Best Personal Loans for Bad Credit in 2017

Even if you have a poor to fair credit score, it’s still possible to get a personal loan (and one with a reasonably competitive interest rate). To help you out, we researched over 50 different online and traditional lenders to find the best personal loans for borrowers with bad credit. We’ve compiled our top picks in the list below.

Best Personal Loans for Bad Credit (Under 630)

Even if you have a credit score under 630, it’s still possible to get a personal loan. Take a look at our top picks below.

OneMain Financial

If you have a credit score below 620, we suggest considering a personal loan from OneMain Financial. OneMain Financial does not require a minimum credit score to apply. In fact, roughly half of the company’s lending went to borrowers with credit scores under 620 in 2016. However, if you have a very low credit score, this direct lender may require you to secure your loan with collateral. Most borrowers use their personal vehicle to secure the loan. You cannot apply directly for a secured loan; rather, you will apply for an unsecured loan and the company may counter with a secured loan offer instead.

One disadvantage of using OneMain is that you may have to visit a branch in person to complete your application. While the company claims that 83% of Americans live within 25 miles of a branch, it is still inconvenient to visit if you want a seamless online application experience. The company does provide online loans through its iLoan brand, but the application process, loan terms and eligibility criteria are different. OneMain Financial is available in all states.

Best for: Borrowers with credit scores under 620 who are okay putting up collateral and making a branch visit.

  • Loan amount: $1,500 - $25,000
  • Application process: Online plus in-branch visit
  • Cosigners allowed: Yes

iLoan

iLoan is the online counterpart of OneMain Financial, offering unsecured personal loans in 12 states across the U.S. While rates at iLoan are higher than those at OneMain Financial, the application process is completely online (and therefore won’t require a branch visit). Like OneMain Financial, iLoan is open to borrowers with lower credit scores who may have had trouble qualifying elsewhere. One thing we like about iLoan is the company’s 7-Day Satisfaction Commitment, which gives borrowers the option of canceling and returning all loan funds within a week of the loan agreement. This is a somewhat unusual feature among online personal loan providers.

One major downside to iLoan is that it is only available in 12 states: Alabama, California, Delaware, Idaho, Illinois, Missouri, Nevada, New Mexico, Oregon, South Carolina, Utah and Wisconsin. If you live outside of one of these states, we recommend considering the parent company of iLoan, OneMain Financial, instead. Furthermore, iLoan only accepts co-applicants in California, and only makes secured loans in Wisconsin, so it’s not the best option for secured or cosigned personal loans.

Best for: Borrowers with credit scores under 620 who want an unsecured loan.

  • APR: 17.60% - 35.99%
  • Loan terms: 2, 3, 4, 5 or 5.5 years
  • Funding time: 1+ business days
  • Read full iLoan Review
  • Loan amount: $2,550 - $25,000
  • Application process: Online
  • Cosigners allowed: No (except in California)

Consider a Cosigned or Secured Loan

Personal loan companies mainly rely on your credit score and history when evaluating whether to approve you or not. This means that a poor credit score will hurt your chances of getting a personal loan. While some lenders cater to borrowers with poor credit scores, they may charge very high interest rates up to 36% (lenders that charge more than this are likely predatory or not reputable). To get a better rate, we recommend borrowers consider getting a cosigner or securing their loan with collateral. These strategies are not without their risks, but they can help you get approved and qualify for a reasonable interest rate.

LenderCosigners AllowedCollateral Accepted
BackedYesNo
Citizens BankYesNo
PNC BankYesNon-real estate collateral (cash, vehicle, etc.)
Wells FargoYesCD or savings account
FreedomPlusYesNo
Lending ClubYesNo
OneMain FinancialYesInsured vehicle (only some borrowers)
Mariner FinanceYesYes (over $10,000)
Alliant Credit UnionYes (cosigner does not need to be an Alliant member, but will automatically become a member if the loan is approved)Savings account and CD
Navy Federal Credit UnionYesSavings account and CD

Best Personal Loans for Poor to Fair Credit (630 to 680)

There are many lenders that cater to borrowers with poor to fair credit scores, which are typically scores from 630 to 680.

Credit Unions

Credit unions are a great option to get a personal loan, as many credit unions are willing to work with borrowers who have less than perfect credit scores. If you belong to a credit union affiliated with a profession, employer or association membership, the credit union may consider other factors—such as your employment status, income, banking relationship, and educational background—besides your credit history when evaluating your loan application. Another benefit of using a credit union is that most federal credit unions have interest rates capped at 18%. Local and community credit unions may charger higher rates, but those rates don’t exceed 36%.

