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Best Personal Loans for Bad Credit (Under 630)
Even if you have a credit score under 630, it’s still possible to get a subprime personal loan. Take a look at our top bad credit loans below.
For borrowers with poor credit, we suggest OneMain Financial. OneMain Financial does not require a minimum credit score to apply for its personal loans. In fact, roughly half of the company’s lending volume went to borrowers with credit scores under 620 in 2016. OneMain Financial's rewards program sets it apart from other lenders because it encourages borrowers to keep better financial habits. This program awards points that can be redeemed for gift cards to major retailers or discounts on purchases for completing certain tasks. You can receive points, for instance, by paying your loan on time or enrolling in direct pay.
Drawbacks: Depending on your credit score, the lender may require you to secure your loan with collateral. Borrowers can use an insured personal vehicle, such as a car or truck, as collateral. You may have to visit a branch to complete your application, which the company claims, is located within 25 miles of five in six Americans. However, the company does not have branch locations in Alaska, Arkansas, Connecticut, Massachusetts, Rhode Island or Vermont.
LendingClub requires a minimum credit score of 600 to apply for a personal loan. However, borrowers with good credit will have an easier time getting their loans funded. LendingClub operates as a marketplace, which means that your loan is given a rating, depending on your credit and income data, and multiple investors will likely contribute to your loan. Luckily, you can check your rate without affecting your credit score.
Drawbacks: Although, LendingClub has a low credit score minimum, most of their borrowers have good to excellent credit. So, borrowers with bad credit should not use this as their first choice but can still consider it as an option. Another drawback is that it can take some time to get funding. Generally, it takes around seven days for LendingClub to fund your loan offer.
Consider a Cosigned or Secured Loan
Lenders mainly rely on your credit score and history when evaluating you for a personal loan. This means that a poor credit score will hurt your chances of getting approved. While there are some lenders that cater to borrowers with poor credit scores, they may charge very high interest rates up to 36%. Anything above this is likely a predatory loan, such as a payday or no credit check loan.
To get a better rate, we recommend borrowers consider getting a cosigner on their loan or securing their loan with collateral, such as a car or vehicle. These strategies are not without their risks, but they can help you get approved and qualify for a reasonable interest rate. We list lenders in the table below that accept cosigners, collateral or both.
|Lender||Cosigners Allowed||Collateral Accepted|
|PNC Bank||Yes||Non-real estate collateral (cash, vehicle, etc.)|
|Wells Fargo||Yes||CD or savings account|
|OneMain Financial||Yes||Insured vehicle (only some borrowers)|
|Mariner Finance||Yes||Yes (over $10,000)|
|Alliant Credit Union||Yes (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 Union||Yes||Savings account and CD|
Best Personal Loans for Poor to Fair Credit (630 to 679)
There are many lenders that cater to borrowers with poor to fair credit scores, which are typically scores from 630 to 679. Discover some of the best loans for fair credit below.
We think Peerform is a good choice for borrowers who have had positive payment history for the last year. If you want to qualify for a Peerform personal loan, you 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. Peerform 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.
Drawbacks: Peerform is a marketplace lender, meaning that funding your personal loan can take anywhere from three days to two weeks. Peerform is not available to residents of Connecticut, Idaho, Iowa, Kansas, Maine, North Dakota, Vermont, West Virginia, and Wyoming.
According to its website, most Avant borrowers have FICO credit scores between 600 and 700, which makes this company a solid choice for poor to fair credit individuals. We recommend that you have a credit score of at least 580 to 600 to improve your chances of approval at Avant. Avant 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 a late payment forgiveness program, refunding its $25 late fee if you make three consecutive on-time payments after one late payment. Finally, the company has fast funding, funding loans in as fast as one day.
Drawbacks: Rates at Avant start higher than those at other online lenders. That said, our analysis of personal loan interest rates shows that borrowers with fair credit generally receive rates between 18% and 20%. Avant is not available to residents in Iowa, Colorado or West Virginia.
Consider a Credit Union
Credit unions are a great option to get a personal loan, as many credit unions are willing to work with borrowers who would otherwise be turned down at a bank or online lender. 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, such as Navy Federal Credit Union, have interest rates capped at 18%. Local and community credit unions may charge higher rates, but those rates don’t usually 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 certificate of deposit (CD) account. These loans have less stringent credit requirements and below-market interest rates. Some credit unions can fund your loan offer quickly. Alliant Credit Union, for instance, may be able to give you funds as fast as the same day. While you’ll need to be a member to be eligible for 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 association.
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…||Lender||APRs||Loan Amounts|
|Borrowers with bad credit (under 630)||OneMain Financial||16.05% - 35.99%||$1,500 - $30,000|
|LendingClub||6.95% - 35.89%||$1,000 - $40,000|
|Borrowers with fair credit (630 to 679)||Peerform||5.99% - 29.99%||$4,000 - $25,000 ($10,000 - $35,000 for consolidation loans)|
|Avant||9.95% - 35.99%||$2,000 - $35,000|
Our Methodology and Why You Can Trust Our Analysis
We evaluated over 50 different personal loan companies to find the best personal loans for borrowers with bad 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%. All lenders we evaluated offered rates of 36% or less. We also looked for lenders that offered competitive rates based on the borrower’s creditworthiness.
- Fair fees: The fees that lenders charge must be 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 wide 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.
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 APRs higher than 36%, so you should be able get this rate or lower on a loan. You can lower your rate by applying for a loan with a cosigner or getting 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 available to you. Showing lenders that you have been actively repairing and improving your credit score can increase your chances of approval. 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 institution 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 or CD account as collateral. The amount that you can borrow will be based on how much you have in the account. These loans 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. Borrowers should avoid the following types of loans:
- Payday loans: Payday loans are made for subprime borrowers and regularly have APRs that exceed 300% or 400%. Many people believe it to be an easy way to get a quick loan for bad credit. 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, the Consumer Financial Protection Bureau (CFPB) found that 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 CFPB 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.