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Bad Credit Loans: Compare Top Lenders

Bad Credit Loans: Compare Top Lenders
Written by Publishing Team

Bad Credit Loans: What You Need to Know

Summary of the best bad credit companies

All bad credit lenders have something different to offer their borrowers. These lenders report loan payments to credit bureaus, so on-time loan payments can help you build credit.

Development: Best for bad debt consolidation loans.

cocky: Best for borrowers with limited credit history.

LendingClub: Best for credit card consolidation loans for bad credit.

OneMain: Best for bad credit, secured and co-signed loans.

sedvi: Best for bad credit loans that help you build savings.

right on time: Best for small bad credit loans.

Bad credit loan rates

Personal loans can have high rates for borrowers with low credit scores. Borrowers with bad credit can expect an annual percentage rate of between 20% and 30%. Some lenders may consider the purpose for which you are using the money and the amount you are asking for when calculating your rate.

Personal loan interest rates by credit score

25.3% (lower scores are unlikely to qualify).

Source: Average rates are based on aggregated, anonymous bid data from pre-qualified users of the NerdWallet lender market from July 1, 2020 to July 31, 2021. Rates are only estimates and are not specific to any lender.

What is a personal loan for bad credit?

Bad credit loan is a personal loan For borrowers with low credit scores. These loans have fixed interest rates and are repaid in fixed monthly instalments. They are not usually backed by guarantees – they are not guaranteed. Lenders take into account your credit score, credit report, and debt-to-income ratio when deciding whether to lend you money.

How does a bad credit score affect your ability to get a loan

take bad credit score (300-629 on the FICO scale) does not automatically deny you a personal loan, but it does reduce your chances of approval. If you qualify, you may get an interest rate at the higher end of the lender’s range.

Bad credit loans are often repaid in monthly installments, usually over one to five years. You can use the money to pay for just about anything, including a home improvement project, medical bills, or credit card consolidation.

How to compare bad credit loans


Many bad credit lenders consider your credit score in a personal loan application, but they also weigh other factors. Here are some of the things lenders look for when qualifying you for a loan.

  • Balance level. If the lender has a minimum credit score requirement, you will need at least that score, ideally the highest score, to qualify.

  • Debt to income ratio. This is the percentage of your monthly income that goes to paying off debt. Lenders usually like to see this below 40%.

  • financial flow. Many lenders want you to know that you at least have enough money to pay your new loan installments after you’ve paid all your other bills.

  • Co-Advanced and Guarantees. If you get a signed or secured loan, the person or time you add to your application becomes a factor in whether you qualify.

Monthly rates and payments

Bad credit loans usually have higher interest rates than good credit loans, but you should still compare offers to find the most affordable one.

There are two ways to measure the cost of a loan:

APR: Loan Annual percentage rate Similar to its interest rate, but also includes any fees that the lender may charge, such as genesis or prepaid fees. Most financial experts agree that reasonable loans should have an APR of less than 36%.

Monthly payments: Measure the monthly loan payment against your budget to see if you can afford it. You can use a file personal loan calculator To find out your monthly payments on a personal loan at any rate and term.

Terms of payment

Bad credit loan repayment terms tend to fall between one and five years. A longer repayment period will make you lower monthly payments, but you’ll pay more in total interest. Aim for a repayment period that keeps your monthly payments affordable, but helps you pay off the loan quickly.


A bad credit loan can be funded on the day it is approved or it can take up to a week. During the approval process, the lender may ask you for more documents, such as W-2s and payment slips.

Credit Building Features

Consider a bad credit lender that will help you understand and build your credit. Some lenders will share your FICO score with you for free and offer a financial education to help you learn about ways to build credit.

Steps to get a personal loan with bad credit

Here are the steps to apply for a bad credit loan:

  1. Check your credit report: Before applying for a personal loan, check your credit report and address any errors that may affect your score and harm your chances of qualifying. NerdWallet Offers free access for your TransUnion credit report. You can also get a free report from each of the three major credit bureaus (the other two are Experian and Equifax) from

  2. Check your budget: It’s helpful to know your monthly budget when you’re about to apply for a personal loan – that way you’ll know how much you can pay for it each month.

  3. Online pre-qualification: Pre-qualification It allows you to see offers of loan rate, amount and possible repayment term from several online lenders. The process includes a flexible credit check, which does not affect your score.

  4. Consider a signed or secured loan: Adding a co-signer or collateral, such as a car, to your loan application can improve your chances of qualifying or getting a lower rate.

  5. Gather your documents: The lender may request information such as your Social Security number, proof of employment, and proof of income. Gather things like tax documents, payment slips, and W-2s before applying to speed up the process.

