7 Best Bad Credit Loans of 2022

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If you have bad credit, you probably think a personal loan is out of the question. But it’s not.

Many lenders offer bad credit loans giving you access to the funds you need. Before you secure a loan from a bad credit lender, know what to look for and what options are out there, so you get the most attractive loan for your situation.

Quick Glance: Best Bad Credit Loans

  • RECOMMENDED
  • LOAN AMOUNT
  • MIN. CREDIT SCORE

Best Bad Credit Loans: Rates, Fees, & Terms

Best Overall Bad Credit Personal Loan
Upgrade Bad Credit Loans
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On Upgrade's Secure Website
Upgrade
  • Est. APR
    5.94% - 35.47%
  • Min. Credit Score
    560
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  • Loan Details

Upgrade funds loans as soon as the next business day, and you’ll have an answer on your application within seconds. They don’t require a minimum annual income and work with borrowers with credit scores as low as 560.

They accept higher than average debt-to-income ratios of 75%, and they’ll give you a rate discount if you let them pay your creditors off directly.

>> More: Upgrade Personal Loans Review

Best for Easy Qualification + Fast Service
Upstart Bad Credit Personal Loans
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Upstart
  • Est. APR
    5.38% - 35.99%
  • Min. Credit Score
    None
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  • Loan Details

Upstart focuses on more than your credit score, making it a great personal loan for people with bad credit. If you can prove you have a bright future with a solid work or educational history, they may approve you for a loan.

You can use the personal loan for just about any reason, but if you are consolidating debt, they’ll pay the creditors directly for you. You can get approved even if you haven’t started your full-time job as long as you have an offer letter, and the job starts within 6 months.

>> More: Upstart Personal Loans Review

Best for Co-Signed Bad Credit Personal Loans
OneMain Financial bad Credit loans
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OneMain Financial
  • Est. APR
    18% - 35.99%
  • Min. Credit Score
    None
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  • Loan Details

If you’re looking for a secured loan option because you can’t get an unsecured loan. OneMain offers secured options. While the rates and origination fees are high, you don’t need a specific credit score to get the loan.

If you’re consolidating debt, they’ll pay your creditors directly, and you can choose your payment date to make it easier to make your payments on time. They keep their loan amounts small to keep your loans affordable while providing borrowers with bad credit a chance to get the funds they need.

>> More: OneMain Financial Personal Loans Review

Best for Easy Online Application
Avant Bad Credit Loans
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Avant
  • Est. APR
    9.95% - 35.99%
  • Min. Credit Score
    580
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  • Loan Details

Avant is a great personal loan for borrowers with bad credit. Despite its high fees, it’s a great unsecured loan option for borrowers with credit scores as low as 580. You need a monthly income of at least $1,200, and they often fund loans as soon as the next business day.

You can choose from various loan terms to make the loan the most affordable for you, and you can prepay the loan without a penalty if you want to avoid excessive interest costs.

>> More: Avant Personal Loans Review

Best for Peer-to-Peer Bad Credit Loans
LendingClub Bad Credit Loans
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LendingClub
  • Est. APR
    7.04% - 35.89%
  • Min. Credit Score
    600
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  • Loan Details

LendingClub works a little differently than other lenders. They are a peer-to-peer lender, which means individuals invest in your loans. This gives you more flexibility to secure a loan even with bad credit. You can borrow as little as $1,000, which is unusual for personal loan lenders, or as much as $40,000.

You need a three-year credit history to qualify, but you only need a 600-credit score, giving even low credit score borrowers a chance. You can use the funds however you want, but they’ll pay your creditors directly if you use it for debt consolidation.

>> More: LendingClub Personal Loans Review

Best for Overall Bad Credit Personal Loan
LendingPoint Bad Credit Personal Loans
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LendingPoint
  • Est. APR
    9.99% - 35.99%
  • Min. Credit Score
    590
  • Learn More
  • Loan Details

You can use your LendingPoint loan funds for just about anything (legal). To qualify, you must have an income of at least $35,000 and a credit score of 590 or higher. While you can’t have co-signers, you can get approved even if you had a recent bankruptcy. It must be discharged for just 12 months.

>> More: LendingPoint Personal Loans Review

Best Bad Credit Loans for Fast Funding Times
Rocket Loans Fast Bad Credit Loans
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On Rocket Loans's Secure Website
Rocket Loans
  • Est. APR
    5.97% - 29.99%
  • Min. Credit Score
    580
  • Learn More
  • Loan Details

Rocket Loans provides pre-approval within seconds of applying, and it doesn’t hurt your credit score to see what they’d offer. You can even get your funds on the same day if you are fully approved by 1 PM ET. You don’t need perfect or even good credit, and you can use the funds for any purpose.

