is the most trustworthy?

To help you make a decision, we’ve compared each institution’s Better Business Bureau score. The BBB measures businesses based on factors like their responsiveness to consumer complaints, truthfulness in advertising, and clarity about business practices. Here is each company’s score:

LenderBBB Grade
upgrade bank logo

Upgrade

A+
NR
Upstart logo

Upstart

B+
OneMain Financial Logo

OneMain Financial

A+
LendingClub Logo

LendingClub

NR
LendingPoint Logo

LendingPoint

A+

With the exception of LendingClub and Avant, all of our top picks are rated B+ or higher by the BBB. Keep in mind that a high BBB score does not guarantee a positive relationship with a lender, and that you should continue to do research and talk to others who have used the company to get the most comprehensive information possible.

Avant’s business profile is currently being updated, so it doesn’t have a rating from the BBB. LendingClub doesn’t currently have a rating because its business profile is currently being updated. 

In 2018, the Federal Trade Commission filed a complaint against LendingClub for deceptive lending practices, including charging hidden fees, incorrectly leading customers to believe they’d be approved for a loan, and continuing to charge consumers who canceled their automatic payments or had paid off their loans in full. LendingClub is also charged with taking out double payments from accounts and not providing consumers with privacy notices. The case is currently pending. 

Due to LendingClub’s recent history, you might prefer to use a different personal loan company.

Frequently asked questions

What are bad credit loans?

Bad credit loans are aimed at borrowers with a low credit score or limited credit history. These loans have fixed rates and are either secured or unsecured, usually repaid in monthly installments over the course of several years. 

If you have a bad credit score, you aren’t immediately disqualified from getting a loan. However, your chances of getting approved are lessened and if you are eligible, you’ll likely receive a higher rate than someone with a better credit score. 

Each lender has its own standards to determine whether to offer a loan to those with bad credit. Some lenders are more strict than others, so you should shop around before deciding which one to use. 

How does the coronavirus impact bad credit loans?

In response to the COVID-19 pandemic, many lenders have adjusted interest rates or modified their loan offerings to help minimize risk. This includes both traditional brick-and-mortar banks and online lenders. 

That said, if you’re a new borrower with poor credit looking for a loan, you may find it more difficult to qualify in this uncertain economic climate. If you already have a loan, you may have the opportunity to defer payments or waive fees, depending on your lender. 

How did we pick the best bad credit loans? 

Personal Finance Insider’s mission is to help smart people make the best decisions they can with their money. With that in mind, we looked at several online personal loan lenders closely. We evaluated multiple factors to determine the best personal loan lenders for people with bad credit, including:

  • Annual percentage rates: The lower the interest rate on your loan, the better. So we centered our choices on lenders that still offer low maximum rates for those with poor credit history.
  • Loan term length: We prioritized personal loans with a variety of repayment lengths. 
  • Loan amount range: We looked for lenders with small personal loan minimums, and did not put any lenders with a minimum above $2,000 on the list of our top picks. While you may need more money, it could be a better choice to take out less and save on the high APR that may come with a bad credit score. 
  • Minimum credit score: Depending on your credit score, you may be eligible to take out a loan from some lenders and might not qualify with others. We picked lenders with low minimum credit scores so you have the best chance of qualifying, even with a poor credit history. 
  • Trustworthiness: Borrowing from an honest lender is often a chief concern for many people. With the exception of LendingClub, we chose lenders with an A or above grade from the Better Business Bureau to provide the most transparent lenders possible. However, LendingClub is currently not rated by the BBB because of a pending government action. 

What are alternatives to bad credit loans?

While personal loans can be a solid option to get money fast, there might be cheaper avenues available to you:

  • Ask friends or family. While you may feel uncomfortable asking friends or family for a loan, you may be able to reach a deal with smaller payments than through an official lender. 
  • Get a paycheck advance. Some banks will allow you to receive your paycheck a couple of days early, and you’re able use apps that let you get a portion of money you’ve already earned in a pay period. You can also request a paycheck advance from your employer. However, taking a paycheck advance isn’t free — you’ll often be charged fees that come out of your earnings when you receive them.  
  • Work part-time in the gig economy. You can make money on your own time with gig work like rideshare and food delivery apps. These extra jobs might enable you to earn enough to eliminate the need for a loan. 

Are bad credit loans legitimate?

Yes, personal loans with a reputable lender are absolutely safe to borrow. Look over reviews of the company, dig for more information, and disregard offers that feel too good to be true. Search for personal loans that are backed by a Member FDIC bank or NCUA-accredited credit union.

You can find potential scams by looking out for these common indicators of fraud:

  • The lender doesn’t request your payment history or credit score.
  • The lender’s website isn’t secured.
  • The lender ensures approval. 
  • The lender isn’t transparent about fees.
  • The lender coerces you into taking out a loan instantly. 

What can you use a personal loan for?

You’re able to use a personal loan for many purposes, though the list changes depending on the lender. Some common options include: 

  • Credit card refinancing
  • Travel
  • Car repair

Every reason available isn’t listed here, and you should reach out to your individual lender to ask about what choices it offers. 

How much will a personal loan cost?

This depends on how much you want to borrow, what APR you get from your lender, and how long you take to pay off the loan.

The higher the loan amount and APR, the more expensive a loan will be. With a longer term length, you will split up your payments over an extended period so you’ll make smaller monthly payments, but it will cost you more total interest. 

How quickly can you get your money? 

Depending on the lender, you may be able to get your money as soon as the same day you apply. Often a lender will send the money relatively quickly after the application is approved, but there is usually no guarantee on the speed of the approval process.

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