Personal Loans for Bad Credit [Complete Guide]

If you have bad credit, you may find it difficult qualifying for a personal loan unless you apply with a co-signer. Luckily, there are some online loan companies that cater to borrowers with bad credit. The best bad credit loans offer fast funding, an easy online application process, and flexible terms.

In this guide, we’ve reviewed the best online loan options for people with bad credit. Each personal loan company below was evaluated on a variety of key factors including reputation, loan amounts, repayment terms, speed of funding, and fees.

Best Online Bad Credit Loan Companies

1. BadCreditLoans: Best Bad Credit Loans Overall

ClearViewLoans is a comparison tool that helps you connect with approved lenders for your borrowing needs. You’ll notice in nearly any ClearViewLoans review that users can easily find an offer that meets their desired term lengths, APRs, and loan amounts in just a few minutes. Rather than giving your personal information to many different lenders and waiting for offers, you can complete a simple questionnaire to receive quotes from all your top choices.

The ClearViewLoans process is simple. The website walks you through a few basic questions to understand your financial situation and borrowing needs. You’ll answer questions regarding the following:

• Your preferred loan amount ($1,000 to $5,000)
• Your credit score range
• Your email address, name, and phone number so lenders can contact you with quotes
• More personal information, like your address and military history
• Rental or homeowner statuses
• Your car payment status
• Your marital status and any children
• Debt consolidation offers
• Driver’s license information
• And more

After you submit all the required information, you’ll receive quotes from approved lenders for your desired loan. APRs and terms can range based on your financial history, debt-to-income ratio, and credit score.

ClearViewLoans is not a lender but helps you receive quotes from other lenders. Loan amounts vary based on the lender you choose and your location. Because ClearViewLoans caters to borrowers with lower credit scores requiring immediate cash, most of the lending amounts are relatively low.

When going through the steps we discussed above in this ClearViewLoans review, you will see that you can select loan amounts ranging from $1,000 to $5,000. These figures represent the maximums you wish to borrow. ClearViewLoans lenders offer loans as low as $100.

ClearViewLoans offers a few advantages over traditional lenders. You can enjoy the following:

• Fast funding: You can receive your desired loan amount in as few as 24 hours to cover immediate financial needs.
• Versatile spending: ClearViewLoans connects you with personal loan lenders, which means you can use the funding for any needs, ranging from debt consolidation to vacations.
• Loose credit requirements: ClearViewLoans helps you receive lending offers, regardless of your credit history. Review the eligibility requirements below.
• Easy, secure online application process: Applying online for a loan from all the top lending options takes only a few minutes. The ClearViewLoans platform uses iron-clad encryption technology to keep your information safe.

To qualify for funding from a ClearViewLoans lender, you must meet the following requirements:

• A minimum of 90 days of employment with your present job
• U.S. citizenship or permanent residency
• A minimum $1,000 monthly income
• An eligible checking account in your name
• A valid email address and phone number

All applicants also must be 18 or older to qualify. The ClearViewLoans lending tool is an excellent option for anyone needing an immediate, smaller personal loan.

4. Upstart: Best for Limited Credit History

Upgrade is another company offering some of the best personal loans for bad credit. You can borrow money from Upgrade to use for a variety of financial issues, including:

• Credit card refinancing
• Debt consolidation loans
• Major purchases
• Home improvement loans

Conversely, Upgrade’s loan funds are not eligible for certain uses, including:

• Gambling
• College expenses
• Investing

Upgrade has an excellent reputation as a bad credit loan company. Since its inception, it has loaned over $15 billion to more than one million customers and maintains a near-perfect rating on Trustpilot.

If you’re still shopping around for the best rates, you can opt for prequalification with only a soft credit check (with no impact on your credit score) even if you don’t receive pre-approval. Borrowers can apply for both unsecured and secured personal loans from Upgrade. However, a secured loan offers a better chance of getting a lower interest rate.

Loan Amounts and APRs

Upgrade offers bad credit borrowers a lot of flexibility regarding loan amounts, which range from $1,000 up to $50,000. However, you can expect to see high APRs, from 6.55% up to 35.97%.

All borrowers are subject to an origination fee between 2.9% and 8%, although your chosen lender will deduct the fee right from your loan funds. Borrowers who qualify for the lowest interest rates must also enroll in autopay.