Rocket Loans also doesn’t charge a prepayment penalty if you want to pay the loan off early and save on interest charges.

>> More: Rocket Loans Review

How to Choose the Best Bad-Credit Loan

#1. Compare Interest Rates

Interest rates are one of the top concerns for bad credit loans. If you have a low credit score, lenders charge higher interest rates to cover the risk. They assume you’ll default on the loan, so they make up for it with higher APRs.

This doesn’t mean you should pay excessive rates. Compare your options with at least 3 lenders since most lenders don’t hit you with a hard credit inquiry to check your rate.

>> More: Best Personal Loans

#2. Loan Amounts

Each bad credit personal loan lender allows different loan amounts. Think about what you need – is it a small amount or large? Some lenders allow loan amounts as low as $1,000 and others have higher limits starting at $2,500 or $5,000.

Same thing with the upper limit of the loan amounts. If you need a large loan amount, you may have more limited choices.

#3. Easy Online Application

Today if you can’t apply with a lender online, it’s not worth your time. You can compare loans you apply for on the same day with online applications with most lenders. Many lenders even offer an answer within minutes, allowing you to make fast decisions and possibly get funding right away too.

#4. Customer Service

Customer service is just as important as the terms of your loan. If you have had this loan for 2 – 5 years, you want a company you can communicate with and who will help you when you need it. When you apply for loans, assess the customer service level and check reviews online to see what others think.

#5. Reports to Major Credit Bureaus

If you have bad credit, you need all the help you can get to improve your credit. If you pay your bad credit loan payments on time, they can help increase your score. Payment history is the largest part of your credit score, so it’s an important detail.

Not all lenders report to all three credit bureaus. When you apply for bad credit personal loans, ask which credit bureaus they report to before making your decision.

How to Get a Bad Credit Personal Loan

Bad credit loans are easy to get; however, there are a few steps you’ll need to take before the money hits your bank account.

Know Your Credit Score

Before you apply for a bad credit personal loan, pull your credit. You can see your credit report (no score) here, or you can check with your current credit card companies or bank to see if they offer free credit score reporting (most do).

You don’t need good credit to get a bad credit personal loan, but the higher your credit score, the better your terms will get. Try fixing any credit you can fix before applying.

Prequalify with Various Lenders

Get quotes from at least 3 lenders. Make sure they are lenders that don’t do a hard credit inquiry to pull your credit, though.

With personal loan pre-qualification, you’ll see what interest rates and terms lenders offer you so you can compare your options and choose the most affordable loan.

Improve Your Credit Score

If your credit score doesn’t qualify you for a loan, see what you can do to improve it. Here are some simple ways:

  • Bring all late payments current
  • Pay down credit card debt that exceeds 30% of your credit limit
  • Don’t apply for new credit
  • Don’t close old credit accounts
  • Keep a good mix of credit (installment and credit cards)

Add a Co-Signer

Some bad credit personal loan lenders allow a co-signer. If you have bad credit, consider adding a co-signer to get better terms. If you need the co-signer to get you approved (you won’t get approved without one), you’ll have to search for a lender that allows co-signers on personal loans.

Add Collateral

Collateral lowers a lender’s risk. If you have bad credit or don’t qualify for other reasons, add collateral to your loans, such as a car or other valuable assets. If you don’t pay the loan, the lender can take possession of the asset and sell it.

What Can You Use a Bad Credit  Loan For?

People use bad credit loans for a myriad of reasons. Here are the most popular reasons why consumers turn to bad credit loans.

Emergency Situation

Emergencies happen, and it can be scary when we don’t have enough money. A bad credit personal loan can give you the funds you need fast – sometimes as soon as the same day.

Home Remodel

If you don’t have equity in your home or can’t get approved for a home equity loan, a bad credit personal loan can give you the funds you need to remodel your home. This is a good use of your funds because it allows you to increase your home’s value, giving you a greater return on your investment.

>> More: Best Home Improvement Loans

Education

You can use the funds from your personal loan to cover educational costs that your federal financial aid and loans don’t cover. It can be a good alternative if you can’t qualify for personal student loans but need more money to attend the college of your choice.

