Greatest Dangerous Credit score Loans of 2020


Getting a loan when you have bad credit isn’t impossible, but it does come at a higher cost. Bad credit can happen to the best of us after hard financial times or unexpected life events, but you can still borrow money from trustworthy lenders at reasonable rates. Before applying for an online personal loan for bad credit, you can also consider asking friends and family for help, using a credit card or asking for an advance on your paycheck. If you decide a personal loan is your best option, keep in mind that with very bad credit loans, lenders may require a cosigner, higher interest rates or a secured loan.

To determine the best bad credit personal loans, we used our proprietary SimpleScore methodology to evaluate each lender’s rates, terms, loan amounts, customer support and fees. We’ll also cover how to apply for a loan with bad credit, when to use a personal loan versus other options, and steps you can take to improve your credit score and secure a better interest rate.

Why trust The Simple Dollar? 

When we rate and review online bad credit loans, we use our SimpleScore methodology, which we’ve made available to review in the spirit of financial wellness, transparency and honesty. The SimpleScore rating system uses five identifiable and measurable factors to assign a score to each brand in the bad credit loans category. SimpleScore makes it easy to compare bad credit loans online in order to make informed and financially sound decisions regarding your next lending product.

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How personal loans are being affected by COVID-19

If you’re having difficulty paying your personal loan due to a COVID-19 hardship your lender may be able to help. Many lenders, banks and credit unions are offering debt relief, forbearance and other options to assist. 

And if you’re in need of a loan to get you through a COVID-19 hardship make sure you shop around for the best lenders and rates to meet your financial needs. You may be eligible for a hardship loan based on your income, credit and payment history. Most COVID-19 hardship loans have a lower interest rate and deferred payments to help out. 

Most hardship loans range from $1,000 – $5,000 and are paid back in a shorter period of time. Even though a hardship loan may seem like the only choice it’s best to make sure you have exhausted all options before getting a loan because it could have a negative impact on your credit. Here are a few other resources to assist you during this time. 

The Federal Housing Finance Agency is also offering homeowners assistance including forbearance and avoid foreclosure.

Compare the best bad credit personal loans

Lender APR Loan Amount Terms Key Benefit SimpleScore
OneMain Financial 18%–35.99% Up to $20,000 Up to 60 months Same-day funding. 4.5
Peerform 5.99%–29.99% $4,000–$25,000 3 years Easy application process. 4
NetCredit 34.00%–155% Up to $10,000 6–60 months Low credit scores accepted. 3.2
Avant 9.95%–35.99% $2,000–$35,000 24–60 months Mobile application process available. 3.75 5.99%–35.99% Up to $35,000 90 days–72 months Short-term loans available if needed. 4.25 5.99%–35.99% $500–$5,000 3–36 months Large affiliate network to fund your loan. 3.6

What is a bad credit personal loan and how does it work?

Offered by online lenders, banks or credit unions, personal loans can be used for a variety of things. A bad credit score may rule you out for the best interest rates, but that doesn’t mean you won’t have access to the funds you need. In 2019, Transunion’s Q4 Industry Insights Report found balances on personal loans totaled a record high of $161 billion, up $23 billion from the year prior. 

Personal loans for people with bad credit generally come with a higher interest rate, a shorter term and lower amounts. Only consider taking out a bad credit personal loan if you know you’ll be able to pay it off quickly.

Personal loans have a fixed term and defined interest rate, which makes budgeting for repayment easy since you know what your payment will be each month. The term of your loan will vary from lender to lender, though repayment periods are usually between 24 and 84 months. A longer term means lower monthly payments, but more interest over time. Since bad credit loans often have higher APRs — like, up to 400% high, you should expect to pay more in interest and fees.

Be wary, however, as easy bad credit loans come with a price — the terms attached to bad credit loans stack the odds of repayment very much against the borrower and are generally difficult to reasonably pay back.

To avoid cheap bad credit loans that may further harm your finances, It’s best to find reputable online personal loans for bad credit providers that have APRs under 50% to avoid cheap bad credit loans that may further harm your finances. It may seem difficult, but it is possible to get a bad credit loan without risking your credit more than necessary.

Bad credit loans and credit score ranges

It’s important to understand what bad credit is and where you stand ahead of finding the right loan. Your credit score is a triple-digit number that reflects your history in lending and using credit cards. If you regularly miss payments or max out your credit cards, you will mostly likely have a bad credit score.

