Best Personal Loans For Bad Credit to Consider in 2024

A bad credit personal loan might be the right choice if you have a credit score under 580 and have had trouble getting approved by other lenders. Before accepting, consider the loan rates and terms carefully to be sure that it fits into your budget and is the best deal you can get. Key factors to consider are the loan amount, APR, fees, payment amount, and repayment term.

If you’re unsure where to find personal loans for bad credit, we can help. Our team of financial experts reviewed and ranked more than 30 online lenders to help you find the best options. Below are our top six picks for the best personal loans for bad credit.

Because personal loans can have a big impact on your finances, it’s important to spend a little time reviewing your options to make sure you’re not overpaying. Also, it’s usually worth comparing your rates across multiple lenders to ensure you’re getting the best deal for your credit history and financial situation.

Our team of financial experts ranked lenders based on our ratings methodology for personal loans and found the best personal loans for bad credit. This ratings methodology evaluates lenders based on loan length, APR, repayment terms, user experience, customer service, credit score history, banking and credit union use, and additional features.

Best Personal Loans for Bad Credit for 2024 - Full Overview

Now that you know how to compare options, you can choose the company that is best for bad credit loans. Here are our top six picks for the best personal loans for bad credit in 2022.

How to Choose the Best Personal Loans for Bad Credit

Before we provide our top choices, consider these factors when analyzing and comparing loan companies for bad credit.

• Loan features - First, it’s important to look at the basic components of the loan. How much can you borrow? Lenders offer a range of loan amounts and approve you for a certain amount based on your credit and income. They’ll provide repayment terms like 12, 24, or 60 months. Longer loan terms mean lower monthly payments but higher overall costs. Some loans also come with use limitations, so check for such restrictions.
• Interest rates and fees - Look at the annual percentage rates (APRs) available and the rate they’ll offer you based on your credit and financial picture. Determine if there are application, origination, late or returned payment, or other fees. Know if there are prepayment penalties and recognize low interest loans for bad credit aren’t available.
• Application process – Learn if you can you apply online and whether the lender requires significant documentation. Know before applying if the lender will do a hard credit check for a quote. While many lenders perform a soft credit pull to pre-qualify you without hurting your credit score, some require the hard inquiry. Consider how long it takes to get a decision and get the funds.
• Eligibility requirements - Understand the lender’s eligibility requirements before applying. Some require a minimum credit score, residency in certain states, or a certain income. Borrowing from a credit union, you’ll likely need to become a membership. While some lenders allow cosigners, others won’t.
• Customer support – Find out if a lender’s customer service policies work for you before you apply. Determine if they have multiple support channels like phone, email, and live chats.
• Online user reviews – Use online review sites, like Trustpilot, to assess the lender’s reputation. Learn any negative experiences prior borrowers had with the lender,like surprise fees and bad customer service before becoming a customer.
• Perks and bonuses - Look for unique offerings from the lender that make applying worthwhile, like a program that allows you to borrow more as your credit improves. See if that lender analyzes the risk you present, without relying heavily on your credit score or if they offer payment flexibility during hard economic times.

What is Considered a Bad Credit Score?

According to myFICO, a credit score that’s lower than 580 is considered poor, and one between 580 and 669 is fair. Any credit score under 670 is below the average U.S. consumer credit score and lenders will consider that borrower a higher risk.

What Affects Your Credit Score?

The biggest factor affecting credit score is your payment history. Any late or missed payment lowersr credit score. Credit utilization–the amount of credit you’ve used in comparison to your available credit–is another significant  factor in your credit score. The less available credit you’ve used, the higher your credit score may be.

Other factors include your credit mix or type of credit, the average age of your accounts, and the number of  recent credit inquiries. For credit mix, it’s  best to have both revolving and installment accounts and to keep your accounts open as long as possible to increase the age of your accounts. Also, avoid too many hard credit inquiries.

What Are the Types of Loans for Bad Credit?

There are various types of loans you may be able to get with bad credit, including:

• Personal loans: Personal loans are lump-sum term loans you repay over a set period of time. Loans from finance companies for bad credit will typically range from $1,000 to $50,000, have terms from 24 to 84 months, and APRs up to 36%.
• Payday loans: Payday loans are typically small, short-term, high-cost loans that are repaid in increments out of the borrower’s paycheck until satisfied. The set payments come directly from the borrower’s checking account. Since qualification is often income-based, they’re accessible to borrowers with bad credit. Because of their high costs for  short term loans, they’re usually  considered  predatory, and some states prohibit them. Borrowers risk multiple overdrafts if the full amount of each payment can’t be drafted from their checking account each pay period. This often leads to overdraft fees, can cost borrowers their checking account, and lead to collection both from the payday lender and the borrowers bank. 
• Car title loans: Car title loans are lump sum loans secured loans where lenders use your vehicle’s title as collateral. You usually must  own your vehicle outright to use it as security for a title loan. These loans often come with high APRs and short terms which can make repayments more difficult. If you default, the lender can repossess your vehicle.