One thing we like about credit unions is that many of them make small-dollar loans as low as $250. These loans are a better alternative to taking out a no credit check or payday loan. Many credit unions also offer loans that are secured by your savings or CD account. These loans have less stringent credit requirements and low interest rates. While you’ll need to be a member to get a loan, many credit unions will let you to join if you live in the region they serve, are sponsored by your employer, have a family member who is an existing member, or are a member of a particular organization. Some credit unions can also fund your loan offer quickly. Alliant Credit Union, for instance, may be able to get you funds as fast as same day.

Best for: Borrowers with fair or better credit, small-dollar loans, and CD or savings secured loans.

  • APR: Up to 18%+
  • Loan terms: Up to 5 years
  • Funding time: 3 - 7 days
  • Loan amount: $500 - $50,000
  • Application process: Online, by phone or in person
  • Cosigners allowed: Generally yes

Avant

Most Avant borrowers have credit scores between 600 and 700, making it a good choice for a personal loan if you have fair credit. We recommend that you have a credit score of at least 600 to be qualify for a personal loan from Avant. In addition, borrowers who qualify at Avant have, on average, annual incomes between $50,000 to $100,000, so we don’t recommend this company for low-income earners.

One thing we like about Avant is that the company offers flexibility when it comes to repaying your loan. You can change your upcoming and future loan payments up to one day before they are due. This includes changing the payment amount and the due date. The company also provides late payment forgiveness, refunding its $25 late fee if you make three consecutive on-time payments after your late payment. Finally, the company has fast funding, funding loans in as fast as one day. Avant is available in all states, except Iowa, Colorado and West Virginia.

Best for: High-income borrowers with a credit score of at least 600.

  • Loan amount: $1,000 - $35,000
  • Application process: Online
  • Cosigners allowed: Yes

Upstart

We think Upstart is another excellent choice for a personal loan if you have average credit as the company provides competitive rates and terms. The average rate is around 17% on a three-year loan from Upstart, which is in line with what we’ve found for borrowers with fair credit. To qualify at Upstart, you’ll need a credit score of 620 or above and a verifiable source of income (or to be starting a full-time job within six months—other requirements may apply). Upstart will also consider your educational and employment history when making a loan decision, and this is what allows them to have more flexible credit requirements than other companies.

Upstart is one of the few personal loan companies that lets borrower use their funds to pay for educational expenses. This includes college or grad school as well as courses and bootcamps. The company partners with 17 coding and development bootcamps across the country, including Dev Bootcamp, Fullstack Academy and Hackbright Academy. If you’re accepted into one of these partner programs, you are eligible to apply for a Upstart loan to finance your course even if you don’t have a four-year degree or a job offer. Upstart is available in all states, with the exception of West Virginia, and if approved for a loan, you can receive funds quickly, sometimes within the same day.

Best for: Fair credit borrowers with high income or strong educational history, and using funds for educational purposes.

  • Loan amount: $1,000 - $50,000
  • Application process: Online
  • Cosigners allowed: No

Peerform

We think Peerform is a good choice for borrowers who cannot meet the debt-to-income, income, or educational criteria seen with other companies in this category. If you want to qualify for a Peerform personal loan, you will need a minimum credit score of 600, a debt-to-income ratio below 40%, no current delinquencies or recent bankruptcies, an open bank account, and at least one revolving account on your credit history (i.e., a credit card or line of credit). We also like Peerform because the company offers competitive interest rates, especially for borrowers with fair to average credit. One drawback to Peerform is that the company only offers three-year maturities on loans. However, there are no prepayment penalties so you can always pay back the loan earlier.

Like Lending Club, Peerform is a marketplace lender, so funding your personal loan can take anywhere from three days to two weeks. Thankfully, Peerform is available in 41 states across the U.S. Residents of Connecticut, Idaho, Iowa, Kansas, Maine, North Dakota, Vermont, West Virginia, and Wyoming will have to look elsewhere for a personal loan.

Best for: Borrowers with fair to average credit, regardless of income.

  • Loan amount: $4,000 - $25,000
  • Application process: Online
  • Cosigners allowed: No

Summary of Our Top Picks

In the table below, we’ve summarized the best personal loans for borrowers with poor to fair credit.