However, this number is not arbitrarily assigned. Certain parts of your credit history affect your credit score in different ways. Payment history, amounts owed, length of credit history, new credit and credit mix are all considered when your credit score is calculated.

Credit score Estimated APR Detail
Excellent Credit (720 and over) Under 9% Excellent credit will unlock the best rates across all lenders.
Good Credit (660–719) 9%–14.99% You’ll most likely qualify for a number of loans, though there is no guarantee you’re getting the best possible terms.
Fair Credit (600–659) 15%–35.99% A credit score of 700 means you’re in about the 50th percentile
Poor Credit (under 600) 36% and over Having a poor credit score makes it harder to open new loans.

These rates are based on lenders’ advertised personal loans rates and their recommended credit score and borrower eligibility requirements. Your personal loan rate may be different based on income, employment history and current debts.

What is a bad credit score?

A bad credit score can range from 300 to 600, making it more difficult and costly to get a personal loan. Whereas, fair credit scores are 600 and over on an 850 scale. Remember that your credit score will vary depending on the credit bureau.

Here are other bad credit score ranges to think about:

  • FICO: A bad FICO credit score is below 650 on an 850 scale. 
  • VantageScore: A bad VantageScore is 300–619 on an 850 scale. 
  • Equifax Score: A bad Equifax score is 280–559 on an 850 scale. 

How credit scores are calculated

Your score is calculated based on debt owed, new credit established and payment history  — which is why it’s important to pay bills early or on time. The length of history and credit mix is also factored in to determine your score. Take a look at the breakdown to see how these factors add up. 

  • Payment history: 35% 
  • Amounts owed: 30% 
  • Length of history: 15% 
  • New credit: 10% 
  • Credit mix: 10%

Do you know your credit score?

There are a few ways to find out your credit score for free, but it’s best to use You’ll get one free credit report from each of the three credit bureaus once a year meaning you can check your credit score every four months by alternating credit bureaus. You can order your reports by mail, phone or online. You can also check with your bank or credit card holder to order a credit report.

Some secure credit websites, like, also let you check your credit score, monitor your amounts owed and get updates of any changes for free. 

There’s a common myth that checking your credit score often will negatively impact your credit score. But regularly checking your score helps you catch any changes or signs of identity theft. 

But be careful of checking your credit score too often. Requesting your credit report from a credit bureau or bank is a soft inquiry  — which doesn’t impact your credit score like a hard inquiry for a loan would.

We found 51% of Americans don’t check their credit score

Checking your credit score periodically could improve not only your chances at landing a great interest rate on a loan or mortgage, but can also improve your long term financial health. If your credit score falls under 650, you’re in the bad credit range. The first step in any loan process is determining where you stand.

[ Keep Reading: Survey: Half of America Doesn’t Check Their Credit Score at All ]

How can I fix my credit in order to get a better loan?

There are a number of ways you can improve your credit to get better loan options with lower interest rates. Here are a few ways.

  • Check your credit for errors – If there’s an error on your credit report it may be negatively impacting your score. You may be able to dispute it to have it removed for an easy score increase.  
  • Pay your bills on time – Paying your medical or other bills on time helps avoid late fees and the risk of being reported to credit bureaus.  
  • Get credit for making utility and cell phone payments on time – Some utility companies may share your on-time payments with credit bureaus  — which could boost your credit score. 
  • Reduce the amount of debt you owe – Paying off debt can help increase your debt-to-income ratio, one of the factors used to determine your credit score. You’ll also want to decrease your credit card debt to keep balances low and get out of debt.
  • Apply for and open new credit accounts only as needed – Applying for a big purchase or credit card can be a hard inquiry that can hurt your score, especially depending on your other credit score factors. 
  • Don’t close unused credit cards – Closing unused credit cards can decrease your available credit. Leaving it open can help with your credit history length and debt-to-credit ratio. 
  • Don’t apply for too much new credit, resulting in multiple inquiries – Applying for too many credit cards, loans or other inquiries can give lenders the impression that you’re high risk. Only apply for credit when you need it, and be strategic about how much when you do. 

The best rates and terms go to borrowers with good credit. If you have the luxury of time, try to build up your credit score before applying for a loan, especially if you are only a few points away from the next tier. A higher credit score will unlock better terms and rates, so do what you can within your time frame.