6. Prosper: Best Peer-to-Peer Lender

Prosper is a peer-to-peer online lending marketplace – the first in the United States – that has facilitated more than $21 billion in loans to over one million people since its inception in 2005.

Once you apply for a personal loan, Prosper assigns you a numerical rating using factors like your debt-to-income ratio and credit score. Then, private investors decide whether they want to fund your loan.

However, there’s a catch: If investors haven’t funded at least 70% of your loan amount within 14 days, your application will expire. Luckily, Prosper reports that most borrowers receive funding within three days.

Here are the types of online loans for bad credit available from Prosper:

• Personal loans
• Home equity lines of credit
• Investments and IRAs
• Short-term and bridge loans
• Automobile/vehicle loans
• Debt consolidation loans
• Home improvement
• Healthcare financing
• Emergency expenses
• Small business loans

Loan Amounts and APRs

The minimum loan amount on Prosper is $2,000, and the maximum is $40,000. You can expect your interest rate to range from 7.95% up to 35.99%. Due to its unique peer-to-peer lending method, borrowers may find that it takes a few days longer to receive their money than it would from direct lenders.

What Is a Bad Credit Personal Loan?

A bad credit personal loan is a type of loan that is specifically designed for individuals with a low credit score or a poor credit history. When someone has a low credit score, it indicates to lenders that they may have had difficulties managing their finances in the past or have defaulted on previous loan payments.

Traditional lenders, such as banks and credit unions, typically rely heavily on credit scores when determining whether to approve a loan application. If an individual has a bad credit history, they may find it challenging to secure a loan from these institutions. However, some lenders specialize in offering personal loans to individuals with bad credit.

Bad credit personal loans often have higher interest rates and less favorable terms compared to loans offered to individuals with good credit. This is because lenders perceive borrowers with bad credit as higher risk, and the higher interest rates help offset that risk. Additionally, bad credit personal loans may have lower borrowing limits and shorter repayment periods.

While bad credit personal loans can provide access to funds for individuals with poor credit, it’s important to carefully consider the terms and conditions of the loan. Borrowers should ensure they can afford the monthly payments and explore options to improve their credit score over time, as this can help them qualify for better loan terms in the future.

How We Ranked the Best Loans for People with Bad Credit

Now that you’ve finished reading our reviews on the best bad credit loans, you’re probably curious about how we ranked the multiple lenders on our list. Keep reading as we break down the individual ranking factors used to determine the best bad credit loan companies and why they stand out in today’s competitive marketplace.

Eligibility Requirements

Every lender offering bad credit personal loans has varying eligibility requirements for borrowers. The most common factors include:

• Credit history
• Credit score
• Existing debt
• Debt-to-income ratio
• Open accounts
• Financial history (delinquencies, bankruptcies, etc.)
• Collateral (secured loans only)
• Employment

In addition, most lenders offering loans for bad credit require borrowers to:

• Be at least 18 years old
• Have a U.S. residence and bank account
• Provide valid contact information
• Show proof of employment (i.e., pay stubs, W-2s)

Loan Amounts

Another factor we used to rank the best bad credit loans was each lender’s loan amount limits. Most of the companies we reviewed had minimum loan amounts ranging from $500 to $2,000 and maximum amounts between $5,000 and $50,000.

LendYou works with short-term and payday lenders, which means its loan amount options are relatively limited: between $100 and $2,500. Plus, payday loans have insanely high interest rates, sometimes in the hundreds or thousands of percentages.

However, the other lenders in our review had much higher limits for borrowers. For example, Upgrade offers loan amounts ranging from $1,000 to $50,000 and lines of credit that start at $500 and max out at $25,000.

Term Lengths

When comparing personal loans for bad credit, several factors can impact the term lengths available to you, including your desired loan amount and credit score. The online lenders we reviewed had term lengths ranging all over the map.

For example, LendYou can connect borrowers to a lender offering a 30-day payday loan, as its lending network specializes in short-term, unsecured personal loans (but with sky-high interest rates). At the other end of the scale, Upgrade offers loan terms of up to seven years.

Remember, numerous factors affect the loan terms a lender may offer you. For example, unsecured loans and secured loans have different term lengths, and your credit score and chosen lender will also affect which offers and rates you receive.