Debt Consolidation

If you have high-interest consumer debt, you may use the funds from your personal loan to consolidate the debt. You can pay the credit card bills off yourself or some lenders will do it for you using the funds. This leaves you with one monthly payment to cover, so you can focus on paying the debt down faster. You may even secure a lower interest rate than the credit cards charged.

Buying a Car

If you can’t get an auto loan, the funds from your bad credit personal loan may be a good option. Some lenders allow secured loans, which means you can put the car up as collateral to get a lower rate or lower origination fee too.

Types of Bad Credit Loans

  • Secured Personal Loan: When you put down collateral, it’s a secured loan. You tell the lender they can have rights to your asset if you default on the loan. Not all lenders offer this option, though.
  • Unsecured Personal Loan: This is the most common type of personal loan. It’s unsecured because you don’t have to put down any collateral to secure it. Most lenders charge higher interest rates to make up for the risk.
  • Cash Advance: A cash advance comes from your credit card company and is a short-term loan. It’s useful to cover unexpected and urgent expenses, but it often comes with a higher APR than you’d get with a bad credit personal loan.
  • Payday Loans: Payday loans bridge the gap between your paydays when you have unexpected expenses. You can usually borrow $500 or less, but they charge excessive fees. You must repay the loan by your next payday, or you’ll pay more fees and excessive interest rates. See Best Online Pay Day Loan Lenders.
  • Auto Loans: An auto loan is secured by your car. You can get an auto loan at the dealership or from any lender you choose. If you get financing outside of the dealership, the lender will send you the funds which you use to pay for the car, making you a cash buyer at the dealership. Auto loans usually have realistic interest rates and competitive terms.
  • Student Loans: Student loans are money you borrow to go to college. You can get federal student loans from the Department of Education and private student loans from any lender that will approve you. Student loans are often deferred until you graduate, although they accrue interest. If you can’t make the payments right out of graduation, you can apply for extended deferral too.
  • Home Equity Loan: A home equity loan uses the equity in your home and converts it to cash. Home equity loans have a fixed interest rate, competitive terms, and you can use up to 85% of your home’s equity. Home equity loans have a fixed interest rate, and you receive the funds as one lump sum.
  • Home Equity Line of Credit: A HELOC is also a loan against your home’s equity, but it works like a credit line rather than a fixed-rate loan. HELOCs have variable interest rates, and you only pay interest on the money you withdraw from the line. You can make interest-only payments, but if you repay the funds used, you can reuse them during the 10-year draw period. The loan goes into full repayment after 10 years, so you can repay the loan.

How Much Can You Borrow with a Bad Credit Loan?

The amount you can borrow with bad credit varies by lender, and it also depends on your other qualifying factors. Some lenders don’t focus on credit but rather the big picture. What’s your debt ratio? How steady is your employment?

These factors help determine how much you can borrow with bad credit.

Can You Get a Loan with No Credit Check?

The most common no-credit-check loans are payday loans and should be used as a last resort. Payday loans are expensive and only get worse if you can’t pay them off on your next payday. Bad credit loans are a good alternative.

Are Bad Credit Loans Safe to Use?

Bad credit loans are safe if you use a reputable lender. Check the Better Business Bureau and other reviews before choosing a lender to make sure they’re legit before applying.

Are Bad Credit Personal Loans Worth It?

If you need funds, bad credit personal loans are your best choice when compared to payday loans or credit card cash advances. If you have the money to pay the loan off early, it works in your best interest because you’ll save money on interest. If you can’t, though, bad credit loans are worth it because they help you get the funds you need.

Summary: Best Bad Credit Loans

Bottom Line: Best Bad Credit Loans

Bad credit loans may cost more than other loans, but they offer the chance to fix your financial situation. If you use them right, they can help fix your credit while solving your financial issues. Do your research and find the loan that suits you the best.

Methodology

To select the best bad credit loans, we reviewed over 25+ lenders. Our unbiased evaluation includes reviewing the lender’s online experience, credit score requirements, income requirements, transparency, rates, fees, funding times, and security. Analysts also evaluated the impact each loan option has on an individual’s credit score. Read our personal rating methodology for more information about our impartial review process.

 

Kim Pinnelli
Kim Pinnelli

Kim Pinnelli is a Senior Writer, Editor, & Product Analyst with a Bachelor’s Degree in Finance from the University of Illinois at Chicago. She has been a professional financial writer for over 15 years, and has appeared in a myriad of industry leading financial media outlets. Leveraging her personal experience, Kim is committed to helping people take charge of their personal finances and make simple financial decisions.