“The biggest problem with bad credit is what we call the catch-22: you have to get a loan to build credit, but you need good credit to get a loan. It’s hard to find a loan with bad credit, but that does not mean payday loans are the solution for your emergency cash needs,” says Jeff Zhou with FigLoans. “Payday loans advertise themselves as a quick fix but are often designed to trap borrowers in debt. Hidden costs in the fine print make payday loans exceptionally dangerous.”

Jeff Zhou – FigLoans

How will applying for a poor credit loan impact my credit score?

Getting a poor credit loan may cause your credit score to take a slight dip because the lender will perform a hard credit check when you apply. Your credit score can drop as much as five points with a hard inquiry, but it could drop less if you don’t have any outstanding issues on your credit report. Your score usually returns to normal after a few months after your inquiry. Fortunately, inaccurate hard inquiries can be disputed and removed if you find an error on your credit report. 

Oftentimes, if you have multiple inquiries over 14 to 30 days, lenders will count those as one single inquiry, and you won’t be penalized for each individual inquiry over this time period. So it’s best to do the bulk of your loan applications in a short time span if you need to apply to more than one. 

How to get a loan with bad credit

  • Evaluate how much you need: Try not to take out more money than you need. Don’t forget loans have interest and fees, so getting out more than you need can impact your ability to repay the loan.
  • Check your credit score and gather financial documents: To start, you’ll want to go through your credit report to ensure there are no errors that need to be corrected. Gather things like pay stubs and asset information that will help lenders evaluate your financial history. Did you know that you can get a free credit report each year? Before applying for a loan, pull your credit report from This site is offering free weekly credit reports until April 2021 in light of COVID-19.
  • Consider a secured loan: With poor credit, getting a secured loan is easier than an unsecured loan. This will mean that you’ll need to put forth an asset before you can obtain the loan.
  • Prequalify for a loan: Often done online, prequalifying for a loan lets you know exactly how much you can borrow and what the terms of the loan will be. Lenders will perform a soft credit pull, which will not impact your score. 
  • Finalize: To finalize your loan, the lender will perform a hard credit inquiry. Remember: too many hard inquiries will negatively affect your credit score.
  • Work towards paying off your loan: Once you have your loan, make a realistic budget for repayment. Without a clear plan for repayment, it’s easy to fall behind on payments and damage your credit even further.

[ Next: How to Get a Loan With Bad Credit ]

What documents are required for a bad credit loan?

Oftentimes, you’ll need four documents to help get a bad credit loan.

  • Proof of identity:  Lenders will need to verify your identity using a driver’s license, passport or birth certificate. 
  • Income verification: You’ll need proof that you’re employed. Many lenders will accept your latest tax returns, W-2s or recent paystubs. You may also be asked for your employer’s information for verification. 
  • Proof of address: Lenders will accept utility bills, a lease or home insurance documents to help verify your identity. This address is also used to send your loan information after you’re approved.
  • Social Security number: You’ll also be asked for other personal data such as your Social Security number for the loan application process.  

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Answer a few questions to see which personal loans you pre-qualify for. It’s quick and easy, and it will not impact your credit score.

The 6 best loans for bad credit in 2020

Finding the right bad credit lender for you doesn’t have to be difficult, which is why we use our evidence-based, proprietary SimpleScore system to rate and review the best bad credit lenders so you can find the right one for you.

The best bad credit loan lenders

Best for emergency loans – OneMain Financial

If loans were a car, OneMain Financial would be a fast one. But just like premium gas in the tank, you won’t save much on interest with the lowest APR at 18%.

Loan Amount



4.4 / 5.0

SimpleScore OneMain Financial 4.4

OneMain Financial provides a variety of personal loans for all types of borrowers. Consumers with lower credit scores may not be able to qualify for all of OneMain Financial’s credit products, but will find products tailored to meet their needs. OneMain provides bad credit loans that consider other factors besides credit score. Furthermore, a borrower can put up a car, truck or other assets as collateral to qualify.

In the News

In October 2020, Business Wire published an article about OneMain Financial providing relief for their customers who were affected by Hurricane Sally. These customers may defer their loan payments from Sept. 25, 2020 to Oct. 26, 2020. Eligible customers could contact a representative to remove some additional costs, such as late fees and return payment fees. “We want to help affected customers and encourage them to contact us if they need assistance with their loans,” said Gary Fulk, Senior Managing Director at OneMain Financial.