Good for…LenderAPRs
Borrowers with poor credit (under 630)OneMain Financial9.99% - 36.00%
iLoan17.60% - 35.99%
Cosigned or secured loanVary
Borrowers with fair credit (630 to 680)Credit unionsVary
Avant9.95% - 35.99%
Upstart7.37% - 29.99%
Peerform5.99% - 29.99%

Methodology

We evaluated over 50 different personal loan companies to find the best personal loans for borrowers with poor to fair credit. In our review, we considered the following criteria:

  • Competitive APRs: In most states, the maximum APR for a personal loan is capped at 36%. We looked at lenders that offered competitive rates for borrowers, regardless of whether the borrowers had good or bad credit.
  • Fair fees: Some of the lenders in this list charge few, if any, fees. Of the lenders who do, the fees were reasonable, with origination fees of no more than 6% and late fees no more than $25 or 5% of the monthly past due. None of the lenders has prepayment penalties or application fees.
  • Range of loan amount and terms: All of the lenders on this list let individuals borrow at least $25,000 and offered longer or more flexible repayment options. Typical terms were between two to seven years.
  • Transparent rate and fee disclosure: Trustworthy lenders will present rates, fees and loan amounts upfront, instead of requiring you to apply to figure out what the cost of the loan will be. Lenders we included in this list all had easy-to-find and transparent rate and fee schedules on their websites.
  • Geographic reach: Most of the lenders on this list are available in at least 40 states across the U.S., making them a better fit for a wider variety of borrowers.
  • Lender credibility: We evaluated the credibility of the lenders on this list based on user reviews, Better Business Bureau (BBB) ratings and the company itself.

Lenders included in this list generally scored well in each of the criteria above by having competitive, clear and transparent fees, rates, and terms.

How to Get a Personal Loan With Bad Credit

It’s still possible to get a competitive offer on a personal loan, even if you don’t have a great credit score. The key is to shop around and consider a variety of lenders: online direct lenders, marketplace lenders, credit unions, banks and even microlenders. Fortunately, due to government regulations, most personal loans will not have interest rates higher than 36%, so you should be able get this rate or lower on a loan. One great way to lower your rate is to apply for a loan with a cosigner or get a secured loan.

Having a cosigner with excellent credit history will help you qualify for a low APR, which will make your loan easier to repay. The same goes for securing your loan with collateral. However, both of these methods are not without risks. If you default on a loan with a cosigner, your cosigner will be on the hook for paying off the loan (and it will likely damage their credit). In the case of a secured loan, the lender has the right to seize the collateral if you are delinquent or in default.

If you don’t want to apply with collateral or a cosigner, there are still options to get a good personal loan, despite a poor credit score. One way is to show lenders that you have been actively repairing and improving your credit score. This can be done through making on-time payments for any debt you have and keeping your credit utilization low. It also helps to work with a lender that you have established a positive relationship with (i.e., the bank or credit union where you have a checking account or mortgage). In this case, the lender may be more willing to overlook flaws in your credit history.

Generally speaking, it will be hard to get an unsecured personal loan from a bank if you have a poor credit score. However, many banks now offer secured personal loans that use your savings account or CD as collateral. The amount that you can borrow will be based on how much you have in your savings account or CD. The great thing about these loans is that they are open to borrowers with all types of credit, and they have low interest rates and few fees. However, you must be diligent in repaying the loan if you want to keep your savings account or CD.

Loan Options to Avoid

Unfortunately, there are many predatory lenders that advertise almost exclusively to individuals with poor credit. These types of loans generally come with very high interest rates, hidden fees and short payback times. We recommend borrowers avoid the following types of loans:

  • Payday loans: Payday loans regularly have APRs that exceed 300% or 400%, and most require you to pay back the loan within a few weeks, making it all too easy to fall into a debt trap. In fact, payday borrowers are more likely to declare bankruptcy than those who don’t take out payday loans.
  • Guaranteed approval loans and no credit check loans: These loans may look like a standard installment loan, but they usually come with high interest rates and hidden fees. APRs on these loans can be anywhere from 50% to 500%. On a two-year $5,000 loan with a 396% APR, you would pay back over $35,000.
  • Car title loans: Title loans use your car as collateral for the loan, meaning you can lose your vehicle if you can’t repay. These loans also frequently have high interest rates of 100% to 200%, which makes it all the more likely that you won’t be able to repay (and thus lose your car). The Consumer Financial Protection Bureau estimates that one in five title loan borrowers will have their cars repossessed.
  • Credit card cash advances: Getting a cash advance from your credit card may seem like a great deal in comparison to the options above -- but it’s not. Interest rates will generally be around 25% or more, and there are fees for withdrawing the cash.

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