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A personal loan for bad credit is an option for borrowers with low FICO scores and thin credit histories. The loans can range from $1,000 to $50,000 and have fixed interest rates that are repaid in monthly installments.
Compare lenders’ minimum credit score requirements, fees and loan terms to find the best one for you. Also consider whether you can qualify for a better deal by adding a cosigner or coborrower.
1. Upstart
Upstart uses AI to consider more than just a borrower’s credit score, which makes it a good option for borrowers who have unique financial backgrounds. The lender also offers flexible loan uses, quick funding and helpful resources. On the downside, its high interest rates and fees may not be suitable for all borrowers.
To prequalify for a personal loan, visit Upstart’s website and fill out an online form. You will need to provide basic contact information and details about your education, employment and savings. Upstart will run a soft credit check (which won’t impact your score) and then present you with potential loan offers within minutes. You can then review each offer and choose one to continue with the application process.
If you are rejected for a Upstart personal loan, it’s important to remember that it doesn’t reflect your creditworthiness or your ability to repay a debt. Instead, it’s a sign that you need to improve your overall financial standing before applying again in the future. In order to do this, it’s a good idea to seek professional financial advice that can help you develop a plan for improving your creditworthiness and managing your finances effectively. In addition, you may want to explore alternative financing options, such as peer-to-peer lending or credit union personal loans. These may offer lower rates than Upstart’s personal loans and are more likely to be approved if you have bad credit.
2. OneMain Financial
OneMain Financial prioritizes a borrower’s ability to repay on their loan application. The lender doesn’t have hard cut-off points for credit scores, debt or income and instead considers the applicant’s entire financial picture to determine if they are able to take on a new debt obligation. OneMain also gives borrowers the option to secure their personal loans with collateral. That may help lower their rates if their credit is too poor for other lenders to approve them.
OneMain offers a range of online and in-person services including live chat, phone and email. Their customer service representatives are helpful, knowledgeable and courteous and can answer questions about their products or how to apply. OneMain has a convenient app that makes it easy to manage your loan account, and their website features a comprehensive resources tab with helpful explainer content and financial calculators.
While they offer low minimum credit finchoice credit card scores and fast funding, OneMain has higher start rates than some competitors that offer loans for bad credit. It also charges origination fees, which can be 1% to 10% of the loan amount. And, it has a smaller maximum loan amount than some of our other picks for personal loans for bad credit.
The lender has a high BBB rating and a 3.6/5 user rating on WalletHub. It also provides flexible terms, a variety of loan amounts and the ability to submit an application with a co-applicant.
3. Upgrade
Upgrade is one of the best personal loan lenders for bad credit because it offers competitive rates, a variety of loans, and a robust mobile app. It also has a low minimum credit score requirement. In addition, borrowers can take advantage of rate discounts by enrolling in automatic payments and using their loan to pay off debt with direct payment to creditors. These features set it apart from competing online lenders, such as Prosper and Upstart.
When a borrower applies for an Upgrade personal loan, the lender will run a soft credit pull to prequalify the applicant. The company requires verification of identity, income, and residence, as well as a recent bank statement and pay stubs. Upgrade can also accept joint applications and consider both borrowers’ credit profiles when making a lending decision.
Borrowers can get their funds quickly after approval, typically within one business day of clearing the required verifications. They can use the money for any purpose, including home improvement projects and debt consolidation. However, the company doesn’t allow its loans to cover post-secondary education expenses, investments, illegal activities or gambling. In addition, the loan program includes a Short-Term Hardship option that allows borrowers to reduce their payments for a limited time if they encounter financial difficulty. However, this should be a last resort for borrowers who are struggling.
4. Best Egg
With a simple application and high customer satisfaction ratings, Best Egg is one of the easiest personal loan lenders to work with. It allows you to prequalify without affecting your credit score, and the process is entirely online. It also provides a number of useful tools to help you manage your finances, including the ability to see what rate you would qualify for before submitting an application.
The lender has a wide variety of lending products, which makes it possible to find a personal loan that fits your needs. Its lending criteria goes beyond a borrower’s credit score and takes into account factors like income, debt-to-income ratio and education. In addition, it is one of the few personal loan lenders that offers a secured option for those who are considered a higher-risk applicant. Secured loans require collateral that can be seized in the event of default, which helps reduce the risk for the lender.
If you are denied a personal loan from Best Egg, the company will provide an explanation of why you were rejected. This information can be helpful in identifying areas where you may need to improve before trying again. Typical reasons for denial include low credit scores, high debt-to-income ratios or insufficient income. By working to improve these areas, you can increase your chances of approval in the future.