OneMain Financial Disclosure

Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on your ability to meet our credit standards (including a responsible credit history, sufficient income after monthly expenses, and availability of collateral). Larger loan amounts require a first lien on a motor vehicle no more than ten years old, that meets our value requirements, titled in your name with valid insurance. Maximum APR is 35.99%, subject to state restrictions. APRs are generally higher on loans not secured by a vehicle. The lowest APR shown represents the 10% of loans with the most favorable APR. Active duty military, their spouse or dependents covered under the Military Lending Act may not pledge any vehicle as collateral for a loan. OneMain loan proceeds cannot be used for postsecondary educational expenses as defined by the CFPB’s Regulation Z, such as college, university or vocational expenses; for any business or commercial purpose; to purchase securities; or for gambling or illegal purposes.

Borrowers in these states are subject to these minimum loan sizes: Alabama: $2,100. California: $3,000. Georgia: Unless you are a present customer, $3,100 minimum loan amount. Ohio: $2,000. Virginia: $2,600.

Borrowers (other than present customers) in these states are subject to these maximum unsecured loan sizes: Florida: $8,000. Iowa: $8,500. Maine: $7,000. Mississippi: $7,500. North Carolina: $7,500. New York: $20,000. Texas: $8,000. West Virginia: $7,500. An unsecured loan is a loan which does not require you to provide collateral (such as a motor vehicle) to the lender.

Best peer-to-peer lending – Peerform

You won’t want to swat away this spider web of connections. PeerForm uses peer-to-peer lending to get borrowers money quickly, but their origination fees will stick.

If you need a bad credit loan option and your credit score is poor but not outright terrible, Peerform is a lender you may want to consider. It’s a peer-to-peer lending platform, meaning borrowers are matched with individuals willing to lend money. It’s an interesting concept that takes traditional banks out of the equation and can sometimes offer lower fees due to reduced overhead.

Be mindful of the fact that Peerform will decline any application with a credit score below 600, which is all the more reason to raise your credit score. Because of this criteria, Peerform is able to offer loans ranging from $4,000 to $25,000 to potential borrowers with APRs ranging from 5.99% to 29.99%. One of the downsides to using Peerform is that it can take up to two weeks to receive funding. So, if you need cash fast, this may not be the best platform for you. Additionally, there is a 1% to 5% origination fee attached to the loan.

Best for building credit – NetCredit

Like someone who looks past all their partner’s red flags, NetCredit helps borrowers get a loan, regardless of their score. But with some of the highest APRs out there, its got a few red flags of their own.


3.2 / 5.0

SimpleScore NetCredit 3.2

NetCredit offers personal loans with much higher interest rates than many lenders, starting at 34% and soaring to 155% APR. The good thing about NetCredit is it looks beyond just your credit score, sometimes accepting applications with scores as low as 550. Further, NetCredit has a suite of tools and guarantees that provide transparency and ease-of-use for customers, even allowing borrowers to return the loan the day after funding if they change their minds.

Its loans range from $1,000 to $10,000 with APRs starting around 34% — and in some cases ranging as high as 155%. If your offer comes with an extremely high APR like that, look into other options, such as a secured loan or using a cosigner. You could easily find a better bad credit loan elsewhere.

In the News

In May 2018, the Daily Press reported that the state of Virginia was suing NetCredit for violation of the state’s consumer protection laws. The state alleged that NetCredit illegally made more than $47 million off of high-interest loans. Virginia has a usury cap of 12% on consumer loans with some exceptions. Those exceptions do not include NetCredit, which offered loans with interest rates as high as 155% to Virginians, the state claimed.

Best mobile app – Avant

Tech-savvy customers rejoice! Avant’s mobile app allows borrowers to easily access loan details and contact customer service.

Avant focuses on loans for borrowers with average credit — customers with a credit score between 600 and 700. If you fall in that range, Avant is good if you need your funds quickly, as you may get your loan as soon as the next business day after you apply. Avant also makes its customer support team available seven days a week, meaning customers can reach out and ask questions, even on a Sunday morning.

Loans from Avant range from $2,000 to $35,000 with APRs between 9.95% and 35.99% which is reasonable compared to other loans for people with bad credit. Furthermore, the loan terms offered are between 24 to 60 months. However, you should also be aware of an administration fee charged for loan origination that is 1.50% to 4.75% of the loan itself.

In the News

Avant is working with its members who have been impacted by COVID-19 through its Readiness Plan and encourages borrowers to use its mobile app or customer service dashboard for account servicing needs.

Avant Disclosure

The actual loan amount, term, and APR amount of loan that a customer qualifies for may vary based on credit determination and state law. Minimum loan amounts vary by state. Avant branded credit products are issued by WebBank, member FDIC.