Costs and Fees

You should always compare personal loan rates and fees before choosing a lender. If there’s one thing we hate, it’s paying exorbitant fees, and bad credit loans are no exception. Unfortunately, charging borrowers fees is perfectly in line with industry standards and normal practice for almost every lender.

Some companies that connect borrowers with multiple lenders through a partner network don’t charge any fees; instead, the company receives a commission for referring potential customers to direct lenders. However, you’ll find that most lenders do charge fees.

For example, the most common is the origination fee, which usually is either a flat rate or a percentage of the loan. In fact, the majority of lenders charge an origination fee, which comes directly from your loan amount.

In addition, many lenders charge late payment penalties and subject borrowers to NSF fees for returned checks. You may also come across annual fees, loan application fees, or prepayment penalties, where lenders charge you extra money to pay off your loan early.

Application Process

Applying for a bad credit loan when you’re in desperate need of emergency finances is already nerve-wracking. However, the ultimate annoyance is companies with a long, complex, or confusing application process.

When we evaluated the six companies in our review of the best loans for bad credit, the swiftness and ease of the application process were crucial factors. After all, who wants to spend an hour answering intricately detailed questions on the phone or computer? Even worse is the hassle of searching for those ever-elusive financial documents.

Fortunately, all six companies in our review have fast, simple applications you can complete online in minutes. First, enter your personal information to compare interest rates in real-time and see if you prequalify, then find the loan that works best for you. Plus, most of the lenders in our review offer approvals within one business day.

Eligibility Requirements for Legitimate Loan Companies

Every bad credit lender, from peer-to-peer companies like Prosper to direct lending providers like OneMain Financial, has unique criteria for evaluating potential borrowers. So, before you apply, check your credit score and credit report, and gather necessary documents ahead of time, like W-2s, paystubs, tax returns, valid identification, etc.

Remember, every lender is different, but most use the same general factors when determining eligibility, including your:

• Credit score
• Total credit usage
• Credit report
• Annual income
• Payment history
• Existing debt
• Field of employment
• Desired loan amount
• Monthly cash flow

However, it’s your credit score and payment history (which makes up a massive 35% of your FICO score) that have the most influence on whether you’ll receive loan approval. Finally, before you sign, ask yourself:

1. Do I really need a personal loan, or am I trying to compensate for overspending or poor budgeting?
2. Can I afford to take on another monthly payment for a personal loan on my current income?

A personal loan may not be the best option if you’re overspending or can’t afford another monthly bill. You can also increase your chances of approval by improving your credit score before applying.

Types of Bad Credit Loans

As we mentioned earlier in our reviews of the best bad credit loan companies, there are numerous different loan types for borrowers with bad, poor, or fair credit. Stick with us as we discuss the four most common types of loans for people with bad credit.

Secured Loans

A secured loan is a personal loan that requires a form of collateral from the borrower, such as a house or car. If the borrower fails to meet the loan’s original terms, the lender can seize the collateral to recoup any financial losses.

Although the borrower accepts the chance of losing their collateral if they don’t repay, secured personal loans offer lower interest rates and better terms than unsecured loans. Most people who apply for secured loans use the funds to pay for a home equity loan, car, or mortgage.

Unsecured Loans

Unsecured loans are loans that are not backed by any collateral or asset. Unlike secured loans, which require borrowers to provide an asset (such as a house or a car) as collateral, unsecured loans are granted based on the borrower’s creditworthiness and ability to repay the loan.

Here are some key features of unsecured bad credit loans:

No Collateral: An unsecured loan does not require any collateral. This means that if a borrower defaults on the loan, the lender cannot seize any specific asset to recover the funds. Instead, the lender may take legal action to recover the outstanding amount.

Based on Creditworthiness: Lenders assess the borrower’s credit history, income, employment stability, and other relevant factors to determine their creditworthiness. A strong credit profile, including a good credit score, can increase the chances of loan approval and more favorable loan terms.

Higher Interest Rates: Since unsecured bad credit loans carry more risk for the lender, they generally come with higher interest rates compared to secured loans. The higher interest rate compensates the lender for the risk they assume by providing funds without collateral.

Fixed Repayment Terms: Unsecured loans typically have fixed repayment terms, meaning borrowers must repay the loan over a specified period, usually through regular installments (monthly, bi-monthly, etc.). The repayment period for online personal loans can range from a few months to several years, depending on the loan amount and the lender’s terms.