How to Get a Loan with Bad Credit

Start with determining the bad credit loan companies where you will qualify for a loan. Most companies post their eligibility requirements online. Make a shortlist of lenders that may suit your needs. While each will have a slightly different application process, here are the common steps you’ll encounter:

• Visit each lender’s website: Visit the websites of the lenders from your shortlist.
• Go through  pre-qualification: Most lenders pre-qualify with a soft credit check on their site. This involves providing your monthly income  and expenses, and other required income.
• Review your offers: Lenders review  your application and let you know if you’re approved. If you are, they’ll show you  how much you can borrow, along with the fees, APR, and terms. Compare offers: Look at your offers side by side to see which loan fits your budget and purposes most closely.
• Accept the loan: Follow the lenders process to accept the offer. You may have to verify your income by sending bank statements or connecting your bank account and send other documents related to monthly expenses or collateral offered to secure the loan. Then, you’ll usually need to e-sign documents.
• Receive the funds: Upon full approval, the lender will send you the funds. Often, they’ll direct deposit them into your bank account within one to two business days.

Where Can I Get a Personal Loan with Bad Credit?

Borrowers with bad credit can get a personal loan from banks, credit unions, and online lenders. In most cases, the best bad credit loans are available through online lenders like the six lenders above. specialize in lending to bad credit borrowers, have lower overhead costs because most don’t have physical branches, and have more lenient loan qualification requirements.

Alternatives to Bad Credit Loans

Even the best bad credit loans can be expensive, so consider one of these alternatives:

• Borrow from friends and family: Lenders don’t know you personally so can only look at your financial records and history to assess the level of risk you present. Friends and family members know you, which can work to your advantage when borrowing money. If you need better loan terms than you can get with a lender, consider asking people who trust you to repay them for a personal loan.
• Credit cards: Some lenders also offer credit cards to people with bad credit. In some cases, you must put down a security deposit but then can earn an unsecured credit line as you make faithful payments for a certain amount of time. While credit cards typically have high APRs, you can cut your borrowing costs by paying off the balance as quickly as possible.
• Work on your credit: If your financial need is not an emergency, work on fixing your credit and wait. Get a secured credit card to establish a positive credit line and make all your payments on time, and in a short time, you may qualify for better rates and terms on a loan than you can get with loans for bad credit.

Bad Credit Loans Rates, Amounts, and Terms

The best bad credit loans can offer a far better borrowing solution than payday or car title lenders. You often can borrow thousands of dollars which can be repaid over several years with APRs below 36%, in most cases. While the loan amounts may be lower than personal loans for good credit, they are often higher than payday loans and car title loans.

Additionally, the APRs usually are on  the high end of the ranges lenders provide to account for the risk you present. But they will be much lower than the APRs you’ll face with payday loans and car title loans. Overall, bad credit personal loans are worth considering, if they’re your only option. They also can work as a tool for improving your credit, provided you make your payments on time, and help you get loans with better rates and terms  in the future.

How to Avoid Personal Loan Scams

Scammers about in the personal industry, especially for borrowers with bad credit. The best way to avoid scams is applying through a reputable lender websites Here are some red flags that are warnings you’re on a scammers website:

• Incorrect or unsecure URL: Scammers often create websites that look very similar to a legitimate lender’s website to steal your information. Check website URLs carefully to be sure you’re on the true lender’s website and make sure they start with “https” and you see a lock symbol at the beginning of the URL.
• Personal email address: If you receive an email from someone pretending to represent a lender that uses a personal email address, especially from a free email provider, be wary. Lender representatives use email addresses that end with the company’s website URL (e.g. name@avant.com)
• No credit check: Lenders must run a credit check, even if just a soft inquiry, to verify your identity. If a lender does not require any credit check, stay away.
• Upfront payments: Most personal loans today require upfront payments. Application and origination fees get deducted from your loan proceeds. If a lender is trying to get you to pay something before you can get your loan funded, that’s a big red flag.

Go to  legitimate lenders, like those that made our list above. By opting for well-known, reputable lending companies, and going directly to their websites, you can greatly reduce your risk of getting  scammed.

Conclusion

If you currently have bad credit and need a loan, there are a number of lenders that will consider lending to you — no matter your credit score. Above are six of the best loans for bad credit currently on the market. Applying is simple and you can get an answer within minutes. The downside of bad credit loans is you’ll  likely get smaller loan amounts with higher interest rates than if you had fair or better credit. But, if you pay your loans on time, you’ll add positive credit activity to your credit reports. That can help you improve your credit score and position you for better rates and terms for your future borrowing needs.