Best bad credit lender marketplace –

Overwhelmed with it all? Take a break and let do the legwork and connect you with lenders. But don’t forget to check its work and read the terms of each offer.


4 / 5.0

SimpleScore 4

After completing just one online application, will search its network of lenders to find one that matches your needs and financial situation. When the results return, you have to do a little extra research to find the best one for you. Be sure to read the terms and agreements of each offer, as they could all differ from one another.

APRs are competitive and there are several types of loans, which top out at a generous $35,000. Of course, this is a referral site, so your terms, fees, and APRs will vary depending on the lenders who contact you. This kind of information can be easier to determine with a direct lender.

Best for really bad credit –

Because having really bad credit is bad enough, eases your worries about getting a loan. However, a low cap of $5,000 may not be enough to bridge the financial gap.


3.6 / 5.0

SimpleScore 3.6

When it comes to getting a loan with really, really bad credit, your options are limited. But is a site that has been connecting borrowers with poor credit to a network of willing lenders since 1998. Once you apply, you’ll receive offers from a network of lenders. You can choose which offer is best for you and your financial situation before moving forward in the process.

Keep in mind that depending on your situation, you may not receive any offers. On the other hand, you can reject any offer that doesn’t fit your needs. Once you accept an offer, typical loan amounts range from $500 to $5,000 with an APR of anywhere from 5.99% to 35.99%, according to its website. The repayment terms generally range from three to 36 months. Although the 35.99% APR can seem daunting, it’s better than a predatory payday loan.

Tips for choosing the best bad credit loan company for you

Decide why you need a loan

Before starting the process, evaluate your current situation. What’s the purpose for the loan? How much do you really need? By defining these things, you’ll be better positioned to decide which loan is best.

Shop around

If getting a personal loan is the right move, next you’ll need to decide on a lender. Shop around from traditional banks and credit unions to some of the best online lenders for bad credit. Whichever option you go with, your monthly payments are influenced by the APR of the loan. Try to find a loan you can qualify for with the lowest APR possible.

Compare terms and fees

Next, compare the terms and fees for the options you’ve selected. The long-term implications of a loan with less favorable terms cannot be ignored. Personal loan comparison will help you evaluate the terms and fees, making sure whatever you choose fits your finances and doesn’t just solve the need for money.

Consider what type of flexibility you need

Make sure the repayment terms are suitable for your budget. If you want to pay off your loan before the term ends, check to see if the lender charges repayment fees. If there are repayment fees, you may want to consider a different lender that better fits your needs

Plan your repayment budget

Come up with a strategy for repaying your loan so you never fall behind on payments or damage your credit. While your credit might not be the best now, it doesn’t have to stay that way. The personal loan can be used to your advantage to rebuild your credit through on-time payments.

What are the uses for a bad credit personal loan?

Before you take out a loan, consider your entire financial situation. If you have poor credit, you’ll end up with a higher interest rate, which means more money paid back in the long run.

Bad credit personal loans can be put to any use. Whether you’re interested in debt consolidation to improve your credit score or adding a quick infusion of cash to your bank account, a subprime loan can help. Some of the most common uses for personal loans for bad credit are:

Common uses for a personal loan

  • Paying off high-interest credit card debt
  • Debt consolidation
  • Home improvement projects
  • Paying off medical bills
  • Unexpected emergencies
  • Cover moving expenses
  • Pay for your wedding
  • Refinancing existing loans
  • Military Loans
  • Starting a business
  • Financing a car

Bad uses of personal loan

Types of personal loans for bad credit

Before you apply for a loan, it’s important to understand the different types and what borrowing could mean for your financial situation. Some of these loans may be harder to get if you have bad credit, but lenders offer many options to help you get the money you need at the best rate possible.

Secured loans

Secured loans are the most common type of bad credit loan and uses collateral, such as your car or bank accounts. The lender can seize the collateral if you fail to pay back the loan.

  • Pros: Backed by collateral, lower interest rates and larger amounts.
  • Cons: Any collateral you put down will be taken by the lender if you do not pay back the full amount of your loan.

Unsecured loans

Unsecured loans are more difficult for someone with bad credit to get because it’s based on credit. This type of loan doesn’t require collateral and often has a better interest rate. Borrowers with bad credit may still be able to get an unsecured loan with a cosigner.

  • Pros: Unsecured loans are backed by credit instead of collateral.
  • Cons: More difficult to acquire with bad credit, higher interest rates.