Versatile Use: Unsecured loans can be used for various purposes, such as home improvements, medical expenses, education, or even personal events like weddings. The lender usually does not impose restrictions on how the funds are used, unlike some specialized loans (e.g., auto loans or mortgages).

It’s important to note that due to the absence of collateral, unsecured loans pose a higher risk for lenders. As a result, lenders may have stricter eligibility criteria, require a higher credit score, or provide lower borrowing limits compared to secured loans. Borrowers with good credit history and stable income are more likely to qualify for favorable terms and interest rates.

Before taking out an unsecured loan, it’s crucial to assess your financial situation, compare loan offers from different lenders, and ensure that you can comfortably meet the repayment obligations.

Payday Loans

We won’t mince words: A payday loan (also known as a cash advance loan) is usually a bad idea and often counterintuitive to achieving financial health and stability. However, there are certain circumstances where borrowing from a payday lender can provide a feasible solution to your financial problems.

For example, cash advance loans are a common choice for people who need a small unsecured personal loan but don’t want to undergo a credit check or disclose their credit score. But there’s a huge catch: APRs that rise into triple and even quadruple digits, although the maximum rate depends on your state of residence. Plus, most payday loans have caveats that you must repay the loan amount in full upon receiving your next paycheck.

How to Spot Bad Credit Personal Loan Scams

Spotting bad credit personal loan scams can be challenging, as scammers are often skilled at appearing legitimate. However, there are some red flags and warning signs you can look out for to help protect yourself from falling victim to scams. Here are some tips to spot bad credit personal loan scams:

Upfront Fees: Be cautious if a lender asks for upfront fees or charges before approving your loan. Legitimate lenders typically deduct fees from the loan amount or include them in the repayment plan, rather than requiring upfront payment.

Guaranteed Approval: No lender can guarantee approval for a loan, especially if you have bad credit. If a lender claims to guarantee approval regardless of your credit history, it’s likely a scam.

Unsecured Websites: Check if the lender’s website is secure. Look for “https://” at the beginning of the website URL and a padlock symbol in the address bar. A lack of security measures may indicate a scam.

No Credit Check: Reputable lenders typically conduct credit checks to assess the borrower’s creditworthiness. If a lender claims to offer loans with no credit checks, it may be a scam.

Pressure Tactics: Be cautious if a lender uses high-pressure tactics to rush you into making a decision or signing loan documents. Legitimate lenders will give you time to review and understand the terms and conditions.

Unprofessional Communication: Poor grammar, spelling mistakes, and unprofessional emails or phone calls can be signs of a scam. Legitimate lenders typically communicate professionally.

No Physical Address or Contact Information: Check if the lender provides a physical address and legitimate contact information. If they only have a generic email address or a P.O. Box, it could indicate a scam.

Requests for Payment via Untraceable Methods: Scammers often ask for payment through wire transfers, prepaid cards, or cryptocurrency. Legitimate lenders usually accept payments through verifiable and traceable methods.

Missing or Fake License: Research the lender’s license and credentials. If they claim to be licensed but you can’t find any evidence or their license seems suspicious, it’s a warning sign.

Research the Lender: Before engaging with any lender, research their reputation. Check for online reviews, verify their licensing and registration, and look for any complaints or scams associated with their name.

Remember, it’s essential to exercise caution and do your due diligence when dealing with unsecured personal loans, especially if you have bad credit. If something seems too good to be true or you feel uncertain about a lender, trust your instincts and consider seeking alternatives.

Frequently Asked Questions (FAQs)

Conclusion

Now that we’ve discussed every aspect of how to apply for a personal loan with bad credit, it’s time to wrap it up. In this post, we reviewed the best bad credit loans for 2023 from the most reputable and top-rated lenders, including BadCreditLoans, Upstart, Prosper, LendYou, ClearViewLoans, and Upgrade.

All six lenders in our review provide a fast and convenient solution for people who need a loan, even if they have bad or poor credit. Be sure to take the time to compare rates and research lenders—and never sign a loan agreement without reading the fine print. However, with some hard work, smart budgeting, and discipline, you can rebuild your credit and secure a brighter, more stable financial future.