  6. Apply: It may take a lender between one business day and a week to review the application and fund the loan. The process leads to a difficult credit inquiry, which can cause your score to drop, but should rebound over time.

Types of bad credit loans

Unsecured personal loans for bad credit

that loan without collateral No guarantees required. Instead, the lender decides if you qualify based on things like credit score, income, and cash flow.

It can be difficult for borrowers with bad credit to qualify for an unsecured loan because many banks, credit unions, and online lenders weight your credit score significantly on a loan application.

Some online lenders, like the ones mentioned above, design their unsecured loans for consumers with low credit scores.

Secured Credit Loans

Credit standards are usually lower for secured loans, which require collateral, so it may be easier to qualify if you have bad credit.

When you add security to an application, the risk to the lender tends to be lower – it involves something valuable that you must take on if you don’t make your loan payments.

Banks and credit unions may allow you to use an account, such as a savings or investment account, to secure the loan. Online lenders often allow you to secure a car loan.

Although adding collateral to a loan can help you qualify or get a better rate, balance the importance of getting the loan against the risk of losing the security.

Bad credit loans co-signed

A co-location with better credit and higher income may improve your chances of qualifying for a loan or getting a lower rate. It tells the lender that if you don’t make the loan payments, someone else is likely to.

Co-signed loans are not as common as co-signed loans, where you have a co-borrower. Adding a co-borrower has a similar effect on your ability to qualify, but both borrowers have access to funds on a co-borrower. This is not the case with the co-location loan.

With either option, if you fail to make the loan payments, your co-applicant will be required to pay and your credit score may be affected.

Cash Advance Applications

a cash advance application It allows you to borrow from your next paycheck before you receive it. These apps usually don’t take your credit score into account at all when you ask for an advance. Instead, they review your bank account to see when you get paid, how much and how to spend to determine if you qualify for an advance.

They usually withdraw your money on the next payday. Prepaid amounts are usually set around $250.

These apps may charge for things like subscriptions or express funding, and some require you to tip for the service. With an app, you may be paying to access the money you’ve earned, so this should be one of the last financing options you’re considering.

If you use a cash advance app, check your budget and make a plan to cover your necessary expenses, such as bill payments, with a smaller paycheck.

Detect bad credit loan scams

The lenders on this page offer legitimate personal loans. Here are some red flags to watch out for when buying a loan.

No credit check or guaranteed consent: Reputable lenders dig into your money, including credit and income, to determine if you can pay off the loan. A lender that doesn’t do this may charge exorbitant rates that could lead to you falling into a debt trap.

No government license: The Federal Trade Commission requires lenders to register in the states in which they do business. Many lenders list state licenses on their websites.

Gift card request: No legitimate lender requires a gift card in exchange for a loan. If you are asked to present a gift card – even by someone who says they work for a reputable lender – consider it a scam.

Non-disclosure of fees: The Truth in Lending Act requires lenders to disclose the loan’s annual interest rate, total interest, and total repayment amount before signing the loan agreement. Ask to see this information before signing and walk away if the lender refuses.

How to pay off a personal loan for bad credit

Update your budget: follow income Which breaks down your income into needs, wants, savings and debts to ensure timely monthly payments for your personal loan.

Set up automatic payment: Setting up automatic payments ensures that you will pay them on time. Over time, this will help improve your credit score. Some lenders offer rate discounts to customers who use automatic payments.

Stay in touch with the lender: If you lose your job or run into a sudden expense and think you might default, contact your lender immediately to work on a solution. Some lenders offer difficult programs or will temporarily Postpone your payments And waive the late fee until you’re back on your feet.

NerdWallet Personal Loan Rating Methodology

The NerdWallet review process rates and rates personal loan products from over 30 lenders. We collect over 45 data points from each lender, interview company representatives and compare the lender to others who are seeking the same customer or offering a similar personal loan product.

Star ratings award points to lenders who offer consumer-friendly features. Here are some of the things we’re looking for:

  • Facilitated credit checks for pre-qualification.

  • Competitive interest rates and no fees.

  • Transparency of pricing and terms.

  • Customer service is easy to access.

  • Reporting payments to credit bureaus.

We also take into account regulatory actions provided by agencies such as the Consumer Financial Protection Bureau.

We weigh these factors based on our assessment of which factors are most important to consumers and how effectively they affect consumer experiences. This methodology applies only to lenders who set maximum interest rates at 36%, which is the maximum that most financial experts and consumer advocates agree is the acceptable limit for a loan to be affordable. NerdWallet does not receive compensation for our star ratings. Read Editing Guidelines.

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