Long-term loans

Long-term loans typically allow between 60 and 84 months for repayment. They provide a lower monthly payment over an extended period of time. Installment loans are common.

  • Pros: More affordable monthly payments, higher amounts.
  • Cons: Time-consuming, possible extra fees, loss of collateral in the event of a default.

Keep Reading: Best Installment Loans for Bad Credit

Emergency loans

An emergency loan can be approved quickly with access to the money immediately after approval. But it may come with a higher interest rate. Emergency loans are often used to cover urgent repairs, expenses or medical bills.

  • Pros: Short amount of time between application and receiving cash, options for loan term length.
  • Cons: Possible high interest rates

Payday loans

Payday loans allow borrowers to get money fast — typically a small amount of $500 of less with the understanding that it will be paid in full when you get your next paycheck. These loans usually have high interest, exorbitant fees and should be avoided at all costs.

  • Pros: Fast and easy to apply for
  • Cons: Short terms, high rates, plenty of fees, predatory

Cash advances

A cash advance is a loan borrowed from your credit card. Generally a short term loan, how much you can borrow against your credit line will vary from card to card.

  • Pros: Easily accessible through ATMs and banks, fast money.
  • Cons: Steep fees and high interest rates.

Home equity loans

As you make payments toward your mortgage, you build up equity in your home. When you have built up enough, you can take out a loan against the equity you’ve accrued with a home equity loan.

  • Pros: Loan covered by collateral, therefore covered in the event of default.
  • Cons: Defaulting on payments may end up in losing the home.

[ Keep Reading: Buying a Home with Bad Credit ]

How to detect personal loans scams

You shouldn’t jump at the first loan offer that comes your way. Keep an eye out for red flags that could mean a bad credit loan scam. Here’s what to watch out for:

  • No credit check: Legitimate lenders will check your credit to determine if you can repay the loan, so beware of any lender who doesn’t.
  • Upfront fees: Many lenders require fees, but legitimate lenders will take them out of the loan once it is funded.
  • Unregistered in your state: The Federal Trade Commission requires lenders to be registered in every state they do business in. The lender should also have a verified address.
  • Email warning signs: Unsolicited emails with irresistible rate offers, emails with errors and an inconsistent email address are all ways to spot scams.

Frequently Asked Questions for Bad Credit Loans

Do I need collateral?

Most personal loans are unsecured. But, if you have bad credit, you may only qualify for a secured loan, which is secured by an asset or collateral.

Can I get a loan if I’m unemployed?

Getting a loan while unemployed really depends on the lender. Most often lenders will look at employment history when approving you for a loan. However, the biggest consideration is your credit score. If you have a long employment history and good credit, you may qualify for a personal loan. But, it may have to be secured by collateral so your lender knows it will be paid back.

How long does it take to get my loan?

Depending on the type of personal loan you choose, you could get your loan within minutes up to several weeks.

Can you get a loan without a checking account?

Yes, you can apply for a loan without opening a checking account. For instance, some short term loans like title loans may not require you to open a checking account since you can put down collateral to back the loan.

Can you get a loan with no credit check?

Yes, payday and title loans are examples of loans that you can get without having your credit pulled. However, these loans often come with high APRs and short repayment terms, making them a high-risk form of borrowing.

What is an APR?

APR or Annual Percentage Rate is a way to evaluate the affordability of the loan. It includes both the interest rate of the loan and any additional fees you pay. For the second quarter of 2019, the average interest rate on a personal loan was 9.41%, according to Experian.
Personal loan rates range from about 6% up to 36% on average, with lower percentages being the most ideal. The APR you receive is determined by your credit score, financial history and loan details. Bad credit personal loans will have higher interest rates, but that doesn’t mean you have to settle for anything that comes your way. You’ll still be able to strategically compare options and find the lowest possible APR for your credit.

What’s the difference between fixed APR and variable APR?

There are two types of APR: fixed and variable. With a fixed APR, the interest rate on your personal loan is the same for the duration of your loan. If you have a fixed rate of 5.99% on your loan, it will remain 5.99% until you make your last payment. Conversely, if you have a variable APR, the interest rate will fluctuate based on the prime lending rate, which is the lowest rate your bank can charge its customers to borrow money.

Is there risk in bad credit loans?

As with any lending product, there will always be a risk. If your income situation changes and you can’t pay your monthly loan bill, the lender can report your late and non-payment to the credit bureaus, which will further damage your credit score.

Can I get a personal loan with a 500 credit score?

Yes. While the terms and rates on the personal loan won’t be ideal, you can most likely find a lender willing to work with you if your credit score is 500. However, if your lending needs aren’t emergent, try fixing your credit before borrowing with a 500 credit score.

Ask the Experts

What are things to watch out for with bad credit personal loans?

If you’re in a situation where you really need to take out a loan and your credit is less than stellar, here are some things to consider before signing on the dotted line.

First, is the loan absolutely necessary right now or can it wait until you’ve gotten your credit profile in better shape? This is an essential question because it is inevitable that people with damaged credit will pay more and, in many cases, feel cornered to agree to loan terms that aren’t great

Here’s what to look out for:

Interest rates – The lower your credit score, the more you will pay in interest fees.

Repayment length – Some lenders will entice borrowers to take out a loan with longer than standard repayment lengths. However, it’s important to keep in mind that the longer you pay on a loan, the more you pay the lender back in interest. And, for long auto loans, you will likely end up underwater on the car (owing more than the vehicle is worth).

Prepayment penalties – This is another way lenders can sneak in unexpected charges. Suppose you take out a standard 5-year loan but have the good fortune of being in a position to pay it off by year three? If the loan term includes prepayment penalties, the borrower will have to pay a fee (usually a percentage of the remaining balance) to get out of the loan early.

The bottom line is: please read all the fine print and determine the true, entire cost of a loan before making the financial commitment!

How has COVID-19 affected the behaviors of banks and lenders?

Pre-COVID-19, banks and lenders were a little less restrictive with the criteria they were using to determine consumer loan eligibility. Loan applicants with average or below-average credit profiles — although penalized with higher interest rates — were still likely to secure the loan that they applied for.

Today, over 40 million Americans have suddenly found themselves without jobs since the start of the pandemic in mid-March. This crisis has shot the rate of unemployment so high that we are surpassing what Americans who lived through the Great Depression experienced. In response, lenders are reflexively tightening the belt on who they lend money to in fear of an avalanche of missed or defaulted loan repayment scenarios by consumers who can’t afford to keep up with what they own. They’re now most likely to agree to do business with customers perceived as being a less risky repayment bet — those with higher credit scores and more assets.

If I get denied for a bad credit personal loan, will it make my credit worse?

Not getting approved for a loan isn’t what impacts your credit. Your credit report will have no definitive information on whether a submitted loan application was approved or denied.

However, most lenders will check your credit report with one (or all) of the major credit bureaus when you apply for a loan, resulting in a hard inquiry. Hard inquiries stay on your credit report for up to two years and can cause a minor drop to your score. The good news is that the impact on your score decreases as each month passes.

Although more hard inquiries on a credit report do lead to larger credit score drops, it’s still smart to shop for loans from different lenders to get the best interest rate and terms. Credit scoring models recognize this and will typically only count multiple hard inquiries as one inquiry as long as they are done within a specific loan shopping time window and are for the same loan type.

What is your advice for finding the best loan for someone with bad credit?

First comes finding the potential lender, just know an important fact here. Having a bad credit score doesn’t mean you can’t take out a loan. There will always be a hand for you to clap further. I recommend you to find a potential lender with patience.
Taking a second opinion with a partner bank is what you must consider as a follow-up, show them you’re serious by improving your credit score in less time, and finally never repeat your past mistakes.

What steps can one take begin improving their credit score if denied for a bad credit loan?

First, you should never bog down after you got denied for the loan. Then you can shift your key focus on how to improve your credit score. Analyze your past financial steps, make a report on them, and start working on it to improve. Right after, start clearing the clutter by paying bills on time and start creating additional sources of income. If you lack financial discipline, never hesitate to spend a penny on a financial adviser to keep you balanced. Finally, keep an eye on the durability of credit and opt for new to fix the old one.

What are the most common considerations for banks and lenders when considering the approval of loan applicants?

There are a few common considerations:

  1. Your past credit score
  2. Genuinity of your cause
  3. Your inward and outward flow of money
  4. Legal documentation
  5. Value of your collateral
  6. Mode of repayment and time period

Can a bad credit personal loan help improve your credit score? If so, how?

Any loan or line of credit is reported to the Credit Bureaus. Each time you make your payments on time, it helps your overall payment history, which is the largest factor in determining your credit score.

If I get denied for a bad credit personal loan, will it make my credit worse?

Credit inquiries have little impact on your credit rating unless you have a significant amount. Check out the credit requirements and see if the lender can run a soft credit inquiry to see if you’re pre-qualified. Soft inquiries do not affect your credit negatively.

What steps can one take to begin improving their credit score if denied for a bad credit loan?

First, pay off credit debt. Most people are not aware that carrying high credit card debt severely lowers your score. Before applying for a loan, you can improve your chances of being approved by paying down your card balances to 30% of their credit limits or less.
Second, dispute old accounts. If you have negative accounts on your report that are bringing your credit score down, you can dispute them directly with the credit bureaus. The creditors have 30 days to verify the account, or it must be deleted by law.

What are the most common considerations for banks and lenders when considering the approval of loan applicants?

Income is the most important factor lenders look at when issuing loans. Credit is second. Someone with a 600 credit score and a 60k salary is more likely to get approved for a personal loan than someone with a 650 score making less than 30k a year.

What is your advice for finding the best loan for someone with bad credit?

First, cast your net as wide as you possibly can. It’s not easy to get a loan with bad credit, so plan to speak with a large number of lenders as you look for one that will be willing to give you a loan. Do an online search for lenders in your area and make a plan to call and discuss your options. You can even set online chat meetings with at least 50. This way, you are mentally setting yourself up for an arduous process.
Secondly, try to visit credit unions first instead of regular banks. Credit unions are owned by their customers, not-for-profit shareholders. As a result, you often will find an easier path to a loan from these smaller institutions.

How has COVID-19 affected the behavior of banks and lenders, particularly with respect to making personal loans to those with bad credit?

One thing is clear: banks and lenders are extremely hesitant to issue credit right now. With the economy showing clear warning signs, and the United States officially in a recession, lenders will want significant reassurance that they will get their money back. As a result, the few loans banks will give out will likely go to people with fantastic credit. Also, many banks are working overtime right now to issue PPP loans for the government. In practice, that means loan officers might not have the time to get to your loan application. If you want to submit a personal loan, it could make sense to apply through a bank that isn’t issuing PPP loans.

What are things to watch out for with bad credit personal loans?

Usually, loans for people with bad credit are expensive! Interest rates on personal loans are often very high. The terms may be extended to make the payments more manageable, which also increases the amount you must payback.

High-interest rates and long terms result in very expensive loans. You should not only check the interest rate but also look at how much you are paying back in interest. For example, if you borrow $5,000 for five years at a high rate of 35.99%, you pay more in interest than you borrow!

Can a bad credit personal loan help improve your credit score? If so, how?

First, check with the lender to see if they report to the three major credit bureaus. Any loan that reports to the three major credit bureaus has the potential to help improve your credit score. As long as you make your loan payments on time every month, your score should increase over time. A good idea with any loan or credit card is to set up automatic payments from your checking account so that you will not accidentally miss a payment and potentially damage your credit score.

What steps can one take to begin improving their credit score if denied for a bad credit loan?

I commonly see two reasons people have low credit scores. First, they have no new credit card or loan history and need to build credit. The second reason is they have used too much of the available credit on their credit cards.

If you have no loan history and need to build credit, I recommend using a Credit Builder or Secured Loan. Secured credit cards are also a good tool to build credit, but beware that they come with the same pitfalls and dangers of any credit card. Secure credit cards require education and consistency. If you maxed out your credit, paying down the balance and keeping it low is the best way to help improve your score.

Too long, didn’t read?

The best personal loans for bad credit may take time to get, but if you need money for consolidating other high-interest debt, paying for a wedding, hospital bills or many other things, they can be a good solution. Low credit loans by default will have tighter restrictions, more fees and a higher APR. This is why finding terms you can reasonably repay is essential for building your credit and paying off your debt.

The coronavirus pandemic has already changed the financial industry, and personal loans are no exception. For example, U.S. Bank is offering personal loans of $1,000 to $4,999 at 2.99% APR for all eligible borrowers. Likewise, HSBC Bank is deferring personal loan payments and waiving late fees for 120 days from the time you enroll in HSBC’s hardship program.

Many online lenders are also offering help to people affected by COVID-19. LendingClub is allowing customers to defer two months of payments when they apply for a payment plan. The company is also not charging late fees or reporting late payments to credit bureaus.

We welcome your feedback on this article and would love to hear about your experience with the bad credit personal loans we recommend. Contact us at with comments or questions.

Last editorial update – December 21, 2020, updated lender information and bad credit personal loan editorial buying guide.

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